ACER unveils trio of publications on progress and regulatory treatment of European energy projects

Today, ACER has published two reports and a recommendation related to energy infrastructure in the EU:

• Consolidated monitoring report on Projects of Common Interest (PCIs);
• Report on investment evaluation, risk assessment and regulatory incentives for energy network projects; and
• New recommendation for cross-border cost allocation (CBCA).

Why are these ACER publications relevant to Europe’s clean energy goals?

European Projects of Common Interest (PCIs) are key cross-border infrastructure projects that further link the energy systems of EU countries. Such infrastructure projects are a strategic priority for achieving Europe’s ambitious clean energy goals. Delays in such investments can hamper further market integration, security of supply and be a major obstacle to the timely rollout of renewable projects. ACER’s annual PCI monitoring reports address the status of PCIs, their implementation plans, reasons for delays and rescheduling.

The revised TEN-E Regulation also tasked ACER with reviewing investment evaluation, risk assessment and regulatory incentives for energy network projects. The 2023 ACER report examines how national regulatory authorities (NRAs) mitigate risks for project promoters and incentivise investments in innovative, efficient and sustainable energy infrastructure. It also includes a common methodology on the risk assessment of PCIs.

CBCA is about sharing the efficient investment costs of a PCI between the countries which are significantly impacted by the projects. The new ACER recommendation on CBCA defines good practices (for project promoters and for NRAs) for shared cost allocation requests.

What are the key findings?

ACER’s recent review of the progress and regulatory treatment of PCIs shows that:

• The overall cost of PCIs is EUR 81.2 billion in 2023 (10% increase compared to 2022), mainly due to the increased prices of materials, technical equipment and labour;
• Most PCIs are in an advanced stage (i.e. at least in permitting). Promoters expect 90% of electricity projects and 100% of gas projects to be operational by 2030;
• However, approximately 30% of electricity and 20% of gas PCIs experienced delays over the past year (similar to the trend observed in previous years), most frequently due to permit granting;
• Transmission system operators’ (TSOs’) risks are largely mitigated in the Member States by the default mitigation measures of the national regulatory framework; Project promoters show limited interest to apply for the additional project specific regulatory incentives offered by the relevant EU regulations; only a few times in the past decade have they requested additional incentives due to higher risks;
• In contrast, project promoters have submitted investment requests for CBCA for more than 40% of the gas and electricity transmission PCIs, with a total investment value of EUR 16.5 billion. The respective NRAs confirmed the benefits of the projects for both the hosting countries and Europe as a whole, deviating from the default allocation methods (i.e. the territorial principle for onshore projects and 50-50% allocation for offshore projects) only in a few instances.

What does ACER recommend?

To facilitate the evaluation, approval and implementation of high value European projects, ACER recommends NRAs, TSOs and project promoters to:

• Enhance scrutiny of ‘non-progressing’ priority projects by the Regional Groups;
• Improve investment evaluation, including identification of needs (also at regional level), and cost-benefit analysis of projects addressing those needs;
• Pursue consistent approaches in the assessment of project promoter’s risks across Member States;
• If existing regulatory tools fail to address investment gaps, further align the interest of TSOs and energy consumers by systematically applying benefit-based incentives, and by ensuring impartiality towards specific technological solutions;
• Ensure that project promoters submit complete and high-quality investment requests, including for clusters of interdependent projects;
• Seek an efficient, consistent, pragmatic and flexible approach for the treatment of investment requests and subsequent allocation of investment costs between benefiting countries;
• Include, directly in the CBCA decisions, mechanisms on how to treat uncertainties in the investment requests.

Access the:

• Consolidated report on the progress of electricity and gas Projects of Common Interest, its Annex I (electricity) and Annex II (gas);
• Report on investment evaluation, risk assessment and regulatory incentives for energy network projects and its Annex;
• Recommendation on good practices for the treatment of the investment requests, including cross-border cost allocation requests, for projects of common interest.