The EU Grids Package: A Blueprint For Europe's Future Energy Infrastructure

On 10 December 2025, the European Commission published its long-awaited EU Grids Package(COM(2025) 1005) – a comprehensive set of legislative proposals, policy initiatives and strategic priorities aimed at accelerating the expansion and modernisation of Europe's energy infrastructure. The package addresses electricity grids as well as hydrogen and CO₂ networks and is intended to remove one of the most persistent bottlenecks in the European energy transition: insufficient, fragmented and slow-to-develop network infrastructure.

While the proposals are highly technical in form, their implications are fundamentally political and economic. At stake is nothing less than the ability of the EU to deliver affordable energy, integrate large volumes of renewables, secure industrial competitiveness, and reduce dependence on imported fossil fuels in an increasingly volatile geopolitical environment.

Background: Why Grids Have Become the Central Constraint

Over the past decade, EU energy policy has focused heavily on generation: renewable deployment targets, market design reforms, carbon pricing, and support schemes. Grid infrastructure, by contrast, has lagged behind. The result is a widening gap between installed (or planned) clean generation capacity and the ability of networks to transport and integrate that power.

According to the Commission, more than 500 GW of wind and solar capacity are currently waiting for grid connection across the EU. At the same time, several Member States remain far from the long-standing 15% interconnection target, limiting cross-border electricity flows and preventing the emergence of a truly integrated Energy Union.

These shortcomings have tangible consequences. Electricity prices remain highly fragmented across Europe, industrial consumers face growing uncertainty, and system congestion increasingly forces curtailment of low-cost renewables. Against this backdrop, the Grids Package is best understood as a corrective intervention: an attempt to realign infrastructure planning, permitting and financing with the realities of a decarbonised energy system.

A More European Approach to Infrastructure Planning

At the core of the package lies a proposed revision of the Trans-European Networks for Energy ("TEN‑E") Regulation (Regulation (EU) 347/2013), which governs cross-border energy infrastructure. The Commission's central concern is that the existing planning framework identifies too many projects that never materialise – while at the same time failing to deliver infrastructure where it is actually needed. For example, ENTSO-E estimates that around half of cross-border electricity needs (41 GW) remain unaddressed by 2030.

To address this, the Commission proposes a more directive and scenario-driven approach. Every four years, it would develop a central EU-wide energy scenario, based on Member State input, which would serve as the reference point for infrastructure needs assessments by ENTSO‑E (electricity) and ENNOH (hydrogen). This scenario would guide the selection of Projects of Common Interest ("PCIs") and Projects of Mutual Interest ("PMIs"), with the aim of aligning national planning decisions more closely with EU-wide system needs.

Most notably, the Commission would acquire new "gap‑filling" powers. Where cross-border infrastructure needs are identified but no suitable projects are proposed by transmission system operators ("TSOs") or developers, the Commission could actively intervene – inviting project proposals and, ultimately, launching calls open to any promoter.

The revised TEN-E also introduces new categories of eligible projects, including non-wire solutions (such as grid-enhancing technologies and digitalisation), cybersecurity and resilience upgrades for critical network elements, and CO₂ transport infrastructure.

Accelerating Permits: From Aspiration to Obligation

Permitting delays remain one of the most severe obstacles to grid deployment. According to the Commission, even projects designated as PCIs frequently take five years or more to secure permits, with renewable projects sometimes taking close to a decade.

The proposed Permitting Acceleration Directive (COM(2025) 1007) therefore introduces, for the first time, binding EU-level time limits for permitting procedures covering grid infrastructure, renewables, battery storage and EV charging stations. Where authorities fail to decide within the prescribed deadlines, projects may benefit from tacit approval ("positive silence").

The directive also strengthens the legal status of energy infrastructure by establishing a rebuttable presumption of overriding public interest, allowing key projects to prevail over competing land-use or environmental constraints – while remaining subject to EU environmental law. Further measures include mandatory one-stop-shop permitting portals, simplified procedures for repowering, and explicit facilitation of co-located battery storage.

Taken together, these provisions seek to turn political commitments to faster permitting into enforceable obligations – a move likely to prove controversial in Member States with traditionally decentralised planning regimes.

Grid Access and Market Discipline

Alongside legislative reforms, the Commission has issued non-binding guidance on grid connections (COM(2025) 8473). A central theme is the proposed shift from "first come, first served" to "first ready, first served" access regimes.

The underlying rationale is to eliminate so-called "phantom projects" that reserve grid capacity without progressing to construction. Under the new approach, connection rights would increasingly be linked to demonstrable project maturity – including permitting progress and financial readiness.

While this may improve overall system efficiency, it also shifts risk onto developers, who may need to incur higher upfront costs before securing firm grid access. In practice, this change could materially affect project development strategies, financing structures, and timelines – particularly for smaller or merchant developers.

Energy Highways: Political Prioritisation of Bottlenecks

Another important feature of the Grids Package is the identification of eight "Energy Highways" – strategic electricity, hydrogen and gas corridors deemed critical for completing the Energy Union. These include:

• Iberian Peninsula: Electricity interconnections across the Pyreneans to better integrate the Iberian Peninsula (Pyrenean crossing 1 and Pyrenean crossing 2).
• Great Sea Interconnector: Ending electricity isolation by connecting electricity between Cyprus and continental Europe.
• Harmony Link: Strengthening electricity interconnection of the Baltic States, boosting energy security and energy independence from Russia.
• TransBalkan Pipeline (TBP): reverse gas flow to increase the resilience of energy supplies in the Balkan region and eastern neighbourhood.
• Bornholm Energy Island: Transforming the Baltic Sea into an offshore interconnector hub.
• South-East Europe: Improve price stability and energy security in southeastern Europe, including through storage.
• SouthH2 Corridor: The South hydrogen corridor involving Tunisia, Italy, Austria and Germany.
• Southwest hydrogen corridor: from Portugal to Germany

These projects are not new in legal terms – most already qualify as PCIs or PMIs – but the Commission intends to elevate them politically. Enhanced coordination, fast-tracked permitting, and prioritised access to EU funding are intended to overcome longstanding national resistance and slow progress on implementation.

Here, the political dimension of the package becomes particularly visible. Several Energy Highways touch on sensitive national interests, notably in relation to electricity exports, nuclear baseload advantages, and cost allocation. The Commission's approach increases pressure on Member States to justify delays or opposition, without formally depriving them of final approval rights.

Financing and Cost Allocation

The scale of required investment is unprecedented. The Commission estimates that EUR 1.2 trillion will be needed for electricity grids by 2040 alone, including EUR 730 billion for distribution networks and EUR 240 billion for hydrogen infrastructure.

As grids are largely financed through regulated tariffs, this raises acute distributional and political questions. The Grids Package therefore places strong emphasis on fair and transparent cost-sharing for cross-border projects. Proposed measures include clearer EU-wide principles for cost-benefit allocation, voluntary bundling of PCIs and PMIs to encourage cost-sharing amongst the concerned states, and new rules on the use of congestion income – including an obligation for TSOs to reinvest part of such revenues into cross-border electricity infrastructure. The Grids Package also proposes that renewable energy projects above 10 MW capacity share part of the economic benefits with local communities to enhance public acceptance and social licence for new infrastructure, particularly in rural areas affected by large-scale projects.

Public funding is also set to increase significantly. Under the Commission's proposal for the 2028–2034 Multiannual Financial Framework, the CEF Energy budget would be quintupled from EUR 5.8 to almost EUR 30 billion. At the same time, the Commission explicitly acknowledges that public funds will not be sufficient and signals a stronger role for private capital, to be supported through the forthcoming Clean Energy Investment Strategy (expected in Q1 2026).

The package also includes guidance on the design of two-way Contracts for Difference ("CfDs") (COM(2025) 8479) which will become mandatory for new renewable and nuclear projects from 2027 (2029 for offshore hybrids) under Article 19d of the Electricity Regulation (Regulation (EU) 2019/943). CfDs are intended to provide revenue certainty for investors while preserving market responsiveness and avoiding distortions. The guidance sets out principles for smart CfD design, including:

• No remuneration during negative price periods.
• Incentives for efficient maintenance and participation in forward markets.
• Provisions to combine CfDs with PPAs, subject to safeguards against cross-subsidisation.

Properly designed CfDs can lower financing costs, reduce wholesale price volatility, and attract additional investment in clean generation.

Outlook and Next Steps

The EU Grids Package represents a decisive effort to address structural weaknesses in Europe's energy system. By tightening planning discipline, accelerating permitting, and elevating strategic projects, the Commission is seeking to translate high-level climate and security objectives into concrete infrastructure on the ground.

The Grids Package is still at the proposal stage, meaning that the legislative elements – in particular, the revision of the TEN‑E Regulation and the new Permitting Acceleration Directive – will need to undergo the full EU co-legislative process. In the next step, both the European Parliament and the Council must adopt their respective negotiation positions. These will then form the basis for trilogue discussions between the EU institutions, aimed at reaching a political agreement – a process that may take several months.

What is clear, however, is that grids have moved to the centre of EU energy policy. For developers, investors, and industrial consumers alike, the Grids Package marks a turning point in which network infrastructure is no longer a secondary concern, but a core strategic foundation for the European energy transition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.