Financing energy system integration in Europe : the state of play and future prospects.
Date: 2021-11-12
Institutions: European University Institute
Subjects: EU energy policy, energy grid, energy market, financing, project of common interest

Financing energy system 
integration in Europe: The state 
of play and future prospects

Highlights

•  Energy system integration (ESI) is the process of coordinating the 
planning and operation of the energy system as a whole, address-
ing different sectors, their markets and infrastructure as intercon-
nected	and	complementary	pillars.	

• 

In  a  transition  to  a  decarbonised  and  decentralised  energy  mix 
characterised  by  predominantly  variable  renewable  energy 
sources,	ESI	is	key	to	minimising	cost	and	maximising	efficiency.	

•  The  European  Union  (EU)  has  indicated  its  strong  support  for 
ESI	 through	 the	 European	 Energy	 System	 Integration	 Strategy.	
However, since its publication in July 2020 there has been no an-
nouncement  of  a  dedicated  ESI  fund  or  any  concrete  plans  to 
finance	it.

•  To	date,	current	non-specific	financing	mechanisms	have	provided	
relatively	 little	 support	 for	 ESI	 in	 the	 EU.	 A	 new	 approach	 is	
required	to	leverage	the	benefits	of	ESI	and	align	it	with	the	level	
of	support	in	other	areas	of	the	energy	transition.	

•  A dedicated ESI fund should be created at the EU level utilising an 
approach similar to that of the Connecting Europe Facility (CEF) 
and	Projects	of	Common	Interest	(PCIs).	

Authors
Ilaria Conti, Head of Gas, European University Institute
James Kneebone, Research Associate, European University Institute
Lorenzo Pirelli, EU fellow, European University Institute and Senior Auditor, the European Court of 
Auditors1
Golnoush Soroush, Research Associate, European University Institute

Issue 2021/43
September 2021

1	

	The	views	expressed	here	do	not	represent	the	official	view	of	the	European	Court	of	Auditors.

POLICY BRIEFIntroduction

The process of energy system integration (ESI) 
is one of coordinated planning and operation of 
the  energy  system  as  a  whole  linking  different 
sectors,	markets	and	infrastructure.	The	concept	
has recently emerged as a paradigm shift in how 
we look at the energy sector, which has tradition-
ally followed the value chains of single commod-
ities	(electricity,	oil,	gas,	coal	etc.).	The	change	
in  approach  is  necessitated  by  technological 
evolution 
fossil-fuel  dominated  highly 
centralised  production  to  more  decentralised 
renewable  sources  with  interdependencies  and 
variable	operating	conditions.	

from 

ESI is a key component of the energy transition 
as	it	can	reduce	the	time	and	financial	investment	
required  to  achieve  decarbonisation  compared 
to	 separately	 planning	 for	 each	 sub-sector.1 As 
the  EU’s  Energy  System  Integration  Strategy 
acknowledges,2  ESI  will  be  needed  to  achieve 
deep decarbonisation of the European economy 
in line with the bloc’s climate ambitions and ob-
ligations.3

Nevertheless,	 despite	 the	 financial	 advantages	
and  the  political  mandate  there  remains  little 
dedicated  support  for  relevant  technologies 
and  infrastructure  at  the  EU  level  compared 
to  other  aspects  of  the  energy  transition  such 
as	 renewable	 energy	 production.4  This  policy 
brief  highlights  the  gap  between  ESI  political 
ambitions  at  the  EU  level  and  the  allocation  of 
dedicated	funds	to	support	these	ambitions.	The	
analysis	 covers	 existing	 financing	 sources	 and	
then proposes an alternative approach to better 
support ESI building on established and proven 
structures	in	other	areas.	

1.The current approach to ESI in 
the EU

1.1 EU Energy Sector Integration 
Strategy

The EU strategy for ESI builds on 6 action lines:

1.	 Applying	the	‘energy	efficiency	first’	prin-

ciple.5

2.	 Accelerating	the	electrification	of	energy	

demand.

3.	 Promoting  renewable 

including 
decarbonised hydrogen (H2), for hard-to-
abate	sectors.

fuels, 

4.	 Making	energy	markets	fit	for	decarboni-
sation	through	alignment	of	taxation.	

5.	 Planning	 and	 financing	 more	 integrated	

energy	infrastructure.

6.	 Promoting  the  digitalisation  and  interop-

erability	of	the	energy	system.

The	 ESI	 strategy	 is	 a	 first	 step	 towards	 estab-
lishing	 a	 framework	 to	 support	 sector	 coupling.	
However,	 it	 arguably	 lacks	 the	 requisite	 defini-
tion	 and	 quantification	 of	 financing	 needs	 and	
sources	to	implement	its	ambitions.	As	a	result,	
the majority of network innovation projects involve 
‘ESI-enabling’ technologies such as storage and 
smart	grids	rather	than	ESI-specific	technologies	
like	 power-to-X	 (P2X)	 and	 X-to-power	 (X2P).6 
Figure  1  provides  an  ESI  perspective  on  some 
of  the  main  energy  transformation  processes 
leading	to	the	supply	of	final	energy	demand,	il-
lustrating	how	P2X	and	X2P	work	in	practice.

1 

2	
3 

4	

5	

6 

 Van Nuffel, “Sector coupling: how can it be enhanced in the EU to foster grid stability and decarbonize?” Study requested by the ITRE 
committee of the European Parliament, 2018; Cambini, Congiu, Jamasb, Llorca and Soroush, “Energy System Integration: Implica-
tions	for	public	policy,”	Energy	Policy	143	(2020)	111609.
	European	Commission,	“Powering	a	climate-neutral	economy:	An	EU	Strategy	for	Energy	System	Integration,”	COM	(2020)	299	final.
 https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement , https://sdgs.un.org/2030agenda , https://ec.euro-
pa.eu/clima/policies/eu-climate-action/law_en
	Bauman	et	al.,	“Economic	potential	of	power-to-gas	energy	storages,”	10th International Conference on the European Energy 
Market,	2013;	Budny	et	al.,	“Economic	feasibility	of	pipe	storage	and	underground	reservoir	storage	options	for	power-to-gas	load	
balancing,” 2015; Lambert, “Power-to-Gas: Linking Electricity and Gas in a Decarbonising World?” Oxford Energy Insight 39 (2018); 
Cambini,	Congiu	and	Soroush,	“Regulation,	Innovation	and	Systems	Integration:	Evidence	from	the	EU,”	Energies,	2020,	13.
	According	to	Regulation	(EU)	2018/1999,	the	energy	efficiency	first	principle	means	“…to	consider,	before	tak-
ing	energy	planning,	policy	and	investment	decisions,	whether	cost-efficient,	technically,	economically	and	envi-
ronmentally	sound	alternative	energy	efficiency	measures	could	replace	in	whole	or	in	part	the	envisaged	plan-
ning,	policy	and	investment	measures,	whilst	still	achieving	the	objectives	of	the	respective	decisions.”
 Cambini, Congiu and Soroush, “Regulation, Innovation and Systems Integration: Evidence from the EU,” Energies, 2020, 13; Van 
Nuffel, “Sector coupling: how can it be enhanced in the EU to foster grid stability and decarbonise,” Study requested by the ITRE 
Committee	of	the	European	Parliament,	2018.

2  

  Robert Schuman Centre | September 2021

Figure 1: Schematic overview of direct electrification versus P2X and X2P (Genoese, 2020).

1.2 Existing funding mechanisms

Horizon 2020 is one of the EU’s key innovation 
funds.	 In	 this	 initiative,	 the	 European	 Commis-
sion granted €152 million across 24 projects in 
the  ‘A  single,  smart  European  electricity  grid’ 
category.7	 These	 projects	 deal	 specifically	 with	
ESI and aim to develop and demonstrate inno-
vative technologies to increase the share of re-
newables	and	their	overall	operating	efficiency	in	
the	wider	 network.	 More	 broadly,	 Horizon	 2020	
has	 contributed	 €2.8	 billion	 of	 funding	 across	
399 projects dealing in some way with ESI8 and 
€9 billion across 2152 projects dealing indirectly 
with	ESI	(see	Figure	2	below).

Although  Horizon  2020  has  provided  projects 
with  a  loose  focus  on  ESI  with  considerable 
funding,	 there	 is	 relatively	 little	 financing	 of	
ESI-specific	technologies.9 This is emblematic of 
a	wider	trend	in	investment	patterns	in	this	area.	

The  Connecting  Europe  Facility  for  Energy 
(CEF-E)  aims  to  accelerate  investment  in  the 
field	 of	 trans-European	 networks	 for	 energy	
(TEN-E).	This	 initiative	 groups	 projects	 by	 their	
energy	sector	(gas,	electricity,	smart	grids	etc.),	
reflecting	traditional	vertical	energy	value	chains	
rather  than  the  integrated  energy  system  we 
are	moving	towards.	Only	one	CEF-E	project	is	
specifically	related	to	energy	system	integration:	

TSO	 2020.10  This  project  received  €7  million 
of	 the	 roughly	 €5.35	 billion	 funding	 allocated	
to	 projects	 by	 the	 initiative.	The	 revised	TEN-E	
regulation11	 extends	 the	 definition	 of	 energy	 in-
frastructure to include energy system integration 
projects	within	the	scope	of	TEN-E	and	CEF-E.	
However,  the  revision  of  the  TEN-E  and  the 
revised  project  list  might  only  materialise  after 
2023.	

Like  CEF-E,  the  European  Structural  and  In-
vestment Funds group projects by their energy 
sector	(gas,	electricity,	renewables	etc.)	following	
the	traditional	silos	logic.	The	budget	allocated	for	
energy  infrastructure  projects  in  electricity  and 
gas	 networks	 is	 around	 €2.3	 billion.	 However,	
the  system  for  categorising  spending  does  not 
allow	ESI-related	investments	to	be	captured.	

The  European  Local  ENergy  Assistance 
(ELENA)  service  takes  an  approach  different 
to	 the	 previous	 mechanisms.	 ELENA	 provides	
grants and loans to support the ambitions of the 
Renovation  Wave  strategy,  including  through 
the  use  of  combined  heat  and  power  (CHP) 
infrastructure,	 such	 as	 €2.7	 million	 in	 direct	
financing	 to	 two	 district	 heating	 projects	 in	 the	
Netherlands.12	However,	beyond	direct	financing	
to	
ELENA	 also	 offers	 financial	 guarantees	
protect	against	investor	risk,	as	well	as	financial	
advisory	 services.	 These	 other	 mechanisms	

7 
8	

 https://cordis.europa.eu/programme/id/H2020_LCE-02-2016 and https://cordis.europa.eu/programme/id/H2020_LCE-01-2016-2017
	These	figures	represent	the	numbers	of	projects	exactly	mentioning	the	phrase	‘energy	system	integration’	as	revealed	by	a	text	
mining	analysis	of	their	project	descriptions.
	For	details	of	Horizon	2020	projects,	see	Annex	I.	

9	
10	 	For	details	of	TSO	2020,	see	Annex	II.
11   https://ec.europa.eu/commission/presscorner/detail/en/IP_20_2394
12	 	For	more	details	on	these	projects,	see	Annex	III.

3  

  Financing energy system integration in Europe: The state of play and future prospects

Figure 2: Breakdown of Horizon 2020 funding for ESI projects (Authors, 2021)

have	facilitated	the	mobilisation	of	€6.6	billion	in	
private	 sector	 energy	 efficiency	 and	 renewable	
energy	investments	since	2009.13

In addition to EU funding, several countries have 
committed	to	finance	ESI	projects	with	national	
budgets.	 Such	 cases	 will	 not	 be	 discussed	
here	as	they	fall	outside	the	focus	of	this	paper.	
Moreover,  many  of  these  projects  typically 
have	a	hydrogen	focus,	i.e.	they	aim	to	develop	
hydrogen  capacity  or  infrastructure  and  are 
therefore included in the national hydrogen strat-
egies.14 

1.3. The prospects for ESI financing at 
the EU level

At the time of publication, the European Commis-
sion does not yet have a plan for an EU budget 
contribution	to	energy	system	integration.

Outside  a  dedicated  budget,  the  European 
Commission  is  looking  to  support  ESI  in  the 
field	 of	 hydrogen	 through	 the	 European  Clean 
Hydrogen  Alliance  (ECHA).15  The  aim  of  the 
ECHA is to establish a pipeline of projects by the 
end of 2021 that can accelerate the growth of a 
decarbonised	 hydrogen	 economy	 in	 Europe.	 It	
serves as a platform for industry, public authori-
ties and civil society to work together to establish 
a  clear  vision  of  what  the  growth  of  the  sector 
should look like, with a view to mapping out the 
next	10	years	of	development.	

Although  there  is  no  public  investment  budget 
allocated  to  the  ECHA,  the  European  Com-
mission  offers  its  support  in  guiding  projects 

financing	 mechanisms16 
towards	 existing	
through a Hydrogen Public Funding Compass,17 
which  encourages  projects  to  work  together 
to	 find	 synergies	 through	 facilitating	 dialogue	
and	 offering	 visibility	 to	 private	 investors.	 The	
European  Commission  foresees  up  to  €490 
billion  total  investment  in  the  renewable  and 
low-carbon  hydrogen  space  by  2050  and  is 
using the ECHA to help guide the investment in 
line	 with	 the	 aims	 of	 the	 Hydrogen	 Strategy.18 
This  includes  electrolyser  capacity  targets  of 
6GW by 2024 and 40GW by 2030 and total de-
carbonised  hydrogen  production  of  10  million 
tonnes	by	2030.19	The	final	list	of	projects	eligible	
for inclusion under the ECHA is expected by the 
end	of	2021.

The  existing  funding  options  described  above 
demonstrate two key weaknesses in the current 
approach	to	financing	energy	system	integration	
in	the	EU.	First,	although	there	are	several	well-re-
sourced initiatives that in some way address the 
subject  of  ESI,  they  have  been  broadly  unsuc-
cessful in delivering support for this area relative 
to  the  level  of  political  ambition  outlined  in  the 
EU	ESI	strategy.	This	is	evidenced	by	the	small	
number	of	projects	that	have	received	financing	
from these funds, in the context of their overall 
budgets and contributions to other areas of the 

16   Examples include: Important Projects of Common European 
Interest (IPCEI), Next Generation EU (NGEU), National Ener-
gy and Climate Plans (NECPs), the Recovery and Resilience 
Facility, European Regional Development and Just Transition 
funds,  CEF-E,  the  Connecting  Europe  Facility  for  Transport 
(CEF-T) and the EU Emission Trading System (ETS) Innova-
tion	Fund.

17    https://ec.europa.eu/growth/industry/hydrogen/funding-guide/

13   https://www.eib.org/en/products/advising/elena/index.htm 
14   See Hydrogen-Insights-2021.pdf	(hydrogencouncil.com) 
15  h ttps ://ec.e uropa.eu/growth/indu stry/po licy/eu rop e -

index_en 

18	 	For	more	information	on	the	ECHA,	see	Annex	IV.
19  https://ec.europa.eu/commission/presscorner/detail/en/qan-

an-clean-hydrogen-alliance_en 

da_20_1257 

4  

  Robert Schuman Centre | September 2021

framework	 is	 better	 defined	 to	 create	 the	 right	
incentives for private investment, we can expect 
public funding to decline and be gradually phased 
out	in	favour	of	repayable	grants	or	guarantees.

2.2. Member States and national 
regulators should participate in the 
evaluation of projects 

Just like the current process for PCIs, Member 
States  should  be  the  main  contact  point  for 
project  promoters,  while  energy  regulators 
should	evaluate	the	feasibility,	cost	and	benefits	
of	 the	 proposed	 projects.	 We	 believe	 this	 first	
‘check’  at  the  national  level  would  help  the  EU 
Commission  with  its  evaluation  and  could  fa-
cilitate  synergies  between  mutual  public  and 
private  interests  leading  to  the  formation  of 
mixed	consortia.	

Project  monitoring  could  be  performed  by  the 
European Commission via its European Climate, 
Infrastructure  and  Environment  Executive 
Agency  (CINEA),22  which  already  deals  with 
several	of	the	ESI-related	financing	instruments	
mentioned	in	the	first	part	of	this	paper.

energy	 transition.	 Second,	 the	 scope	 of	 some	
key	financing	mechanisms,	such	as	the	CEF-E,	
follows	 the	 value	 chains	 of	 specific	 commodi-
ties	 (i.e.	 gas,	 electricity,	 oil	 etc.).	 This	 outdated	
approach fails to account for the increasingly in-
tegrated  nature  of  our  energy  systems  and  the 
need to support projects that work towards this 
model.

An	 overarching	 financing	 strategy	 is	 required	
for  ESI  which  would  limit  the  risk  of  fragment-
ed and incompatible infrastructure development 
and provide a better overview of the ESI ‘gaps,’ 
or	missing	links,	which	warrant	stronger	support.	
We  therefore  propose  two  overarching  policy 
recommendations	 to	 improve	 the	 ESI	 financing	
process in a more structured, tailored and trans-
parent	manner	better	reflecting	the	needs	of	the	
sector.

2. Policy recommendations

2.1.Create a dedicated Fund for Energy 
System Integration at the EU level

We propose a mechanism similar to the Projects 
of  Common  Interest  (PCIs)  20  and  Connecting 
Europe	 Facility	 (CEF).21  In  this  format,  interna-
tional infrastructure projects proposed by private 
entities or public-private consortia can apply for 
PCI special status in view of their contribution to 
strengthening	security	of	supply.	While	all	PCIs	
are eligible for public funding, a smaller number 
of  them  are  selected  to  receive  grants  via  the 
CEF	in	a	second	stage.	

Applying a similar logic, projects contributing to 
the  EU  target  of  an  integrated  energy  system 
could be evaluated according to their sustainabil-
ity,	 economic	 value	 and	 other	 relevant	 criteria.	
Only  a  selection  of  these  projects  meeting  ad-
ditional criteria (the number of sectors intercon-
nected, their contribution to economy circularity 
etc.)	 would	 then	 receive	 dedicated	 ESI	 grants	
from	the	EU	and	benefit	from	a	streamlined	per-
mitting	process.

In  line  with  the  innovation  literature,  grant-
based subsidies, carbon contracts for difference 
(CCfD), or other support mechanisms are likely 
required  to  decrease  the  cost  of  technologies 
and  overcome  innovation  barriers  related  to 
uncertainty	 in	 the	 regulatory	 framework.	 Once	
technologies are established and the regulatory 

20	 	https://ec.europa.eu/energy/topics/infrastructure/projects-common-interest_en
21	 	https://ec.europa.eu/inea/en/connecting-europe-facility
22   https://cinea.ec.europa.eu/index_en 

5  

  Financing energy system integration in Europe: The state of play and future prospects

Conclusion

The  publication  of  the  Energy  System  Integra-
tion  Strategy  in  July  2020  was  an  important 
and	 welcome	 first	 step	 in	 shaping	 the	 transi-
tion	of	European	energy	markets	towards	2050.	
The	 strategy	 made	 a	 significant	 contribution	 to	
clarifying  the  EU  approach  to  key  issues  such 
as	 electrification,	 the	 role	 of	 gas	 in	 the	 future	
energy	 mix	 and	 energy	 infrastructure.	 This	
clarity  has  gone  a  long  way  towards  informing 
private  investors  about  the  landscape  of  future 
EU	energy	markets.	However,	the	strategy	lacks	
concrete indications of how the vision of an inte-
grated	energy	system	can	be	materialised.	

At	 present,	 there	 are	 limited	 public	 financing	
options  available  for  ESI  at  the  EU  level,  as  is 
evidenced by the relatively little targeted public 
investment	in	this	area	to	date.	It	therefore	seems	
that the level of political ambition regarding ESI 
is	 not	 matched	 with	 a	 comparable	 financial	
commitment.	 Beyond	 existing	 schemes,	 there	
is	 arguably	 a	 sufficiently	 strong	 scientific	 and	
political  case  for  a  public  fund  that  is  explicitly 
allocated	 to	 ESI.	 This	 should	 be	 coordinated	
at	 the	 EU	 level	 to	 absorb	 tasks	 efficiently	 into	
existing platforms, maximise coordination within 
regions	and	go	beyond	national	objectives.

We  believe  that  infrastructure  integration  is 
at  the  core  of  ESI  and  should  therefore  be  the 
first	pillar	 addressed	 in	 the	 path	 towards	 an	 in-
tegrated	 energy	 system.	 We	 therefore	 propose	
that	a	similar	approach	to	that	used	for	financing	
security of supply infrastructure be followed: the 
PCI	and	CEF-E	model.	Such	a	process	should	
remain  technology-neutral  and  encompass  any 
credible  decarbonised  energy  carrier,  technolo-
gy  and  initiative  which  supports  the  integration 
of	the	EU	energy	system.23 For this reason, we 
believe that not only the EU Commission but also 
Member  States  and  national  regulators  should 
take	part	in	the	evaluation	process.

23	 	Initiatives	of	this	type	in	support	of	one	specific	technology	are	not	new	to	the	European	Commission.	See	Eu-

ropean	Battery	Alliance	|	Internal	Market,	Industry,	Entrepreneurship	and	SMEs	(europa.eu

6  

  Robert Schuman Centre | September 2021

Annex I

Metabolic

The  ‘Metabolic’24  research  project  started  in 
2018  with  the  aim  of  analysing  the  potential  of 
smart  integrated  decentralised  energy  (SIDE) 
systems  to  contribute  to  the  energy  transi-
tion	 within	 a	 microgrid	 system.	 As	 Metabolic	
states,  “A  SIDE  system  is  characterised  by  a 
high  degree  of  system  integration  of  various 
renewable energy technologies” and “at the root 
of  each  SIDE  system  is  a  holistic  design  phi-
losophy aimed at exploiting as many synergies 
as	 possible	 between	 components.”	 The	 aim	 of	
the	project	is	to	provide	flexibility	through	a	new	
economic	model	which	simplifies	and	optimises	
the interactions between SIDE systems and mi-
crogrids	 using	 a	 bottom-up	 approach.	 In	 turn	
this  can  facilitate  the  development  of  integrat-
ed	energy	systems	at	the	neighbourhood	level.	
For this purpose, the project analysed the tech-
no-economic  performance  of  four  micro-grid 
projects  in  the  Netherlands:  Aardehuizen,  De 
Ceuvel,  Schoonschip  and  Republica  Papaver-
weg.	These	projects	were	funded	by	both	public	
and private entities including community cooper-
atives, the joint programming initiative ‘ERA-Net 
Smart  Grids  Plus’  and  the  EU  Horizon  2020 
research	and	innovation	programme.	

HyBalance 

‘HyBalance’25  is  a  demonstration  project  for 
power	to	gas	technology	in	Denmark.	It	focuses	
on  producing  hydrogen  through  water  elec-
trolysis  for  the  purpose  of  storing  renewable 
electricity.	 The	 project	 has	 several	 industrial	
partners26  which  bring  their  technical  expertise 
in  designing  and  developing  advanced  large-
scale  electrolyser  technology  and  in  hydrogen 
infrastructure	 rollout	 in	 Denmark	 (e.g.	 Copen-
hagen	 Hydrogen	 Network	 (CHN)).	 There	 are	
also  several  partners  experienced  in  energy 
markets  which  can  provide  ideas  on  how  to 
design  and  integrate  new  markets  in  electrici-
ty  and  natural  gas  from  hydrogen  technologies 
(e.g.	Centrica	and	Hydrogen	Valley	–	previously	
CEMTEC).	HyBalance	is	funded	by	the	Horizon	
2020  programme  through  the  ‘Fuel  Cells  and 
Hydrogen	 2	 Joint	 Undertaking	 (FCH	 2	 JU).’	 In	

24   https://www.metabolic.nl/projects/side-systems/ 
25   http://hybalance.eu/ 
26	 	A	list	of	all	the	partners	can	be	found	on	the	project’s	website.
27   https://www.newenergycoalition.org/en/hydrogen-valley/ 
28   https://ec.europa.eu/inea/en/node/11820

addition,  the  project  has  also  received  funding 
from  the  Danish  Energy  Technology  Develop-
ment	and	Demonstration	Programme	(EUDP).

HEAVENN

One interesting project involved in sectoral inte-
gration  is  ‘HEAVENN’27  in  the  northern  Nether-
lands.	 HEAVENN	 stands	 for	 ‘H2	 Energy	Appli-
cations in Valley Environments for the Northern 
Netherlands.’	The	project	aims	to	produce	green	
hydrogen as a raw material for industry, as a fuel 
for mobility purposes or for renewable electricity 
storage.	 Six	 European	 countries	 and	 thirty-one	
public  and  private  entities  are  involved  in  the 
project.	 HEAVENN	 has	 a	 budget	 of	 €90	 million	
that  is  funded  by  the  European  Commission’s 
Fuel Cells and Hydrogen Joint Undertaking (FCH 
JU)	and	a	public-private	financing	consortium.	It	
designs  and  develops  hydrogen  infrastructure 
that  can  support  the  production  and  delivery 
of	hydrogen	throughout	the	region.	It	started	in	
January	2020	and	will	last	for	6	years.	

PlaMES

This project is carried out by one DSO, four EU 
universities	and	one	spin-off	company.	It	aims	to	
develop an integrated planning tool for multi-en-
ergy	systems	on	a	European	scale.	The	model	
considers  coupling  different  energy  sectors 
(electricity,  heat,  mobility  and  gas)  and  calcu-
lates the optimal-cost energy mix for the future 
European	 energy	 system	 up	 to	 2050.	 Genera-
tion and storage systems are considered in the 
planning  and  operation  stage,  as  are  transmis-
sion  and  distribution  grids,  from  an  integrated 
perspective.	

Annex II

TSO 2020

TSO  202028  contributes  to  the  implementation 
of the TEN-E Project of Common Interest (PCI) 
1.5	 Interconnection	 between	 Endrup	 (DK)	 and	
Eemshaven (NL), known as the COBRA cable, 
and of the TEN-Transport core networks on the 
North	 Sea-Baltic	 and	 Rhine-Alpine	 corridors.	
The  main  objective  of  the  action  is  to  demon-
strate  the  technical  and  commercial  viability  of 

7  

  Financing energy system integration in Europe: The state of play and future prospects

Annex IV

The European Clean Hydrogen Alliance (ECHA) 
was  announced  in  the  new  Industrial  Strategy 
for  Europe32  in  March  2020  and  began  work 
in	 February	 2021.	 The	 ECHA	 has	 six	 thematic	
roundtables covering the entire sector, including 
P2X,	storage	and	X2P.

the 

framework  of 

the  EU 
Consistent  with 
Hydrogen Strategy, projects must meet several 
key	 criteria	 to	 be	 included	 in	 the	 final	 project	
pipeline, which were established by the roundta-
bles.	Emission	intensity	is	a	key	metric,	with	the	
Sustainable Investment Taxonomy threshold of 3 
tonnes (t) of CO2/ t of H2
33 serving as a minimum 
benchmark  limiting  projects  to  decarbonised 
and	renewable	hydrogen.	The	project	collection	
closed in May 2021 with more than 1,000 project 
submissions  accounting  for  well  over  the  elec-
trolyser and decarbonised production ambitions 
in	the	EU	Hydrogen	Strategy.	

power  to  hydrogen  solutions  in  the  Groningen 
region  (NL)  and  to  assess  the  replicability  of 
solutions	 in	 other	 regions.	 These	 solutions	 si-
multaneously  balance  the  intermittent  power 
input  from  the  COBRA  cable  and  develop  the 
use of hydrogen for transport applications along 
the	 TEN-T	 corridors.	 The	 project	 received	 €7	
million of EU funding in 2016 and was completed 
in	June	2021.

Annex III

District Heating 2.0 Stadsverwarming 
Purmerend

The	first	of	the	two	ELENA-funded	district	heating	
projects aimed to modernise outdated fossil gas 
heating infrastructure by converting it to biomass 
and	to	eliminate	inefficiencies	in	the	supply	chain	
(i.e.	 by	 removing	 additional	 unnecessary	 loops	
in transportation infrastructure and improving the 
dispatchability	 of	 heating	 services).	 The	 district	
heating network is situated in Purmerend, North 
Holland,  and  the  new  44  MWh  biomass  heat 
plant utilises biomass supplied by a subsidiary of 
the Staatsbosbeheer, the national forest admin-
istration	of	the	Netherlands.	The	initiative	saves	
an estimated 40 GWh/y and avoids 39,100 t CO2 
/y	 compared	 to	 the	 previous	 infrastructure.29  30 
The	project	was	completed	in	2013.

Rotterdam-Leiden Heat Infrastructure

The second project, completed in 2019, uses a 
heat exchanger to recover waste heat from the 
Shell	refinery	at	the	Port	of	Rotterdam	and	feeds	
it	into	the	main	district	heating	network.	Funding	
from	ELENA	assisted	with	the	technical,	financial	
and  legal  studies  required  for  the  relevant 
permit	requests.	It	also	facilitated	the	identifica-
tion of potential investors to further support the 
financing	of	the	€17.7	million	project.	The	estab-
lishment  of  this  district  heating  infrastructure  is 
estimated  to  save  42  GWh/y  and  avoid  9,114  t 
CO2/y.31 This case is an example of how support 
from	ELENA	goes	beyond	direct	financing	to	also	
provide  services  that  can  attract  private-sector 
investment,  thus  multiplying  the  impact  of  the 
mechanism.

29   https://www.eib.org/attachments/documents/elena-completed-purmerend-en.pdf 
30  https://www.rvo.nl/initiatieven/financieringsvoorbeelden/stadsverwarming-purmerend 
31   https://www.eib.org/attachments/documents/completed-project-factsheet-rotterdam-leiden-heat.pdf 
32   https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1593086905382&uri=CELEX:52020DC0102 
33   https://ec.europa.eu/finance/docs/level-2-measures/taxonomy-regulation-delegated-act-2021-2800-annex-2_en.pdf 

8  

  Robert Schuman Centre | September 2021

The Florence School of Regulation
The Florence School of Regulation (FSR) was founded in 2004 as a part-
nership between the Council of the European Energy Regulators (CEER) 
and the European University Institute (EUI), and it works closely with the 
European Commission. The Florence School of Regulation, dealing with 
the main network industries, has developed a strong core of general 
regulatory topics and concepts as well as inter-sectoral discussion of 
regulatory practices and policies.
Complete information on our activities can be found online at: fsr.eui.eu

Robert Schuman Centre for Advanced Studies
The Robert Schuman Centre for Advanced Studies (RSCAS), created in 
1992 and directed by Professor Brigid Laffan, aims to develop inter-dis-
ciplinary and comparative research on the major issues facing the pro-
cess of European integration, European societies and Europe’s place in 
21st century global politics. The Centre is home to a large post-doctoral 
programme and hosts major research programmes, projects and data 
sets, in addition to a range of working groups and ad hoc initiatives. The 
research agenda is organised around a set of core themes and is con-
tinuously evolving, reflecting the changing agenda of European integra-
tion, the expanding membership of the European Union, developments 
in Europe’s neighbourhood and the wider world.

www.eui/rsc
www.eui/rsc
www.eui/rsc

Co-funded by the 
Erasmus+ Programme 
of the European Union

Views	expressed	in	this	publication	reflect	the	opinion	of	individual	authors	and	 
not	those	of	the	European	University	Institute	or	the	European	Commission. 
© European University Institute, 2021
Content	©	Ilaria	Conti,	James	Kneebone,	Lorenzo	Pirelli,Golnoush	Soroush.

doi:10.2870/031591
ISBN:978-92-9466-092-3
ISSN:2467-4540
QM-AX-21-043-EN-N

9  

  RSC | Policy Brief | Issue 2021/43 | September 2021