European Electricity Infrastructure: Planning, Regulation, and Financing

This report summarizes a workshop hosted by the Climate Policy Initiative (CPI) and the Florence School of Regulation on October 20, 2011. The discussions focused on the planning, regulation, and financing of European electricity transmission infrastructure, specifically in the context of integrating renewable energy and the implementation of the European Commission's proposed Infrastructure Package.

• There is a significant gap between the proposed EU budget for energy network infrastructure and the actual investment needs for electricity transmission. The Infrastructure Package proposes 9.1 billion Euros for the 2013-2020 period, while the total investment need for electricity transmission alone is estimated at 100 billion Euros.
• Transmission System Operators (TSOs) face constraints in financing large-scale investments through debt, as increasing the debt share beyond 65% or 70% of total finance could lead to credit rating downgrades, thereby increasing debt costs and concerning equity investors.
• The workshop identified five financing options for infrastructure: three for incumbent TSOs (issuing additional equity, reducing investor risks, or shifting to a growth model) and two for third parties (merchant-based project finance against congestion revenue or concession-based project finance against guaranteed payments).
• The EU Infrastructure Package introduces a comprehensive approach to grid expansion, including the identification of Projects of Common Interest (PCIs) that must be included in the Ten Year Network Development Plans (TYNDP) and demonstrate a positive cost-benefit ratio on a European scale.
• The Inter-TSO Compensation (ITC) mechanism, intended to share costs between grid users of different European countries, is currently viewed as an imprecise mechanism of insufficient scale because existing lines dominate the allocation of the common pot over new lines.
• The success of the Infrastructure Package depends on resolving several technical challenges, including the creation of robust power system development scenarios, the sharing of detailed network modelling data among TSOs and regulators, and the development of a standardized approach to Cost Benefit Analysis (CBA).

APA

Neuhoff, K., Boyd, R., & Glachant, J.-M. (2012). European Electricity Infrastructure: Planning, Regulation, and Financing. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2012/01/EU-Grid-Workshop-Summary-2012.01.25.pdf

Chicago

Neuhoff, Karsten, Rodney Boyd, and Jean-Michel Glachant. European Electricity Infrastructure: Planning, Regulation, and Financing. Climate Policy Initiative, 2012. https://www.climatepolicyinitiative.org/wp-content/uploads/2012/01/EU-Grid-Workshop-Summary-2012.01.25.pdf.

Wikipedia

{{cite report |last1=Neuhoff |first1=Karsten |last2=Boyd |first2=Rodney |last3=Glachant |first3=Jean-Michel |title=European Electricity Infrastructure: Planning, Regulation, and Financing |publisher=Climate Policy Initiative |date=24 January 2012 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2012/01/EU-Grid-Workshop-Summary-2012.01.25.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{neuhoff2012european, author = {Neuhoff, Karsten and Boyd, Rodney and Glachant, Jean-Michel}, title = {{European Electricity Infrastructure: Planning, Regulation, and Financing}}, institution = {Climate Policy Initiative}, year = {2012}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2012/01/EU-Grid-Workshop-Summary-2012.01.25.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }