EU governments reached a compromise on Friday, significantly scaling back the European Commission’s original plan to channel grid congestion revenues into cross-border energy infrastructure. Under the new deal, member states will only allocate 10% of unused congestion revenues from cross-border power trades to joint EU power projects starting in 2028, with the share rising to 25% by 2031, while revenues generated from domestic power trading will remain within national jurisdictions. Countries including Sweden strongly opposed the original proposal requiring full 25% revenue handover. Meanwhile, EU governments granted the European Commission greater authority to coordinate cross-border grid planning, tasking it with drafting a unified ten-year grid infrastructure roadmap to accommodate surging power demand from renewables, electrification and data centres and ease bottlenecks in ageing power networks. Nevertheless, the cutback in near-term funding for cross-border projects fails to resolve Europe’s financing shortfall worth hundreds of billions of euros for grid upgrades. The existing funding gap has already led to wind and solar curtailment, stalled cross-border interconnector schemes and higher industrial power prices across Europe. While the revised framework delivers clearer planning signals to businesses and investors, long-term financing uncertainty persists. Europe’s climate neutrality and power integration targets remain reliant on an unresolved critical issue: who will foot the bill for the grid upgrades essential to the bloc’s energy transition.
Sources: https://esgnews.com/eu-cuts-grid-funding-plan-as-power-demand-and-renewable-bottlenecks-rise/