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European Energy Regulator Body Proposes Changes to Share Cross-Border Project Investment Costs

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The European Agency for the Cooperation of Energy Regulators has published a policy paper suggesting how the cost of cross-border grid projects can be shared out more fairly among beneficiaries, it said on Monday.

The issue of cost distribution matters in the pursuit of a more deeply inter-connected European electricity market, Acer said, because without it, some projects may fail to materialize at all if one country deems they are making all of the investment but sharing out the benefits.

The report provides options for adjustments to cost sharing, with changes to the existing framework which comprises of three pillars.

First is congestion income distribution that shares revenues from cross-border congestion, then the inter-Transmission System Operator mechanism which compensates those bearing the cost of cross-border flows and finally the cross-border cost allocation, which shares costs of new infrastructure projects across borders.

The report says that while each is important and plays a role in ensuring fairness, key gaps and overlaps remain and should be further optimized.

Its publication comes two years after a commitment by Acer members to strengthen and improve the distribution of cost burdens for infrastructure providing benefits across borders.

Suggested policy options include targeted improvements to the existing mechanisms as well as more sweeping changes to the cost-sharing framework which could include the combining of several mechanisms into a single one or the development of a new framework that uses financing from the EU budget.

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