Key Contacts: Niall Donnelly – Partner |
EU Energy Independence and Affordability Package
On 10 March 2026, the Commission presented a package of measures to boost investment in homegrown clean energy, increase resilience and reduce energy prices (“Package”). The risks associated with Europe and Ireland’s continuing reliance on imported fossil fuels is highlighted by the ongoing conflict in the Strait of Hormuz.
Through the Package the EU seeks to reduce Europe’s dependence on imported fossil fuels and drive down energy costs for households and businesses. The Package includes the Clean Energy Investment Strategy, the Citizens Energy Package and the Strategy for Small Modular Reactors. The Package builds upon the objectives of the European Grids Package which we previously looked at here, and the Affordable Energy Action Plan, here.
The Clean Energy Investment Strategy
The Clean Energy Investment Strategy (“Strategy”) centers around the need to mobilise private capital already available and provide further funding through mechanisms such as the European Investment Bank Group (“EIB”) to support the energy transition. The Strategy estimates that in order to achieve EU energy transition objectives, investment in the energy sector must reach EUR 660 billion annually between 2026 and 2030, rising to EUR 695 billion annually from 2031 and 2040. Lengthy permitting and grid connection processes, fragmented markets, and regulatory frameworks have been barriers to investment at the scale needed.
To ensure grid operators can finance massive infrastructure upgrades while maintaining high credit ratings, the Strategy proposes a number of measures. Firstly, the EIB will set up the Strategic Infrastructure Investment Fund, which will act as an equity platform facilitating co-investment alongside infrastructure funds to bridge equity gaps for large-scale infrastructure projects. The EIB will make an initial commitment of up to EUR 500 million, providing the necessary anchor capital to invest in specific energy infrastructure projects.
Secondly, the EIB will also work with the Commission to develop off-balance sheet financing structures that could convert future regulated revenue streams into immediate liquidity. Thirdly, the EIB supports investments by regulated utilities through the purchase of hybrid bonds, which will enable institutional capital to be mobilised while ensuring physical assets remain under public ownership.
The Commission will also explore with the EIB how to better support access to finance for grid operators via loan securitisation and intermediated lending for small operators, by incentivising commercial banks to grant loans, including by promoting securitisation of existing loan portfolios.
The International Energy Agency estimates that around 35% of the emission reductions required by 2050 will rely on technologies that are not yet available on the market. This requires derisking of innovative clean energy technologies such as Small Modular Reactors (“SMRs”) and other novel forms of renewables and carbon removal technologies (e.g. long-duration energy storage, floating wind and solar and carbon capture and storage). This will be supported primarily by the InvestEU programme through guarantees, and the Horizon Europe Programme, the Innovation Fund and the Scaleup Europe Fund, through grants. Public funding also has a role to play, and the Strategy identifies that the EIB intends to deliver up to EUR 75 billion in the next three years in support of the clean energy transition.
The Citizens Energy Package
The Citizens Energy Package aims to support consumers by allowing them to benefit from faster supplier switching, lower taxes on their electricity bills and more transparent information on energy bills and contracts.
Australia’s Solar Sharer Offer, which provides households with zero-cost electricity during times of high solar generation, is identified as an example of zero-cost electricity offer. To enable citizens to confidently benefit from flexible retail contracts and smart energy devices that optimise energy use, the EU will provide guidance to promote the remuneration of flexibility in retail contracts and improve access to the data required for flexibility with an Implementing Regulation on interoperability requirements.
The Commission also raised that energy consumers can find it difficult to navigate the energy markets. To unlock consumers the EU will develop an easily understandable code of service on consumer rights to energy suppliers.
Strategy for Small Modular Reactors
The EU has identified that the deployment of SMRs could have a key role to play in Europe meeting its energy and climate neutrality targets. SMRs are an innovative technology, designed to be smaller in size and output than traditional nuclear reactors, with a modular design that allows the components to be manufactured in a factory setting and transported to site for use.
The Strategy for Small Modular Reactors sets out 9 actions for the first deployment of European SMR projects by the early 2030s. The EU envisions SMRs being deployed alongside large-scale nuclear reactors in countries which decide to use nuclear energy. The advantages include lower construction costs and times, flexibility in adding additional modules and the related energy security, competitiveness and decarbonisation benefits. The 9 actions outlined are as follows:
Action 1: Focus on EU industry initiatives by identifying a limited number of projects to receive support from suppliers and other partners across EU countries
Action 2: Develop a competitive European supply chain in alignment with local content requirements
Action 3: Develop and implement industrial standards supporting a fleet approach to SMR deployment
Action 4: Develop de-risking schemes for the scaling up of innovative nuclear technologies
Action 5: Design Important Project of Common European Interest (“IPCEI”) on innovative nuclear technologies
Action 6: Support the development of SMRs within Net-Zero Acceleration Valleys
Action 7: Removing barriers to intra-EU flows and protecting European IP
Action 8: Establish an “SMR coalition” on policy, regulatory, licensing and economic aspects of selected SMR designs to facilitate SMR deployment by early 2030s
Action 9: Working with international like-minded partners for mutual benefit
Actions 1-3 aim to facilitate the construction of SMRs by providing support to the most promising SMR designs, promoting collaboration between suppliers and developers to strengthen the supply chain for SMR development, and develop industrial standards which support a “fleet” approach to SMR development by, inter alia, developing the concept of modular manufacturing.
Actions 4-6 aim to promote European tech leadership and competitiveness in the space by catalysing private finance, designing the Important Project of Common European Interest for innovative nuclear technologies, including SMRs, and developing ‘Net-Zero Innovation Valleys’ for SMRs under the Net-Zero Industry Act which could speed up permitting procedures and accordingly help unlock finance.
Actions 7 and 8 aim to simplify administrative procedures related to export controls between Member States for SMR technologies, and Member States should align their policies and licencing processes in this regard. Under Action 9, the EU will continue to work with non-EU governments and organisations to promote industrial cooperation and regulatory dialogue.
The EU considers that the SMR business model relies on shorter construction times and smaller initial investment amounts compared to large-scale nuclear power plants, which in turn allows a lowering of overall financing costs (per unit), making SMRs attractive to investors. A key enabler of this business model is the ability to build additional reactor modules in sequence, therefore having reactor units generating revenues prior to the completion of the full plant. The EU recognises that funding is required to achieve commercialisation of these technologies and therefore Action 4 aims to de-risk private investment in this space through suitable de-risking instruments, developed at Member State level, such as guarantees for first-of-a-kind SMR projects. Additionally the Clean Industrial State Aid Framework which streamlines State aid for manufacturing capacity in clean technologies may enable Member States to provide support for SMR technology.
The strategy also addresses Advanced Modular Reactors (“AMRs”) and highlights the need for future investment in the sector including towards nuclear fusion technologies. AMRs utilise innovative designs with alternative coolants such as liquid metal, molten salt and high-temperature gas, and can offer additional benefits such as reducing nuclear waste through the concept of closed fuel cycles, which can reuse nuclear materials via recycling.
Importantly, Ireland has long been opposed to domestic nuclear energy generation, which is embedded in energy and planning legislation. The prohibition does not extend to consumption of electricity generated from nuclear sources which is imported.
Conclusion
The Package represents a significant step in the Commission’s efforts to reduce Europe’s dependence on imported fossil fuels and drive down energy costs for households and businesses alike. By mobilising private and public investment through the Clean Energy Investment Strategy, empowering consumers through the Citizens Energy Package, and providing a strategic framework for the deployment of SMRs, the Package sets out an ambitious roadmap for Europe’s energy future.
