Key Contacts: Niall Donnelly – Partner |
On 10 December 2025, the European Commission unveiled its European Grids Package (the “Package”), a transformative set of legislative and policy initiatives designed to accelerate the development of Europe’s energy infrastructure to help lower energy prices while ensuring clean, secure and reliable supply. For investors, financiers, and developers, the Package marks a shift to a proactive regulatory framework and accelerated delivery of energy infrastructure. The legislative proposals of the Package will now pass to the European Parliament and the EU Council under the ordinary legislative procedure.
Grid Infrastructure in Europe
European investment in grid infrastructure has been comparatively low given the scale of the transition; for instance, Europe spent significantly less on renewable power and grids in 2025 than China (USD 117 billion vs USD 327 billion). This underinvestment has direct economic consequences. EU electricity prices remain 2–3 times higher than those in the USA and the cost of grid congestion reached EUR 5.2 billion in 2022, and could rise to EUR 26 billion by 2030.
The Package is part of the EU’s work to resolve structural issues in EU energy infrastructure planning and implementation to accelerate the delivery of energy infrastructure.
Enhanced Investment and a Proactive Energy Framework
The magnitude of investment needed is significant with an estimated EUR 1.2 trillion required for electricity grids, including EUR 730 billion for distribution grids, and EUR 240 billion for a hydrogen network by 2040.
The Package seeks to strengthen the regulatory framework to enable cross-border investment. Measures related to cost-sharing agreements aim to ensure investment certainty. The EU proposes that project promoters can bundle multiple Projects of Common Interest (“PCIs”) or Projects of Mutual Interest (“PMIs”) to facilitate cost-sharing discussions between Member States and attract investment through special purpose vehicles. The Package also provides that transmission system operators (“TSOs”) must set aside 25% of congestion rents not spent on guaranteeing availability of allocated capacity or offshore renewable energy for investment into PCIs and PMIs relevant to reducing interconnector congestion.
First introduced in 2013, the TEN-E Regulation sets the rules for identifying and fast-tracking PCIs and PMIs. To be granted PCI status, a project must support at least one priority energy corridor, demonstrate that its total benefits outweigh its costs in the long term and involve at least two Member States or have a significant cross-border impact. PMIs are collaborative projects between EU and non-EU countries that must significantly contribute to the climate and energy objectives of both the Union and the partner country. Approximately every 2 years, the Commission draws up a new list of PMIs and PCIs. EU Regional Groups are responsible for assessing project applications.
The Package aims to aims to address several shortcomings in the TEN-E Regulation, most notably that existing and planned infrastructure projects are not sufficiently targeted towards EU energy and climate targets, and delays in delivery of cross-border infrastructure projects. The Package aims to address these issues by ensuring that PCI/PMIs address identified infrastructure needs, facilitating cost-sharing to encourage investment in cross-border projects, and speed up permit-granting procedures.
Most significantly, the Commission will be granted “gap-filling” powers, allowing it to invite project proposals or launch calls to any party when identified cross-border needs are not met by existing TSOs. For developers, this means a more rigorous but predictable selection process based on cooperation that will invite TSOs, and eventually project developers, to propose projects to address unmet energy needs.
Accelerating Permitting Procedures
Slow permitting has been identified as a significant barrier to deploying energy infrastructure and generation projects. Permitting is identified as taking 5 years on average for transmission grids and up to 9 years for renewable energy projects. The TEN-E Regulation proposes the following changes to benefit PCI and PMIs:
- Projects on the PCI or PMI lists shall have “have the status of the highest national significance possible”, ensuring preferential treatment during environmental assessments, spatial planning and land expropriation;
- In the permit-granting procedure, until climate neutrality is achieved, the planning, construction and operation of electricity infrastructure are presumed to be in the overriding public interest and serving public health and safety for the purposes of the Habitats Directive, the Water Framework Directive and the Birds Directive;
- electricity infrastructure projects may be exempted from individual environmental assessments if they are already included in a National Development Plan that has undergone a Strategic Environmental Assessment, and an Appropriate Assessment for the purposes of the Habitats Directive;
- the mandatory statutory permit-granting procedure is now capped at 18 months from the acceptance of a complete application. An optional pre-application phase is limited to 24 months, and total combined extensions cannot exceed six months except in extraordinary circumstances; and
- to prevent administrative delay, projects will benefit from “tacit approval” if authorities fail to issue a decision within the prescribed deadlines. However, this does not apply to environmental decisions, or where the principle of tacit approval does not exist in the legal system of the applicable Member State.
The Package also proposes measures to speed up permitting granting procedures for energy infrastructure generally. As regards grid infrastructure, it proposes binding time limits of 2 years for decisions, and 3 years, in exceptional circumstances, tacit approval, and a presumption of ‘overriding public interest’.
Next steps
The European Grids Package is an important shift toward a unified European approach to energy infrastructure, designed to bridge the gap between climate targets and actual delivery of energy infrastructure the ground. The Package seeks to drive enhanced investment by introducing transparent cost-sharing, project bundling and dedicated congestion revenue to de-risk large-scale cross-border infrastructure. The proactive permitting framework also provides greater certainty for investors, financiers, and developers by capping statutory deadlines and introducing tacit approval, which may significantly reduce delivery delays for developers.
