Energy: Commission releases €750 million for infrastructure projects

Brussels, 12 May 2014

Energy: Commission releases €750 million for infrastructure projects

The first call for proposals under the Connecting Europe Facility (CEF) to help finance key trans-European energy infrastructure projects is open. A total of €750 million will be made available for first priority projects mainly in the gas and electricity sectors. These projects will address security of supply issues and help bring an end to the energy isolation of some Member States. They will also contribute to the completion of the EU-wide internal energy market and to the integration of renewables to the energy grid. The EU funding will accelerate investment in missing cross-border links by leveraging the necessary private and public funding.

European Energy Commissioner Günther Oettinger i said: "This is a crucial step. Such a huge amount of EU financial support will make a solid difference. The current Ukraine crisis underlines the importance of upgrading energy infrastructure and building missing interconnections between Member States in order to enhance the energy security in the EU. In general Member States can only help each other with energy supplies, if they are well connected. Moreover, improving the energy infrastructure is a prerequisite for completing the internal energy market for the benefit of consumers and businesses in the EU."

Under the Connecting Europe Facility a total of €5.85 billion has been allocated to trans-European energy infrastructure for the period of 2014-2020.

In order to apply for a grant, a project has to be included in the list of 'projects of common interest'. The first list was adopted by the European Commission in October 2013. It consists of some 250 key energy infrastructure projects which, when completed, would each ensure significant benefits for at least two Member States; enhance security of supply, contribute to market integration and further competition as well as reduce CO 2 emissions.

The grant money will be available to finance studies and construction works. Whereas oil infrastructure projects are excluded from any form of financial assistance, grants for studies are available to all other projects of common interest. This is also the case for grants for construction works (except hydro-pumped storage projects). However, to be eligible for grants for construction works a project has to fulfil strict criteria: its cost-benefit analysis (CBA) has to show significant benefits for security of supply, solidarity, or technological innovation. The project must have received a cross-border cost allocation decision issued by the competent national regulatory authorities or - in case they disagree - by the Agency for the Cooperation of Energy Regulators (ACER). According to its business plan the project has to be commercially not viable and therefore reliant on EU funding to go ahead.

In general, the amount of EU support cannot exceed 50 per cent of the eligible costs. In exceptional cases, when a project will contribute significantly to the security of supply or boost energy solidarity between Member States, the EU support can amount to 75 per cent of the costs.

The application deadline for proposals is 19 August 2014. The final decision on which projects will get the CEF funding from the Commission will be taken by November 2014.

Background

The legislative basis for this call for proposals is the Connecting Europe Facility Regulation which is in force since December 2013 and the rules on how this financial aid is granted are laid down in the Regulation on guidelines for trans-European energy infrastructure which entered into force in May 2013. From an overall budget of €33.2 billion covering three sectors - transport, energy, telecommunications - energy accounts for €5.85 billion in the period of 2014-2020. The bulk of these funds are available for grants whereas a maximum of 10% is set aside for financial instruments.

In a properly functioning internal market investments should be driven by the market itself. Sometimes the bulk of an investment needs to be made by companies in one Member State while there are benefits across the border in another Member State. In this case a decision on sharing the costs needs to be taken by the competent regulatory authorities. This cross-border cost allocation is, together with an adequate cost-benefit analysis of the project, one of the key documents project promoters have to present when applying for grants for works.

In addition to this call for proposals for grants the Commission will, after a thorough assessment later this year, identify the conditions under which money will be made available to help set up innovative financial instruments like project bonds for infrastructure projects. This will be done in cooperation with the European Investment Bank.

More information

Detailed information on the call for proposals:

http://inea.ec.europa.eu/en/cef/cef_energy/apply_for_funding/cef_energy_call_for_proposals_2014.htm

Full list of projects of common interest by country:

http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_projects_country.pdf

Memo on projects of common interest MEMO/13/880

Contacts :

Sabine Berger (+32 2 29 92792)

Nicole Bockstaller (+32 2 295 25 89)

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