Financing Trans-European Energy Infrastructures – Past, Present, and Perspectives

The transformation of the European energy system towards a low carbon industry requires substantial investment and financing. According to the Energy Infrastructure Package (EIP), around one trillion euros must be invested in the European energy system until 2020. Out of the €200 billion required investment for transmission networks, only half of the capital will be provided by markets. This leaves a financial gap of ca. €100 bn. and poses a question on the EU role in financing European energy infrastructures.

This policy paper by Christian Von Hirschhausen focuses on the future financing of trans-European energy infrastructures. After providing an overview of the long-term infrastructure needs and of the various instruments that currently exist to finance these infrastructures, the author discusses various aspects related with the planning and financing of cross border energy infrastructures with the help of a case study: the North Sea Grid Project. On the basis of the North Sea example, he highlights the importance of adopting a regulatory approach balancing European and Member States’ interests as well as of streamlining and expanding the EU financial support to sustainable energy infrastructures.