EUROPEAN COMMISSION 
Brussels, 19.10.2011 
SEC(2011) 1234 final 
  
COMMISSION STAFF WORKING PAPER 
Executive Summary of Impact Assessment 
Accompanying the document 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
 
on guidelines for the implementation of European energy infrastructure priorities 
repealing Decision No 1364/2006/EC 
 
{COM(2011) 658 final} 
{SEC(2011) 1233 final}  
 
 11) Problem definition 
The Commission Communication on energy infrastructure priorities for 2020 and beyond1 
confirmed the need to revise the TEN-E polic y and financing framework, identified priority 
corridors and areas to be implemented by 20 20 and proposed a new method to identify 
projects of common interest (PCIs) to impl ement these priorities. The supporting impact 
assessment highlighted the scale change in investment vol umes and delivery times with 
investments worth about EUR 140 bn in electricity networ ks of European significance, about 
EUR 70 bn in gas networks, as well as EUR 2.5 bn for CO2 transport infrastructure to be 
delivered by 2020. It also identified obs tacles with regard to permit granting. 
The problem analysis is further refined by this complementary impact assessment 
accompanying the legislative proposal on energy infrastructures. 
Problems with permit granting procedures and public opposition 
They are amongst the major reasons impeding the timely implementation of energy 
infrastructure projects, in particul ar of electricity overhead lines. Administrative procedures 
are complex and inefficient , notably with regard to the or ganisation of procedures and the 
competences of involved parties, remain fragme nted and lack clear time limits and upfront 
planning and coordination of the implemen tation of EU environmental legislation2. The 
opposition of affected population  relates to the uncla rity about the added value of a project, 
real or perceived impacts on the environment a nd landscape, health and safety concerns, late 
and insufficient involvement of  the public and stakeholders. 
Problems related to the regulatory framework  
The existing framework is not geared towards delivering the identified European 
infrastructure priorities. Tariff setting and regulatory incentives remains nationally focussed on short-term cost efficiency without taking into account the correspond ing long-term Europe 
2020 investment challenge. Key decisions on cross- border projects are taken on the basis of 
national priorities only. This is in partic ular a problem, where be nefits and costs are 
asymmetric among the Member States with cross-border investment approvals resulting in complex or delayed processes. 
Problems related to financing 
In view of the scale change in investment volumes and the urgency to deliver the energy 
infrastructure priorities until 2020 network operators are to face significant financing 
challenges. The financial crisis puts constr aints on companies to raise debt capital at 
favourable terms, while country risks go up an d credit ratings down. Current regulation or 
ownership structures make it difficult for TS Os to effectively attract new institutional 
investors. At the EU level, the existing TEN-E programme with its limited focus on grants for 
feasibility studies and lack of adequate risk m itigation instruments is not suitable to facilitate 
access of to debt/equity finance and to levera ge public and private investment in energy 
networks for the future. 
 
2) Analysis of subsidiari ty and EU added value 
The EU's competence in the area of energy is enshrined in the Treaty on the Functioning of 
the European Union (TFEU), in particular in  the energy Article 194. Energy networks are 
covered under Article 170 a nd 171 TFEU. Concerning permit gr anting, Article 171-2 TFEU 
                                                
 
1  COM/2010/0677 
2  Directives 2001/42/EC, 85/337/EEC,  92/43/EEC, 2009/147/EC, 2000/60/EC 
 
 2stipulates that "Member States shall, in liaison with the Commission, coordinate among 
themselves the policies pursued  at national level which may have a significan t impact on the 
achievement of the objectives referred to in Article 170".  Moreover, Article 194-2 TFEU 
allows the EU to establish the measures nece ssary to promote the in terconnection of energy 
networks. 
 
3) Objectives of EU initiative 
The general objective of this initiative is to ensure sufficient and timely development of 
energy infrastructures across the EU and in its neighbourhood in order to meet the EU's 
energy policy objectives of market integration,  security of supply and sustainability. The 
initiative aims specifically at implementing, by 2020, the trans-European en ergy infrastructure 
priority corridors by: 
− streamlining permit granting procedures to signi ficantly reduce their duration for projects 
of common interest and increase public  involvement and acceptance for the 
implementation of such projects; 
− facilitating the regulatory treatment of project s of common interest in  electricity and gas 
by allocating costs depending on the benefits pr ovided and ensuring allowed returns are in 
line with risks incurred; 
− providing eligibility rules for Un ion financial aid in the form of market-based and direct 
EU financial support to proj ects of common interest. 
This initiative is to replace the existing TEN-E  guidelines and compleme nts the proposal for a 
Regulation establishing the “C onnecting Europe Facility” (CEF ) covering all infrastructure 
sectors (energy, transport, te lecommunications) and setting co mmon rules for granting Union 
aid in form of both grants and new financial instruments. 
 
4) Policy options 
The following policy options are discussed for the three policy areas covering the problems 
identified: 
 
Policy area A: Permit granting, stakeh older involvement and compensation 
Option A.0 Business as usual 
Option A.1 Establishment of a regime of Common European Interest 
Option A.2 Organisation and limitation in  time of the permit granting process  
 Element A.2.1: Organisation of  the permit granting process 
 Suboption 
A.2.1.a Leading Authority without decision-making power at national level 
(“light one-stop shop”) 
 A.2.1.b Leading Authority with decision-making power (“full one-stop 
shop”) 
 A.2.1.c Cross-border Leading Authority with European Authority of Last 
Resort and European permit granting procedure 
 Element A.2.2: Limitation in time of the permit granting process  
 A.2.2.a Requirement for Member States  to establish time  limits for each 
individual PCI 
 A.2.2.b Legally-binding time limits established by stakeholders in the 
framework of regional cooperation 
 A.2.2.c Legally-binding time limit established by the EU legislative act 
 
 3Option A.3 Establishment of a regime of Common European Interest and organisation and 
limitation in time of the permit granting process 
Policy area B: Regulation  
Option B.0 Business as usual 
Option B.1 Cost allocation 
 B.1.a EU transmission tariff 
 B.1.b Ex-ante cost allocation 
 B.1.c Ex-ante cost allocation with ex-post adjustment 
Option B.2 Investment incentives 
 B.2.a Risk-related incentives for PCIs 
 B.2.b Penalty and enforcement action for PCIs 
Option B.3 Ex-ante cost allocation and risk-related incentives for PCIs 
Policy area C: Financing  
Option C.0 Business as usual 
Option C.1 Risk sharing instruments 
Option C.2 Risk capital instruments  
Option C.3 Grant support for project construction 
Option C.4 Combination of grants, risk sharing and risk capital instruments  
Following a preliminary analysis, the subop tions A.2.1.a, A.2.1.c, A.2.2.a, A.2.2.b and B.1.a 
were discarded as the related measures were c onsidered to be ineffect ive or disproportionate 
compared to their impact. 
 
5) Assessment of impacts 
Under business as usual (BAU)  persistent delays of new infr astructure projects, notably in 
electricity, will persist due to the financing, regulatory and permit granting problems. European priorities would not be  addressed sufficiently by the market operators and Member 
States. The Commission estimates that a significant share of the needed investment of 
approximately EUR 200 bn until 2020 will not be delivered  on time under the existing 
framework, jeopardizing the EU's ability to meet its energy and climate policy objectives by 2020. Lack of interconnections will reduce opport unities for system optimisation, increase the 
risk of disruption and trigger additional costly  back-up and balancing generation investments. 
Assuming their mere continuation,  TEN-E and other EU funds would not be able to make a 
significant impact on the investment challenge. 
 
5.1. Permit granting
 
OPTION A.1: Establishment of a reg ime of common European interest 
This option is expected to have intermediate  positive effects by contributing to the timely 
delivery of more projects than under BAU. Citizens would be potentially affected in the 
limited opportunity to question the necessity of a project in the permit granting procedures. 
The impacts on the environment are not expected  to increase greatly under the new regime 
vis-à-vis the current one, given the assumpti on of earlier completion of projects. With 
successful project delivery st rong positive effect s on climate objectives are expected. 
Investors' certainty will be increased and pos itively contribute to the projects' viability. 
Regarding administrative costs,  the reduction of resources n eeded for processing a given 
 
 4number of projects is estimated at about  3% on the promoters' side, and 12% on the 
authorities' side. 
OPTION A.2: Rules on the organisation an d duration of the perm it granting process 
(suboptions A.2.1b "full one-stop shop " and A.2.2.c "time limit of 4 years") 
The impact of this option is expected to be strong and positive, allowing a large majority of 
projects to be delive red on time. The number of projects realised on time would be higher 
than with option A.1, but not all PCIs would ge t the priority. The option would significantly 
improve conditions for citizens to participate in the decision-making process as the Leading Authority and/or promoters woul d need to ensure early cons ultation. Complian ce costs would 
be higher than under option A.1. Positive impacts on administrative costs are also expected to be more significant under this policy option, with 26% of administ rative cost savings. 
OPTION A.3 Establishment of a regime of common European interest and rules on the 
organisation and duration of the permit granting process 
The overall impact of this policy option, which combines the impacts of options A.1 and A.2, 
is considered to be the most positive of all op tions, as it would lead to the on-time completion 
of almost all the needed projects by 2020, provi ded appropriate measures on regulation and 
financing are in place. Environmental impact s, social impacts on employment and economic 
impacts on GDP are expected to be stronger unde r this policy option as all projects would be 
completed, while administrative cost savings would amount to 31%. 
Resulting from this analysis, policy option A.3 is the preferred option. 
 4.2. Regulatory measures
 
OPTION B.1: Cost allocation 
Ex ante cost allocation  would enable certain in vestments, for which no viable cost sharing 
would be possible under the BAU with dist ributional and social impacts on market 
participants and final consumers. Limited administrative impacts are expected with the requirement for NRAs to cooperate with othe rs and TSOs from different Member States. 
The impacts of ex ante cost allocation with  ex post adjustment possibility  would only differ 
in the final economic and distributional impact s. While it would render more precise the 
allocation, it would create a downside revenue risk for TSOs and external investors. The 
implementation could trigger additional administ rative costs, as TSOs and NRAs could have 
to re-evaluate benefits and renegotiate cost allocation.  
As a result, suboption B.1.b is the preferred suboption. 
OPTION B.2: Investment incentives 
Incentives for PCIs with higher risks  would create a positive economic impact for 
infrastructure delivery by recognising the ch allenges posed by certain investments. The 
financial impact of such an adder on network tariffs would remain very limited, given the low expected volume of eligible investments, th e limited administrative impact and the overall 
low share of transmission costs in the final energy prices.  
Penalties and enforcement action for PCIs  by forcing TSOs to deliver agreed priority 
projects could potentially increase social welfar e at EU level. Such measures would require 
conferring new powers to NRAs. The measures  could also trigger strong opposition from 
TSOs, as the economic impact could be negative , either because of reduced revenues through 
 
 5the penalties in case of non delivery, or because  of additional uncovered risks taken up in case 
of project delivery. The added value of such a compulsory scheme compared to an incentive-
based scheme seems therefore limited.  
As a result, suboption B.2.a is  the preferred suboption. 
OPTION B.3: Ex-ante cost allocation  and risk-related incentives for PCIs 
This option would be the preferred option , as it would combine the positive impacts of 
both preferred suboptions and allow c overing the largest number of PCIs. 
 
4.2. Financing  
OPTION C.1: Risk sharing instruments 
Introduction of risk sharing instruments would improve access to capi tal and new financing 
sources and risk capital (e.g. bonds or guarantees) at more adapted terms, improving the 
commercial viability of projects towards a pos itive investment decision. Such support would 
come at a lower expense to the public budget than direct grants with a high multiplying effect 
(up to 25). This option requires cooperation w ith financial institutions which lowers the 
administrative burden of the Commission.  
OPTION C.2: Risk capital instruments 
Provision of equity would result in a very positive impact on the financial capability and 
attraction of new investors. By assisting projects in their earl y phase, the pipeline of mature 
projects would be accelerated, es pecially if they are more complex, innovative and involve a 
multitude of stakeholders. A high leverage of  the EU budget could be expected with a 
multiplying factor between 1 and 10. If invest ments are outsourced to a financial institution, 
this will create substantial resource needs within these financial institutions. 
OPTION C.3: Grant support to project construction 
Grants would provide large positive economic and social impacts, suppor ting the delivery of 
PCIs which would not be developed by market fo rces or regulation alone, while mitigating the 
impact on network tariffs. Grant intervention woul d target those PCIs which are particularly 
vital for the achievement of th e 2020 energy and climate polic y objectives and the internal 
market and security of supply of the Union. The administrative impact  will be directly 
correlated with the number of projects a nd the EU budget available to support them. 
OPTION C.4: Combination of grants, risk  sharing and risk capital instruments 
As this option combines options C.1, C.2 and C.3, it would cumulate the positive impacts of 
the individual options. But provi ding a toolbox of market-based  instruments (C.1 and C.2) 
and direct financial support (C.3) will also lead to synergies and efficiency gains, as it will be 
possible to flexibly provide the most cost-effective solution for specific project risks. 
As a result, option C.4 is the preferred one.  It reflects the proposal s concerning the future 
EU budget as made by the European Comm ission on 29 June 2011 and fully reflects the 
proposed Connecting Europe Facility. 
 
6) Comparison of options and final conc lusions of the impact assessment 
As a result of the analysis, the impact assessment presents a set of preferred options : 1) 
establishment of a regime of common European  interest, full one-stop shop and time limit of 
 
 64 years for projects of common interest; 2) ex  ante cross-border cost allocation and risk-
specific incentives for PCIs; and 3) a combina tion of grants, risk sh aring and risk capital 
instruments. None of them alone is capable of delivering the necessary investments which 
calls for the coordination of polic y action for the preferred options. 
Overall, the negative impacts on the environmen t, individual citizens and tariffs will be 
largely outweighed by the benefits expected from the completion of the trans-European 
networks. This will allow the EU to achieve the energy and climate targets agreed at EU level, 
notably the 20% renewables share and th e 20% GHG emission reduction by 2020. Adequate 
infrastructure will also facilitate  the full integration of the intern al energy market in electricity 
and gas, thereby creating ne w opportunities for system opt imisation and efficiency, 
competition and choice for the final consumer a nd hence exerting an overall lowering effect 
on energy prices. The set of measures will al so make our energy supplies more secure, by 
providing diversification of s ources, routes and counterpart s and by increasing system 
stability, but also by improving the security and climate resilience of our networks.  
All this will contribute to the significant positive overall effect on GDP and employment 
already identified in the 2010 impact asse ssment (+0.42% of growth and 410,000 additional 
jobs compared to the baseline scenario over the period 2011-2020).  
The table below summarises the imp acts of all options and suboptions. 
Options Economic and social 
impacts Environmental 
impacts Other impacts 
A.1 + = Legal feasibility: - 
A.2 ++ + Legal feasibility: - 
A.3 +++ ++ Legal feasibility: - 
B.1 ++ + Administrative: - 
B.2 ++ + Tariff impact: - 
B.3 +++ ++ Administrative and tariff impact: - 
C.1 +++ +  
C.2 ++ + Administrative: - 
C.3 +++ ++ Administrative: - 
C.4 +++ ++ Administrative: - 
Tariff: + 
A.3 & B.3 & C.4 +++ +++ Legal, administrative: - 
Tariff: + 
Summary of impacts  (= equivalent to baseline; + to +++ impr ovement compared to baseline; - to - - - 
worsening compared to baseline)