Electricity and infrastructure managers : is there a need for regulation?
Date: 2023-02-23
Institutions: European University Institute
Subjects: Austria, Germany, Italy, Spain, electricity supply, energy law, industrial infrastructure, price of energy, rail transport, railway industry, transport infrastructure

EUROPEAN TRANSPORT
REGULATION OBSERVER 

Electricity and Infrastructure  
Managers: Is there a need for 
regulation?

Highlights

Electricity  is  used  for  railway  traction.  With  the  4th  Railway 
Package,  traction  current  became  excluded  from  the  Minimum 
Access  Package  to  be  provided  by  the  Infrastructure  Managers 
(IMs)  and  was  declared  an  additional  service  that  could  be 
acquired  from  third  parties  or  even  directly  generated  by  the 
Railway  Undertakings  (RUs)  themselves.  It  is,  however,  still 
common  in  many  Member  States  to  have  the  IMs  as  the  only 
providers (the so-called “intermediaries”) of electricity for traction, 
be  it  for  legal  or  for  technical  reasons.  The  question  of  traction 
current has recently gained attention because of the decarbonisa-
tion imperative on the one hand and the rise in electricity prices on 
the other. Overall, there seems to be a need for clearer regulation.

In  the  context  of  their  corporatisation,  railway  operators  were 
unbundled  and  their  electricity  generation,  if  they  had  any,  was 
often  sold  to  electricity  generating  companies.  Most  IMs  now 
buy  electricity  on  the  market,  even  though  some  of  the  IMs 
still  generate  their  own  electricity  or  a  portion  thereof.  With 
increasing electricity prices IMs are forced to manage their elec-
tricity  portfolio  more  proactively  (futures,  hedging,  etc.).  Some 
of  the  IMs  are  even  considering  going  back  into  the  generation 
business  be  it  in  order  to  reduce  price  risks  or  in  order  to  take 
advantage  of  renewables  generation  along  their  infrastruc-
tures. There might even be opportunities for IMs to sell electric-
ity, for example for charging electric vehicles at railway stations.  

Authors
Matthias Finger, EUI; Juan Montero, EUI; Teodora Serafimova, EUI;

Issue 2023/03
February 2023

POLICY BRIEFThis raises the question as to how far IMs can go 
in terms of energy management and generation, 
thus 
In 
particular, there is a need to clarify the interface 
between railway and energy regulation. 

for  regulatory  certainty. 

the  need 

Against  this  backdrop  and  drawing  on  the  dis-
cussions of the 22nd Florence Rail Forum, this 
policy  brief  examines  the  current  and  foreseen 
practices  in  the  different  Member  States  in 
matters  of  electricity  for  traction,  the  technical 
and  legal  issues  that  complexify  the  matter,  as 
well as the question of whether there is a need 
for regulatory clarification. 

2  

  Robert Schuman Centre | February 2023

Is there a need for regulation in 
rail traction current?

A comment by Matthias Finger and Juan 
Mont ero, Florence School of Regulation – 
Transport Area 

Our  Rail  Forum  on  traction  current  asked 
the  question  whether  there  was  a  need  for 
regulation; the clear and simple answer is YES! 
And  probably  there  would  have  been  a  need 
for  action  since  long;  yet,  it  is  the  exploding 
electricity  prices  as  a  result  of  the  Ukrainian 
war,  coupled  with  the  pressures  to  and  oppor-
tunities  for  greening  rail,  that  really  put  traction 
current on top of the agenda of Railway Under-
takings  (RUs),  Infrastructure  Managers  (IMs) 
and railway regulators… whereas the issue still 
remains  absent  from  DG  MOVE’s  current  work 
programme.

To  recall,  the  EU  pursues  the  objective  of 
building a single European market, both for elec-
tricity and rail. Not only the goals are identical in 
both  sectors,  but  also  the  means  to  reach  that 
goal,  namely  by  unbundling  formerly  vertically 
integrated  operators,  while  regulating  non-dis-
criminatory  access  of  both  electricity  suppliers 
and  RUs  to  the  monopolistic  infrastructure  that 
are the electricity grid on the one hand and the rail 
network on the other. So far so good. However, 
both processes are pursued independently from 
one another and not astonishingly have ignored 
one another and have followed different rhythms. 
On  the  one  hand,  electricity  market  liberalisa-
tion  has  simply  left  aside  rail  traction  current, 
even  though  railways  are  typically  the  biggest 
consumer  of  electricity  in  almost  every  EU 
Member State. On the other hand, railway liber-
alisation, even in the 4th Railway Package, has 
assumed that RUs would eventually have access 
to  various  suppliers  of  electricity,  as  traction 
current is defi ned as an additional service in the 
Recast Directive, and if not, it would be charged 
at cost plus a reasonable profi t.

The  reality  today  is  that  the  single  European 
electricity market is much more mature than the 
single  European  railway  market. There  is  com-

petition  in  the  supply  of  electricity,  but  RUs  in 
most Member States cannot choose their elec-
tricity supplier and they rely on the monopolistic 
provision by the IM in each territory. As electricity 
prices  have  risen,  this  has  become  the  largest 
cost  in  some  routes,  even  higher  than  track 
access charges, becoming a barrier to entry for 
newcomers and an impediment to realising the 
single European railway area. 

Traction current is becoming even more relevant 
(and complex) because the EU’s ambitious de-
carbonisation  objectives  put  unprecedented 
pressure  on  railways  which  are  called  upon  to 
play a central role to reach these goals, not the 
least  thanks  to  attracting  massive  investments 
on  the  deployment  of  new  electricity  sources 
such as solar panels. IMs are concentrating four 
different  roles:  generating  part  of  the  electrici-
ty,  acquiring  another  part  in  the  market,  trans-
mitting it all to RUs through their infrastructure, 
and  selling  it  to  them.  Too  much  integration  of 
activities for a natural monopoly.

Now, the most logical way out would be to apply 
the more mature electricity regulatory framework 
also  to  traction  current,  and  this  is  most  likely 
where  we  will  end  up  at  the  very  end,  at  the 
example of Germany where the Federal Court of 
Justice has mandated precisely that already back 
in 2010; unbundling of the corporation in charge 
of energy, and detailed regulation on access to 
the  infrastructure,  including  the  deployment  of 
meters in rolling stock. 

But  in  order  to  get  there,  we  nevertheless  will 
have  to  deal  with  specifi cities  of  electricity  in 
railways (identifi cation of consumers when loco-
motives  are  leased  and  subleased,  consumers 
the  country,  deployment  of 
moving  across 
meters,  etc.).  Indeed,  one  has  to  acknowledge 
that railways are not simply a large customer that 
has  been  forgotten  in  the  electricity  regulatory 
framework.  It  cannot  be  treated  as  a  closed 
distribution  network  either,  which  is  the  closest 
concept the electricity regulatory framework has 
for  integrated  railways.  Rather,  typically  the  IM 
operates a parallel electricity network, often also 
covering an entire country, a network that has no 

3  

  Electricity and Infrastructure Managers: Is there a need for regulation?

in line with the basic principles of both a single 
European  electricity  and  railway  markets.  But 
none of these specifi cities are insurmountable.

The question therefore is more one of how to get 
there  and  who  should  be  the  driver. One  could 
start from the more mature electricity regulatory 
framework and gradually adjust traction current 
to it. One might also start from the current railway 
regulatory framework and gradually remove the 
specifi cities that impede the creation of a single 
European  traction  current  market.  The  ultimate 
outcome  of  these  two  processes  will  probably 
be very similar, but the chances of going astray 
will  probably  be  bigger  along  the  second  way, 
not to mention the fact that it will certainly take 
longer.  And  who  should  take  the  lead?  Before 
COVID-19  the  European  Commission’s  DG 
MOVE  and  DG  ENER  had  started  discussions 
to  address  the  issue.  We  think  that  it  is  time 
to  resume  these  discussions  in  the  interest  of 
advancing  a  more  integrated  single  European 
electricity and railway market.

status within the electricity regulatory framework. 
And  even  in  the  railway  regulatory  framework 
this railway electricity grid is simply treated as an 
appendice to the tracks. It is moreover a network 
that is not just distributing electricity to a few end 
customers aka RUs. Rather, that parallel network 
has  multiple  interconnections  with  the  national 
electricity grid, and in some countries these in-
terconnections involve the transformation of the 
current from 50Hz to 16.7Hz, an additional cost 
factor. 

In some countries, integrated railway companies 
produce  electricity  for  their  own  consumption 
and  with  the  new  decarbonisation  objectives 
(and  sometimes  corresponding  subsidies)  IMs 
aspire to venture into electricity generation. This 
is  further  complexifi ed  by  the  fact  that  in  most 
EU  Member  States  the  end  using  customers, 
i.e.,  the  RUs  (in  most  Member  States)  are  still 
unable to precisely measure the consumption of 
a particular train thanks to onboard devices. 

To  that  one  has  to  add  legal  and  institutional 
specifi cities of railway electricity, both generation 
and  grid  operations,  different  in  each  Member 
State. In some Member States railway electric-
ity is under the electricity law, in others precisely 
exempt from that electricity law. In some Member 
States, traction current must be provided by the 
national IMs, in others this is simply a historical 
practice. In some Member States, the IM actively 
manages  traction  current  (hedge  contracting 
etc.), in others it is forbidden to do so. It is fair 
to  say  that  in  most  Member  States  incentives 
for  managing  traction  current  are  not  aligned 
with the requirements of long-term planning and 
investing of RUs. 

Now,  all  these  legal,  institutional  and  technical 
specifi cities do indeed complexify the application 
of a regulatory framework to traction current that 
is not only harmonised across Member States so 
as  to  facilitate  cross-border  railway  operations, 
but moreover is stable and predictable so as to 
favor  long-term  investments  while  at  the  same 
time capable of handling various types of public 
support 
for  strengthening  railways  vis-à-vis 
less  decarbonised  modes  of  transport.  Not  to 
mention  the  fact  that  this  framework  should  be 

4  

  Robert Schuman Centre | February 2023

Main Takeaways from the 
Discussions

By Teodora Serafimova, Florence School of 
Regulation – Transport Area 

The  current  context  of  unprecedented  energy 
price  increases  and  volatility,  coupled  with  the 
European Union’s ongoing energy transition and 
efforts  to  pursue  a  modal  shift  to  rail,  renders 
the topic of traction current particularly relevant 
for  railway  undertakings  (RUs)  as  well  as  for 
the entire railway ecosystem. To recall, traction 
current  is  an  essential  rail-related  service  for 
providing rail transportation using electric trains 
and  locomotives.  The  public  electricity  grid 
network  is  composed  of  energy  companies 
producing electricity, which in turn, is transmitted 
and  distributed  to  households  and  companies. 
This electricity is also fed into the railway network 
through  dedicated  infrastructure  elements  such 
as  electric  substations.  Despite  its  evidently 
close  link  to  the  use  of  the  electrical  supply 
equipment,  traction  current  is  excluded  from 
the  Minimum Access  Package  (MAP).  Instead, 
traction current is classified by Annex II No. 3 (a) 
of Directive 2012/34/EU as an “additional service” 
and thus follows a separate price regulation. 

Though  the  Directive  does  not  define  traction 
current,  the  concept  can  be  easily  understood 
as “the continuous flow of electricity with a view 
to  enabling  electric  trains  to  feed  their  engines 
and provide transport services”. Despite what is 
a  seemingly  straightforward  definition,  a  closer 
look at its implementation in the various Member 
States  reveals  a  high  degree  of  divergence  in 
approaches.  To  gain  a  deeper  understanding 
of  these  national  practices  and  approaches, 
the 22nd Florence Rail Forum was kicked off with a 
presentation  of  the  recently  published  Overview 
Paper on Charges for Traction Current, produced by 
the Independent Regulators’ Group – Rail (IRG-
Rail).  The  findings  of  this  overview  document 
are  based  on  questionnaire  responses  by  23 
member countries of IRG-Rail. 

Various  stakeholders  need  to  be  taken  into 
account  when  examining  the  topic  of  traction 
current.  These  include  railway  undertakings 

(RUs), as the end users of the electricity; infra-
structure managers (IMs) as the party in charge 
of operating the rail network; and the energy un-
dertaking,  which  is  the  company  that  supplies 
the  electricity.  The  IRG-Rail  overview  paper 
analyses  the  different  relationships  that  exist 
between these three sets of actors, namely the 
user of traction current, the (rail-related) service 
provider, and the energy supplier. 

The  so-called  “intermediary”  approach  is  most 
prevalent in the EU. In the countries where such 
an approach is observed, there is a direct rela-
tionship  between  the  end  user  of  the  electrici-
ty (i.e., the RU) and the service provider, which 
in  a  majority  of  cases,  is  the  IM.  These  two 
parties enter into a contract for the provision of 
the  traction  current  service.  In  parallel,  there  is 
another relationship between the service provider 
and the energy supplier, which in turn, provides 
the electricity to the rail network. It is referred to 
as  an  “intermediary”  relationship  because  the 
IM,  as  the  service  provider,  is  in  the  middle  of 
the two other parties, whereby two separate re-
lationships exist. An alternative approach is that 
of “separation”, in which even though there is still 
a  relationship  between  the  end  user  of  traction 
current  and  the  service  provider,  the  electricity 
itself  is  not  directly  contracted  from  that  party. 
Instead, in these cases, the RU directly sources 
its  electricity  from  the  energy  supplier.  Things 
can get further complicated when we observe a 
mix of different approaches, i.e., having the pos-
sibility of obtaining the electricity from the service 
provider either as a fallback option or as an alter-
native to going directly to the market. Similarly, 
complexity  increases  in  instances  where  the 
service  providers  are  allowed  to  produce  the 
electricity themselves.

The overview paper shows that in 17 out of the 
23 countries surveyed, there is only one provider 
of the service. In a majority of cases (in 15 out of 
the 17 countries), this party tends to be the IM or 
a subsidiary company of the IM. There are some 
exceptions though, such as Poland, where an in-
dependent company (not the IM) is in charge of 
providing traction current, and the Netherlands, 
where RUs set up a group-purchasing organisa-

5  

  Electricity and Infrastructure Managers: Is there a need for regulation?

tion that buys the electricity from the market and 
then resells it to the individual RUs. 

Conversely,  it  is  only  in  a  few  countries  that 
we  observe  more  than  one  provider  of  traction 
current. These include Austria, Bulgaria, Finland, 
France,  Germany  and  Portugal.  However,  the 
fact that there are multiple providers of electricity 
in  these  countries  does  not  preempt  the  possi-
bility  for  RUs  to  choose  an  energy  provider. To 
illustrate this, in Portugal, there are two energy 
providers,  but  these  were  selected  by  the  IM 
and the incumbent RU in a tendering procedure. 
In  other  words,  this  does  not  guarantee  an 
individual RU the right to choose an alternative 
energy  supplier.  On  the  other  hand,  whereas 
there  is  only  one  energy  provider  in  both  the 
United Kingdom and Belgium, in theory, it is still 
possible  for  an  RU  to  sign  a  contract  directly 
with another energy supplier. In other words, the 
number of providers does not determine the pos-
sibility of choosing a provider.

The  report  goes  on  to  reflect  on  the  reasons 
behind  there  being  a  sole  provider  (the  IM) 
in  the  majority  of  cases.  The  fact  that  the  IM 
tends to be the only provider illustrates how tied 
the  provision  of  the  service  is  to  the  rail  infra-
structure.  Most  of  all,  the  report  underlines  the 
existence  of  legal  and  practical  reasons  for 
sticking to a sole provider. In the case of Croatia, 
for instance, there is a legal constraint deriving 
from the National Railway Act, which stipulates 
that  IMs  shall  be  the  sole  buyer  of  electrici-
ty  through  a  public  procurement  procedure.  A 
similar situation can be observed in Spain, where 
the legal constraint originates from the National 
Energy Sector Act. In this case, it stipulates that 
the IM should be the only owner of the electric 
supply points and, as such, can be the only party 
that  can  access  the  energy  market.  Moreover, 
there are also practical constraints behind cases 
with  a  sole  provider.  In  Italy  and  Sweden,  for 
instance, it is claimed that there is an economic 
advantage  to  the  IMs  being  the  sole  provider 
of  the  service.  In  Slovakia,  on  the  other  hand, 
technical constraints linked to the limited imple-
mentation of on-board metering were argued to 
hinder the adoption of an alternative approach in 
the country. 

6  

  Robert Schuman Centre | February 2023

Charging  systems  are  another  topic  that  the 
report  explores  in  depth.  Additional  services 
have a particular price regulation, and in cases, 
where there is a sole provider of the service, the 
regulatory  framework  stipulates  that  charges 
cannot exceed the cost of providing the service 
plus  a  reasonable  profit.  The  IRG-Rail  report 
finds  that  in  15  of  the  respondent  countries, 
service  providers  do  not  charge  a  reasonable 
profit, meaning that in these cases, the service 
provider  acts  as  a  mere  intermediary  between 
the  parties,  buying  electricity  from  the  market 
and  then  reselling  it  to  the  operators  in  the  rail 
network,  without  including  any  or  a  reasonable 
profit.  What  is  more,  in  a  third  of  respondent 
countries,  it  is  specifically  mentioned  that  their 
system follows a profit neutrality principle.

A  few  exceptions  exist,  however.  One  of  these 
is  Austria,  where  dedicated  infrastructure  is  in 
place and used for the provision of the service. 
The presence of such an infrastructure element 
and  its  associated  risk  is  the  justification  for 
charging a reasonable profit. In Romania, on the 
other hand, a fixed amount is charged per MWh, 
though no information has been gathered as to 
the reasoning for it. 

In this context, it should be noted that reasonable 
profit, when applicable, refers to the charge for 
the  rail-related  service,  not  to  the  price  or  fee 
that  is  charged  by  the  energy  company  since 
the latter is not regulated by railway regulation. 
Therefore,  it  cannot  be  excluded  that  some 
energy  companies  do  charge  reasonable  profit 
for the provision of electricity. In countries where 
it is possible to directly contract with an energy 
supplier, the prices for energy are determined by 
the free market.

Another  topic  tackled  by  the  study  relating  to 
the  charging  systems  is  that  of  energy  mea-
surement  systems  (EMS),  also  referred  to  as 
on-board power meters. These are devices that 
are installed on trains and that provide an actual 
measure  of  consumption  as  opposed  to  an 
estimated  consumption  during  a  given  journey. 
Traditionally,  all  charging  systems  have  relied 
on  conversion  ratios  or  alternative  metrics  that 
provide  an  estimation  of  a  train’s  consumption 

throughout a given journey. However, there are 
many  different  variables  that  may  affect  the 
real consumption of a given train, including the 
technical  specifications  of  the  train,  the  char-
acteristics  of  the  terrain  or  even  the  driving 
behaviour of the train driver. As a result, similar 
trips may end up consuming significantly different 
amounts  of  electricity  despite  being  charged 
in  the  same  way.  Conversion  ratios  and  other 
metrics,  therefore,  do  not  fully  capture  all  the 
potential variables affecting final consumption. 

to 

face 

The  implementation  of  EMS,  however,  remains 
limited  and  continues 
important 
economic  and  technical  barriers.  At  present, 
only 11 countries’ charging systems allow for the 
usage  of  EMS.  Notwithstanding,  there  is  broad 
agreement among regulators on the advantages 
linked to their wide-scale deployment in railways. 
First, charging according to actual consumption 
matches real demand for electricity, which may 
lead to fewer inefficiencies in the system and less 
supply imbalances altogether. Second, allowing 
for  charging  according  to  actual  consumption 
would provide a clearer signal of the cost borne 
in the provision of the transport service. RUs may 
translate this into the final prices, ensuring better 
price signals for the end users of transportation. 
Third, if RUs can pay on the basis of what they 
consume, this could foster energy savings by in-
centivising better performance by train drivers or 
investment in more energy-efficient rolling stock. 

According to a number of stakeholders, the fact 
that some charging systems do not allow for the 
use  of  EMS  constitutes  a  practical  obstacle  for 
choosing an energy provider, given that it is more 
difficult  to  link  energy  consumption  with  output 
production  by  RUs.  Incentivising  the  roll-out  of 
EMS  was,  therefore,  welcomed  as  a  means  to 
enable a shift away from the reliance on a sole 
provider.

The  Forum  also  provided  an  opportunity  to 
examine  the  topic  of  traction  current  from  an 
energy regulation perspective. To recall, electric-
ity  supply  has  been  liberalised  in  the  EU  since 
2007.  According  to  Article  4  of  the  Electricity 
Directive (EU/2019/944), all electricity consumers 
shall  have  the  right  to  choose  their  electrici-

ty  supplier,  in  addition  to  which,  they  can  have 
more  than  one  electricity  supply  contract  in 
parallel,  provided  that  the  required  connection 
and metering points are established. In view of 
this, from an electricity standpoint, it was noted 
that  there  is  no  legal  provision  or  legitimate 
reason  which  would  hinder  RUs  from  enjoying 
the same freedom to choose their supplier. 

The  Forum,  furthermore,  explored  the  status 
of  IMs’  electricity  network  within  the  electrici-
ty  regulatory  framework  and,  more  precisely, 
whether it can be considered a so-called “closed 
distribution system”. According to Art. 38(1)(b) of 
the EU Electricity Directive, this specific type of 
system shall distribute electricity primarily to the 
owner or operator of the system or their related 
undertakings,  which  in  the  case  of  railways 
would  be  the  IMs.  Drawing  on  this  definition,  it 
is  doubtful  that  this  would  be  the  case  in  most 
Member States, as it is RUs – as opposed to the 
IMs, which tend to be the primary consumer of 
electricity. Having said that, even if it were to be 
classified as a closed distribution system, railway 
IMs would still have to comply with the obligation 
to provide third-party access under the EU Elec-
tricity Directive, thus leaving little room or justifi-
cation for not allowing competition in the market. 

Moreover, reacting to the findings of the IRG-Rail 
study, some stakeholders argued that the limited 
metering  on  the  individual  train  level  does  not 
constitute  a  legitimate  excuse  for  sticking  to  a 
sole provider. In particular, it was noted that since 
there  are  multiple  trains  and  train  companies 
operating on the same rail network today, specif-
ically in the liberalised rail freight segment, there 
must already be ways of defining and measuring 
their individual consumption. This, in turn, it was 
argued, could be an indicator of their respective 
energy  consumption  in  a  transitory  period  up 
until smart meters are installed at a large scale. 
Here once again, an analogy was drawn to the 
electricity  sector,  where  despite  liberalisation 
having been in place for 25 years already, smart 
meter implementation is still not uniform across 
the Union. 

Another interesting observation from the energy 
sector  has  been  that  even  if  consumers  are 

7  

  Electricity and Infrastructure Managers: Is there a need for regulation?

entitled  to  switch  energy  suppliers,  they  do 
not  tend  to  make  use  of  this  right  on  a  regular 
basis. In fact, for a long time, the switching rate 
in the EU has remained at around 5 – 6%. This 
means  that  a  typical  consumer  would  switch 
energy suppliers every 16 to 20 years. The fact 
that consumers do not switch, however, is not a 
conclusive indicator of whether competition has 
been  effective  or  not.  To  illustrate,  there  could 
be  a  scenario  where  effective  competition  in  a 
given market exists, but all competing suppliers 
are  offering  the  same  prices  and  terms,  which 
in  turn,  leaves  consumers  with  little  incentive 
to  switch  away  from  the  incumbent  provider  in 
order to take advantage of competitive prices. In 
other  words,  contestability  and  the  mere  threat 
of  competitors  may  well  be  sufficient  to  avoid 
overcharging by the incumbent supplier.

Subsequently,  discussions  dove  deeper  into 
the  role  of  the  IMs  with  respect  to  the  traction 
current  consumed  by  RUs.  Stakeholders  were 
in agreement that If IMs were to simultaneous-
ly compete with other energy suppliers in selling 
electric  current  to  RUs,  their  role  as  electricity 
network  operators  would  have  to  be  separated 
from their supply business in order not to distort 
competition  (e.g.,  IMs  using  access  charges  to 
their  electricity  networks  in  order  to  disadvan-
tage competitors in respect to their own business 
of  supplying  electricity).  When  it  comes  to 
separation, there is a long history of unbundling 
between  competitive  and  monopoly  activities 
in  the  European  energy  sector,  where  it  has 
been  pursued  on  three  main  grounds:  to  avoid 
cross-subsidisation in tariff-setting, possible dis-
crimination in access conditions and distortions 
in network development.

the  railway  IMs  to  separate  the  management, 
their  different 
including  decision-making,  of 
activities,  in  particular  separate  management 
and  decision-making  of  their  electricity  net-
work-related activities and of their other activities. 
“Legal  unbundling”,  on  the  other  hand,  would 
require  the  IMs  to  operate  their  regulated  and 
competitive  activities,  in  particular,  their  elec-
tricity  network-related  activities  and  their  other 
activities, through separate legal entities. Finally, 
“ownership unbundling” would require the elec-
tricity  network-related  activities  and  the  other 
activities  of  the  railway  IMs  to  be  operated  by 
undertakings with separate ownership. 

In  the  German  case,  for  instance,  the  Federal 
Court of Justice has ruled that energy regulation 
shall  be  applicable  in  the  context  of  traction 
current.  Though  unbundling  is  underway,  there 
is  no  specific  unbundling  rule  in  the  railway 
market,  which  stipulates  that  IMs  cannot  be 
service facility operators in parallel. As a result, 
DB  Energie  runs  the  distribution  network  while 
at  the  same  time  producing  and  selling  energy 
without  the  obligation  to  unbundle.  This,  in 
turn,  has  been  possible  thanks  to  provisions 
stemming  from  EU  legislation,  which  foresee 
that very small operators with less than 100 000 
customers  shall  be  exempted  from  adhering 
to  unbundling  rules.  This  illustrates  that  the 
legislator, at  the  time  of  designing  the  law, had 
not considered that an energy supplier as big as 
a railway energy supplier, could have less than 
100 000 customers yet such high consumption. 
In  view  of  this,  discussants  agreed  that  IMs  do 
not entirely fit into the electricity framework and 
reiterated the importance of regulatory clarifica-
tion. 

Drawing  on  this,  different  forms  of  unbundling 
were  identified  for  railway  IMs  based  on  the 
regulatory  framework  for  the  energy  sector. 
To  begin  with,  “accounting  unbundling”  would 
require the railway IMs to keep separate internal 
accounts for each of their activities, in particular, 
their  electricity  net-
for 
separate  accounts 
work-related  activities  and  for  other  activities. 
Subsequently,  “functional  (management  and 
decision-making)  unbundling”,  would  require 

In  conclusion,  this  initial  session  showed  that 
the  railways-  and  energy-related  regulatory 
frameworks  have  evidently  been  approached 
and developed in a separate manner. This points 
to  a  lack  of  knowledge  and  awareness  at  the 
time of the boundaries between the two laws and 
sectors,  which  are  being  brought  to  light  ever 
more  prominently  by  the  current  realities. As  a 
result, there is little alignment and even contra-
dictions  between  some  of  the  provisions  in  the 

8  

  Robert Schuman Centre | February 2023

respective  pieces  of  law.  Stakeholders  were  in 
agreement on the need to clarify the law and the 
borders  between  the  different  legal  provisions. 
As  a  starting  point,  a  careful  analysis  of  the 
legal  interfaces  would  have  to  be  conducted. 
Only afterwards would it be possible to devise a 
regulatory framework that is conducive to a more 
efficient railway system and a competitive energy 
system. Whereas Forum participants agreed on 
the  central  role  that  the  European  Commission 
would  have  to  play  in  such  a  clarificatory 
exercise, it was also noted that another, perhaps 
more pragmatic, debate could take place directly 
between railway and energy operators. 

What are the current and foreseen 
practices in the different Member States 
in matters of electricity for traction? 
What are the technical and legal issues 
complexifying the matter?

Austria

In Austria, the infrastructure manager (IM) ÖBB-
Infrastruktur AG has its own traction transmission 
and  distribution  system  covering  roughly  2  000 
km of the electricity network in the country. About 
one-third  of  the  energy  needs  are  met  by  the 
IM’s own production, whereas another one-third 
is  contracted  by  partner  power  plants.  In  other 
words, roughly two-thirds of the Austrian energy 
demand  from  the  railway  sector  is  covered 
within  the  traction  current  network  and  power 
plants  within  it,  which  has  a  frequency  of  16,7 
Hz  (in  contrast  to  the  general  public  network’s 
frequency of 50 Hz).

Prior  to  2015,  the  Austrian  IM  delivered  the 
energy to the railway undertakings (RUs) while 
also being the owner of the distribution network. 
The traction current and the use of the traction 
current  network  were  provided  as  one  product. 
In  2015,  the  first  proceedings  were  initiated 
by  the  Austrian  regulator,  Schienen  Control 
Kommission, with the goal of enabling liberalisa-
tion and ensuring that all RUs could source their 
energy either from the 50 Hz network or from the 
16,7 Hz network. The ultimate objective was to 
enable the delivery of energy by a (third) energy 
provider. In 2016, the deregulation of the traction 
current market was completed.

ruled 

Railway law has been applied in the regulation 
of the traction current network in Austria. The EU 
Railway Directive defines traction current as an 
“additional service”, and in Austria, this term has 
been broadly interpreted to constitute an “entire 
network”. Though the Electricity Directive gives 
clear indications as to what a system operator is 
(i.e., either it is a distribution system operator or 
a transmission system operator), in its transposi-
tion into the National Electricity Act, the Austrian 
legislator 
that  a  distribution  system 
operator or a transmission system operator can 
only be one that runs on the frequency of the 50 
Hz network. As a result, the 16,7 Hz network was 
intentionally  left  out.  Following  a  lengthy  inves-
tigation  process  launched  by  the  regulator,  the 
Federal Court referred the Decision back, stating 
that  the  additional  service  comprises  both  the 
traction current and the traction current network, 
whereby  the  traction  current  network  is  only  to 
be  regulated  where  the  traction  current  itself  is 
in  competition.  As  underlined  by  the  IRG-Rail 
paper,  whereas  Austria  allows  RUs  to  source 
their  energy  from  the  50  Hz  public  network,  in 
practice, this has been discouraged by the IM’s 
double tariff system (i.e., one tariff for the distri-
bution of energy and one tariff for the conversion 
of  energy).  In  sum,  the  Austrian  approach  un-
derscored  a  preference  to  prioritise  the  proper 
transposition  of  existing  regulation  as  opposed 
to resorting to new regulation.

Germany

A  similar  railway  network  structure  to  Austria 
characterises  Germany.  However,  as  already 
elaborated in the previous section, already back 
in  2010,  the  German  Federal  Court  of  Justice 
ruled that the traction current network is an elec-
tricity  supply  network  and  is  to  be  subjected  to 
regulation under the Energy Industry Act, given 
that no specific rules on access and charges for 
the traction network exist in railway law. 

On  the  basis  of  the  Federal  Court  decision 
of  2010,  it  has  been  possible  to  establish  that 
energy suppliers have a right to supply customers 
in  the  traction  network,  RUs  can  choose  their 
own  energy  supplier  (third-party  access),  and 
costs of the traction network are to be paid via 
energy bills (i.e., not part of the MAP). A total of 

9  

  Electricity and Infrastructure Managers: Is there a need for regulation?

about  12  railway  electricity  suppliers  are  active 
in the German market today. There are no price 
differences for conversion and distribution, and a 
price list is reworked in line with the rules of the 
electricity regulation and published on an annual 
basis. 

Notwithstanding, the Federal Court has also ac-
knowledged  the  need  for  specific  regulation  in 
order to cater to the technical needs of the railway 
network. These relate, in particular, to the mobile 
and transboundary nature of railways, whereby 
there is not one but numerous RUs and locomo-
tives per customer. One given technical point of 
use does not necessarily remain with the same 
user,  and  changes  can  take  place  at  frequent 
intervals. Moreover, the fact that braking energy 
can  be  fed  back  into  the  catenaries  and  remu-
nerated provides an economic incentive to RUs 
to improve the efficiency of their operations and 
reduce  their  electricity  bills.  In  contrast,  energy 
regulation  tends  to  deal  with  more  stationary 
businesses, such as buildings. 

Subsequently,  different  market  approaches 
have  evolved  over  the  years.  In  July  2022,  the 
German regulator Bundesnetzagentur (BNetzA) 
published a regulation of traction current access 
rules  with  a  view  to  simplify  the  operation-
al  procedures,  ensure  more  efficient  process 
design,  designate  clear  responsibilities,  and 
accelerate  digitalisation.  The  obligations  laid 
down  in  the  regulation  are  to  be  implemented 
by  July  2026.  In  sum,  the  need  for  additional 
regulation was approached sceptically by stake-
holders  in  Germany,  where  it  has  been  clearly 
established  that  electricity  regulation  applies 
to  the  distribution  grid.  Notwithstanding,  it  was 
recognised  that  the  political  response  to  the 
current energy crisis is going in the direction of 
more regulation rather than less. 

Spain

The  cost  of  electricity  has  typically  represent-
ed  between  12%  and  19% of  the  average  cost 
per ticket of an average high-speed operator in 
Spain  under  normal  circumstances,  according 
to  figures  from  May  2021.  This  oscillation  can 
be  attributed  to  the  differences  in  the  charges 

10  

  Robert Schuman Centre | February 2023

for  the  use  of  the  lines,  which  for  some  routes 
such  as  Madrid-Barcelona  are  greater,  diluting 
the weight of the cost of energy in relative terms. 
The  current  price  increases  triggered  by  the 
energy  crisis  have  resulted  in  traction  current 
now  accounting  for  27-40%  of  operators’  cost 
structure.  For  the  average  operator,  this  price 
increase means an increase in the average cost 
per  ticket  of  between  22%  and  35%,  which  in 
turn, is equivalent to around €8 more per ticket 
on the Madrid-Barcelona route. 

Against  the  backdrop  of  the  current  realities, 
national regulations governing traction current in 
Spain assign the IM, Adif, exclusivity in the acqui-
sition of traction current, which it then resells to 
railway operators as a service. As a public entity 
subject to Spanish public procurement law, Adif 
has to adhere to rigid regulations in terms of con-
tracting deadlines, negotiations and the involve-
ment of interested parties in the management of 
electricity  supply  contracts.  Contracts  of  more 
than five years are not to be exceeded. 

One  of  the  advantages  of  such  a  centralised 
purchasing  model  has  been  that  it  allows  for 
better  prices  to  be  obtained  due  to  economies 
of  scale  while  simplifying  the  administrative 
management of the supply of traction current for 
new entrants. Centralised purchasing, however, 
was  only  welcomed  as  long  as  it  adequately 
takes  into  account  the  interests  of  all  railway 
operators,  regardless  of  whether  incumbents 
or newcomers. A negative effect of such a cen-
tralised purchasing approach, on the other hand, 
is that it can restrict the possibility for operators 
to  take  their  own  decisions  in  the  complex 
times of the current energy crisis whilst limiting 
certainty  on  electricity  supply  prices.  The  latter 
is  a  crucial  precondition  to  enabling  the  proper 
pricing of tickets. What is more, the above-men-
tioned  limitation  of  contracts  to  a  maximum  of 
five  years  conflicts  with  the  long-term  needs  of 
railway operators. To illustrate, it was pointed out 
that while the newcomer OUIGO has a 10-year 
framework allocation capacity contract, its rolling 
stock needs to be modified to enter the Spanish 
market, and the related investments have to be 
amortised  for  a  period  of  time  exceeding  ten 
years. 

In view of this, Forum participants stressed the 
need for enhanced transparency in the selection 
process  of  the  energy  supplier,  in  particular 
when  it  comes  to  prices,  contract  modalities 
and  any  measure  that  may  have  anti-competi-
tive  effects.  Some  participants  put  forward  the 
idea of establishing a so-called contract co-man-
agement  body  involving  the  participation  of  all 
interested  rail  companies.  In  addition,  support 
was  expressed  for  the  prolongation  of  supply 
contracts, regardless of whether these are cen-
tralised  or  not,  to  a  duration  of  up  to  10  or  15 
years. 

Italy

Traction current in Italy is regulated by a set of 
consecutive  Decisions  by  the  Italian  Transport 
Regulation Authority (ART-IT). First, through its 
Decision  no.  127/2017,  the  ART-IT  launched 
a  public  consultation  on  the  further  develop-
ment  of  principles  and  criteria  for  regulating 
access  to  the  national  railway  system.  Notably 
its Annex A, point 8 of the Decision (“Pricing of 
the traction current supply”) underlines the need 
to  ensure  a  better  correlation  between  the  tari-
fication  determined  by  the  national  IM,  RFI,  for 
the  provision  of  traction  current  and  the  actual 
energy consumption of each single train. Since 
at  the  time  of  the  Decision’s  adoption,  only  a 
few trains were equipped with on-board meters, 
energy consumption was based on an estimation 
by the IM. 

The  subsequent  Decision  No.  152/2017 
concluded the consultation process and adopted 
some  additional  principles  and  criteria 
for 
regulating access to the national railway system 
(Annex A to the Decision). The Decision imposed 
the establishment of different energy consump-
tion  classes,  depending  on  rolling  stock  types, 
and the adoption of specific coefficients for each 
class (to estimate the energy consumption from 
the amount of electrical train*km operated) with 
the aim of differentiating the unit cost of energy 
depending on each energy consumption class.

Decision  No.  33/2018,  on  the  other  hand, 
requested  the  national  IM  to  ensure  that  the 
accounting  and  billing  of  the  traction  current 

supply  are  done  by  means  of  EMS  from  2019 
onwards.  A  communication  from  the  IM  dating 
from  March  2022,  however,  demonstrates  that 
only  two  RUs  in  Italy  declared  themselves  in  a 
position to use EMS for energy billing.

Last  year’s  ART-IT  Decision  No.  227/2022 
requested  the  IM  to  launch,  by  1st  February 
2023,  a  public  consultation  of  stakeholders  on 
the terms of reference, through which applicants 
for  rail  infrastructure  capacity  may  request  the 
provision  of  traction  current  to  the  different 
providers  operating  in  the  liberalised  energy 
market (and therefore not only through the IM). In 
the context of this consultation, the ART-IT also 
requested the IM to publish any existing impedi-
ments and incentivising provisions for applicants 
to install on-board energy metering systems on 
their  respective  rolling  stock  and  buy  traction 
current from third parties.

When it comes to the technical issues, RUs quoted 
difficulties in getting EMS to comply with the latest 
standard of EN 50463:2017 due to a lack of data 
transducers installed on-board as well as a lack 
of  their  electronic  components  on  the  market. 
On  the  regulatory  front,  the  main  obstacles 
pertained to the management of “mobile” points 
of  delivery.  Stakeholders  reaffirmed  that  the 
existing  energy  regulatory  framework  does  not 
adequately consider the case of final consumers 
equipped  with  “mobile”  supply  points,  such  as 
RUs operating trains on a network, and instead, 
it  largely  focuses  on  fixed  points  of  delivery 
spread  over  pre-defined  territorial  zones  of  the 
energy transmission grid. 

In  sum,  the  Italian  experience  suggests  that 
in  order  for  RUs  to  buy  energy  on  the  free 
market,  they  would  need  to  meet  a  number  of 
pre-conditions.  Namely,  they  would  need  to  be 
equipped  with  fiscally  certified  EMS,  acknowl-
edged and accepted by the energy market, and 
be connected to fixed territorial points of delivery 
managed  by  the  IM,  which  allows  metering, 
accounting and billing of the energy transmitted 
by different energy providers and consumed by 
trains circulating along the different stretches of 
the rail network. 

11  

  Electricity and Infrastructure Managers: Is there a need for regulation?

The need for a European response to 
address both ad-hoc and structural issues 

Subsequently, discussions also zoomed out onto 
the  European  context.  To  recall,  the  European 
Green Deal and the Sustainable and Smart Mobility 
Strategy set ambitious objectives for modal shift 
both for passenger rail and rail freight. Progress 
towards these objectives, however, stands to be 
de-railed  in  the  short  term,  with  energy  prices 
for  traction  having,  on  average,  tripled  in  2022 
compared to 2021. What is more, the increase in 
electricity prices has been more significant than 
the  increases  in  diesel  prices,  thus  dispropor-
tionately  affecting  railways.  If  left  unaddressed, 
this risks incentivising operators to switch back 
to diesel to power their trains.

in 

rendering 

Besides  the  economic  elements,  stakehold-
ers  highlighted  the  operational  and  technical 
challenges  posed  by  the  energy  crisis.  In 
particular,  since  higher  speed  comes  with 
higher  energy  consumption,  some  partici-
pants  cautioned  against  the  forced  reduction 
in rail speed, given that rail speed is a decisive 
railways  competitive 
element 
vis-à-vis other modes and to growing their modal 
share. To counteract these effects, stakeholders 
stressed  the  need  for  railways  to  be  granted 
priority access (also compared to other transport 
modes) to affordable and sufficient electricity in 
view  of  the  necessity  to  sustain  and  grow  their 
share.  Besides  being  a  core  pillar  of  the  EU’s 
decarbonisation  strategy,  discussions  recalled 
the strategic role played by rail freight during the 
crisis in sustaining supply chains and safeguard-
ing the transportation of various types of energy 
in countries like Germany and Czechia. 

to 

response 

the  crisis, 

the  European 
In 
Commission  has  adopted  Regulation  18/54, 
which sets a number of emergency interventions 
with  a  view  to  tackling  electricity  prices  in  the 
short term. One of these is a target for reducing 
power consumption (a 5% reduction on 10% of 
the peak hours from 1st December to 30th March 
2023). A revenue cap has also been introduced 
for  the  infra-marginal  producers  (i.e.,  nuclear 
and renewables). Some end users (RUs) might 
be  able  to  benefit  from  such  revenue  caps,  in 

12  

  Robert Schuman Centre | February 2023

particular,  by  reducing  the  unit  costs  of  elec-
tricity  traction  for  railways.  Forum  stakeholders 
stressed the importance of ensuring that part of 
the revenues from the cap is channelled towards 
traction current as a means to deal with the high 
energy  prices.  The  application  of  these  rules 
at  the  EU  level  was  welcomed  as  particularly 
important to protect public service contracts.

While participants agreed that the long-term effect 
of such emergency rules should not be underes-
timated  given  their  possibly  distortive  effect  on 
competition, they also acknowledged that com-
petition has been useful in managing the crisis. 
To illustrate, had there been no competition in the 
market, the pressure would have fallen entirely on 
the sole (monopoly) supplier. Conversely, there 
is also a need for strong customers in the market 
who have the purchasing power and resources 
to  invest  in  large  renewables  projects  and  who 
are able to engage in long-term contracts (e.g., 
20-30 years). In addition to the above-mentioned 
short-term  measures,  the  Commission  also  put 
forward  some  longer-term  measures  as  part  of 
its REPowerEU Plan, comprised of a series of leg-
islative proposals dealing with energy efficiency 
and  savings,  renewables  deployment,  and  the 
addition of a new chapter to the national recovery 
plans on resilience. 

In  contrast  to  the  emergency  measures  aimed 
at alleviating the effects of the energy crisis, the 
regulation of traction current calls for a long-term 
solution. In sum, discussions reaffirmed the inter-
linkages between European railways and energy 
laws.  The  EU  Railways  Directive  hints  at  this 
interdependence  by  making  a  clear  reference 
to  the  Electricity  Directive  in  its Annex  II  where 
traction  current  is  identified  as  an  “additional 
service”, i.e., “it should be done without prejudice 
to the Electricity Directive”. Going forward, par-
ticipants were aligned over the need for clarifica-
tion on the interpretation of existing railways law. 
Since bringing the issue to the European Court of 
Justice would entail a lengthy and cumbersome 
process, stakeholders largely agreed that inter-
vention  at  the  institutional  level  would  be  more 
productive. Here a good starting point would be 
the clarification of concepts, including rail infra-

structure,  the  level  of  unbundling  and  charging 
systems in order to create a shared understand-
ing of the rules and ensure their uniform applica-
tion across the EU.

Conclusions

The discussions of the 22nd Florence Rail Forum 
identified a vast divergence across EU Member 
States  when  it  comes  to  traction  current  and 
the  overall  organisation  and  management  of 
electricity  in  railways.  This  divergence  in  itself 
constitutes an obstacle to advancing the Single 
European Railway Area, to promoting cross-bor-
der services and to growing the modal share of 
rail. The underlying factors behind this divergence 
are engrained in regulation and, specifically, the 
lack  of  clarity  in  regards  to  which  regulatory 
framework  shall  apply  to  traction  current.  IMs, 
as  natural  monopolies,  necessitate  regulation, 
and  this  becomes  particularly  evident  when  it 
concerns their role as electricity suppliers. 

A  vast  majority  of  stakeholders, 
therefore, 
agreed that the central question to be posed is 
not  so  much  “whether”  but  rather  “what  type” 
of  regulation  would  be  needed  going  forward. 
An  initial  clarification  to  be  made  pertains  to 
the “reference point” for the future regulation of 
traction current, notably, whether it should be the 
electricity- or railways-regulatory framework that 
serves  as  the  basis  for  future  regulation.  The 
electricity regulatory framework enjoys a higher 
degree  of  maturity  and  can,  thus,  be  applied 
immediately,  as  we  have  seen  in  the  German 
case.  The  railways  regulatory  framework,  on 
the  other  hand,  may  require  some  time  for  its 
further refinement or clarification. On a positive 
side  note,  devising  a  tailor-made  regulatory 
framework  would  offer  the  advantage  of  better 
catering  to  the  needs  and  specificities  of  the 
railway  industry  (e.g.,  mobile  and  cross-border 
nature, difficulty measuring its energy consump-
tion, etc.). 

Regardless  of  which  avenue  policymakers  opt 
for,  Forum  stakeholders  were  aligned  over  the 
fact  that  the  basic  principles  guiding  the  intro-
duction of liberalisation (i.e., unbundling, access 
regulation) in network industries across Europe 

would  remain  largely  the  same  for  the  railway 
sector.  Therefore,  the  main  principles  around 
contestability, ensuring the possibility to directly 
contract  a  supplier,  and  the  supervision  of  the 
conditions on which IMs pass the cost will have 
to be guaranteed.

Stakeholders  also  agreed  on  the  need  to 
make  a  distinction  between  structural  issues 
(concerning  regulation  as  such)  and  ad-hoc 
issues  (concerning  temporary  aid  measures 
due  to  high  energy  prices).  While  short-term 
problems  surrounding  high  energy  prices  and 
regulatory uncertainty tend to take centre stage 
today, in the long-term, the focus would need to 
be placed on structural issues. 

Against the backdrop of the European Green Deal 
and  the  need  to  decarbonise  transport,  IMs  as 
major landowners, are well positioned to invest 
in  solar  panels  and  renewable  energy  along 
their  infrastructure.  Given  railways’  significant 
electricity  generation  capabilities,  they  have 
also  become  paramount  in  the  ongoing  debate 
concerning  energy  blackouts  and  resilience. 
By taking up a more proactive role in electricity 
generation, railways can boost the resilience of 
the entire electricity system. 

As the discussions have shown, many IMs and 
RUs  are  indeed  unveiling  plans  to  invest  in 
electricity  generation  with  a  view  to  becoming 
more  self-sufficient  and  supporting  the  energy 
transition. In Italy, for instance, even before the 
energy  crisis,  Ferrovie  dello  Stato  Italiane  (FS) 
launched a new investment plan, which foresees 
the production of sufficient renewable energy to 
meet  40%  of  their  electricity  needs  in  the  next 
five  years.  To  this  end,  FS  intends  to  invest 
€1.8  billion  in  the  installation  of  solar  power 
plants  over  the  course  of  the  next  five  years 
while  making  use  of  underutilised  assets  and 
space. Securing a conducive EU regulatory and 
industrial policy framework will be paramount to 
accelerate  the  deployment  of  such  projects  by 
incentivising efficient investments in the system, 
securing functional supply chains and access to 
necessary materials. 

13  

  Electricity and Infrastructure Managers: Is there a need for regulation?

The  electricity  consumption  of  each  virtual 
point  of  supply  is  calculated  as  the  sum  of  all 
measured  volumes  of  electricity  consumption. 
Therefore,  the  measurement  of  the  electricity 
consumption  of  each  train  and  locomotive  is  a 
key feature of the competitive railway electricity 
market. Electricity consumption data is provided 
by  on-board-meters  and  exchanged  with  the 
electricity  grid  operator.  DB  Energie,  therefore, 
processes and delivers such consumption data 
to all eligible parties, such as the train operators 
and their electricity suppliers, as well as to other 
railway  infrastructure  managers  in  neighbour-
ing  countries. This  data  is  also  used  to  charge 
for  the  use  of  the  electricity  network.  Those 
network  access  charges  are  calculated  by  DB 
Energie  and  regulated  by  the  national  electric-
ity  regulator.  All  customers  fi nd  these  network 
charges publicly available on the internet. 

Third-party-access in railway 
electricity markets is possible 

A comment by Florian Baentsch, DB 
Energie GmbH

Third-party-access (TPA) in the railway electricity 
market is possible – this was the main conclusion 
drawn  from  the  German  experience  presented 
at  the  22nd  Florence  Rail  Forum  in  December 
2022.  On  the  basis  of  the  European  Electricity 
Directive (2019/944/EC) as well as the national 
Energy  Economics  Law  (Energiewirtschafts-
gesetz)  and  various  domestic  regulations,  the 
electricity distribution network to supply traction 
power  to  railways  in  Germany  is  regulated  to 
promote  competition.  This  nation-wide  distribu-
tion network on the technical basis of 110 kV and 
16,7 Hz is owned and operated by DB Energie 
GmbH, which is a subsidiary of Deutsche Bahn 
AG. DB Energie guarantees open access to this 
network and offers the contractual and technical 
means for all relevant parties. 

Within the competitive railway electricity market, 
all  railway  companies  are  free  to  contract  an 
electricity  supplier  of  their  choice.  Accordingly, 
about  ten  to  twelve  electricity  suppliers  have 
decided  to  enter  this  market  to  serve  railway 
companies.  The 
legal  contracts,  economic 
processes  and  data  exchange  formats  are 
similar  but  not  completely  identical  to  those 
applicable to the regular 50 Hz electricity market. 
This  is  due  to  certain  specifi c  qualities  of  the 
railway market. For instance, railway customers 
are travelling around the country and also cross 
national borders, which is rather unusual in the 
normal electricity sector. Moreover, railways use 
different  trains  and  locomotives  to  serve  their 
transport obligations and may also exchange lo-
comotives with other operators from time to time. 
Therefore, the point of supply had to be defi ned in 
order to aggregate electricity consumption to the 
correct  railway  operator.  Each  railway  operator 
needs to be responsible for the electricity he or 
she  has  actually  consumed.  Market  rules  are 
therefore  based  on  the  defi nition  that  all  trains 
and  locomotives  operated  by  each  railway  unit 
at each point in time constitute the “virtual point 
of supply”. 

14  

  Robert Schuman Centre | February 2023

Under normal economic circumstances, competi-
tion in a market is there to stay. It is hardly possible 
to put a broken egg back into its shell. But what 
are normal circumstances, nowadays? Currently, 
we  see  regulation  entering  the  wholesale  elec-
tricity market as so-called “excessive” revenues 
of  different  electricity  generators  are  curtailed. 
Additionally, strict regulation is also entering the 
end-user market. “Electricity price brakes” have 
been introduced by the German government to 
come into effect starting in March 2023.

 Is there any room left for competition? Hopefully, 
curtailed  revenues  in  the  wholesale  market  as 
well as legally binding caps in the end-custom-
er  market  of  electricity,  will  remain  temporary 
instruments  to  cope  with  the  energy  crisis.  As 
we all hope that this crisis may not last forever, 
we  are  also  hopeful  that  competitive  electricity 
markets will prevail.

Traction Power is distributed via the Railway electricity network of DB Energie GmbH

15  

  Electricity and Infrastructure Managers: Is there a need for regulation?

Finding the right balance between 
competition and industrial policies 
at the intersection between 
railways and electricity regulations

A comment by Andrea Minuto Rizzo, 
Ferrovie dello Stato Italiane

The intersection between electricity and railways 
regulation  has  several  dimensions  that  can  be 
assessed both from a European policy perspec-
tive  and  with  a  temporal  approach,  distinguish-
ing  between  short-term  and  long-term.  This 
discussion is very timely, as the current energy 
prices crisis still exerts a considerable impact on 
the cost structure of rail traction. 

From a short-term perspective, when facing great 
uncertainty, public policy decisions can, indeed, 
infl uence the future direction in a decisive way, 
especially in the current phase where industrial 
policy is back into the political agenda. However, 
while – on the one hand – increasing the compet-
itiveness of Europe, also in the light of decisions 
taken  in  other  jurisdictions,  like  the  Infl ation 
Reduction Act  in  the  United  States  of America, 
is  key,  on  the  other  hand,  protecting  the  level 
playing fi eld among countries with different fi scal 
space  would  avoid  fragmenting  the  internal 
market.1

Against this background, promoting modal shift 
towards  rail  as  the  most  sustainable  transport 
mode,  is  among  the  top  priorities  of  the  Com-
mission’s  objectives  within  the  Green  Deal.  In 
its Communication on a “Sustainable and Smart 
Mobility  Strategy”2,  the  Commission  noted  the 
need to shift towards more sustainable transport 
modes for both passenger and freight services, 
indicating  very  ambitious  targets.  Rail  freight 
traffi c must increase by 50% by 2030 and double 
by 2050, while highspeed traffi c must double by 
2030 and triple by 2050.

soared,  sometimes  to  an  unbearable  level, 
and  emergency  regulations  have  been  put  in 
place  both  at  European  and  national  levels.  In 
this  challenging  situation,  the  goal  of  a  decar-
bonised European transport and mobility sector 
should  not  only  remain  achievable  but  also 
ensure  an  equal  basis,  without  differentiations 
based  on  the  country  where  an  undertaking  is 
located. Otherwise, the risk of a reverse modal 
shift  becomes  more  concrete,  with  fossil-fu-
el-reliant  transport  modes  gaining  a  competi-
tive  advantage  over  more  sustainable,  electric-
ity-based transport modes such as railways, as 
well the one of a fragmented and uneven playing 
fi eld.

At  the  initiative  of  the  Commission,  Council 
Regulation  n.  1854/223,  adopted  on  6  October 
2022,  consists  in  an  emergency  intervention  to 
address  high  energy  prices,  while  preserving 
the  functioning  of  the  EU’s  electricity  market 
and  security  of  supply.  The  Council  Regulation 
interdependent 
integrated  and 
includes  an 
package  of 
interventions, 
four  emergency 
including  -  among  others  -  a  wholesale  cap  on 
the  market  revenues  of  inframarginal  technolo-
gies  (e.g.,  nuclear,  renewables).  Interventions 
do  not  include  an  electricity  retail  price  cap, 
which could have been considered at European 
level for services of general interest, such as rail, 
to  stabilise  it  against  infl ation  while  –  in  certain 
cases - it has been taken into account at national 
level  by  countries  with  suffi cient  fi scal  space. 
In  that  regard,  policymakers  should  beware  of 
possible  unintended  long-term  effects  of  these 
discrepancies  in  short-term  emergency  rules. 
State aid cannot be the only European solution 
and  should  be  accompanied  by  fair  support 
mechanisms that maintain the integrity and unity 
of the internal market. 

But 

in 

the  meantime,  energy  prices  have 

1 

2 

3 

 Special meeting of the European Council (9 February 2023) – Conclusions (https://www.consilium.europa.eu/media/61997/2023-02-
09-euco-conclusions-en.pdf).
 European Commission’s Communication « Sustainable and Smart Mobility Strategy – putting European transport on track for the 
future », https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12438-Sustainable-and-Smart-Mobility-Strategy_en.
 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R1854&qid=1676213980555&from=en.

16  

  Robert Schuman Centre | February 2023

European  public  policy  decisions  will  continue 
to  be  key  to  help  private  investments  such  as 
the one described above become a reality. The 
Green  Deal  Industrial  Plan,  presented  by  the 
European Commission on February 1st with the 
aim of putting Europe’s net-zero industry in the 
lead, goes in the right direction, especially in two 
respects, both related to the defi nition of a pre-
dictable  and  simplifi ed  regulatory  environment 
but not only. First of all, by ensuring a simplifi ed 
and  fast-track  permit-granting  process,  as  well 
as access to critical raw materials.7 Secondly, by 
proposing, on top of existing European fi nancial 
tools,  the  introduction  of  a  possible  European 
Sovereignty  Fund  to  give  a  structure  and  an 
answer  to  the  investment  needs  in  strategic 
sectors.

In  such  diffi cult  times,  Europe  should  fi nd  an 
appropriate  balance  between  competition 
and  industrial  policies  in  order  to  provide  a 
much-needed  framework  for  all  European  un-
dertakings  to  compete  on  a  level  playing  fi eld, 
thus  bringing  to  light  much-awaited  ambitious 
green transition investments.

Moving to the medium and longer term, Repower 
EU  is  one  of  the  solutions  envisaged  by  the 
European  Commission  to  tackle  these  issues. 
On 18 May 20224, in response to the hardships 
and  global  energy  market  disruption  caused 
by  Russia’s  invasion  of  Ukraine,  the  European 
Commission presented the REPowerEU Plan with 
the aim of accelerating clean energy deployment 
and promoting energy effi ciency and the use of 
renewable sources. It could offer the possibility 
to support the rail sector both - on the one hand - 
supporting zero emission transport and its infra-
structure and - on the other hand - when it might 
contribute  to  increasing  the  share  and  acceler-
ating the deployment of renewable energy, such 
as  on  transport  infrastructure. According  to  the 
EU Solar Energy Strategy5, highways or railway 
tracks present, indeed, an unexploited potential 
for solar energy deployment. 

In  that  wider  context,  FS  has  set  a  goal  to 
become  self-producer  of  energy,  enabling  it 
to  become  one  of  the  largest  producers  of 
renewable energy, thus playing an active role in 
the green transition. As early as 2027, according 
to its 10-year Industrial Plan, FS aims at covering 
40%  of  its  energy  needs,  producing  up  to  2.6 
TWh, with an investment of more than 1.6 billion 
euros. As FS is the fi rst consumer of energy in 
Italy,  with  2  percent  of  national  consumption,  it 
will weigh less on the Italian electricity system. At 
the beginning of 2023, it has already launched a 
130 million tender for twenty photovoltaic plants 
to be installed in those areas adjacent to railway 
electrical substations and from 2024, it will start 
generating  energy,  while  additional  tenders  are 
expected later this year.6 This will offer a concrete 
contribution  to  the  country’s  green  transition, 
hoping it will generate a possible multiplier effect 
also  at  European  level,  with  Italy  and  Europe 
being less dependent on imported fossil energy 
sources. 

4  Communication 

from 
COM_2022_230_1_EN_ACT_part1_v5.pdf

the  Europen  Commission  REPowerEU  Plan  https://energy.ec.europa.eu/system/fi les/2022-05/

5  Communication  from  the  Europen  Commission  ‘  EU  Solar  Energy  Strategy’  htt ps://eur-lex.europa.eu/resource.html?uri=cel-

lar:516a902d-d7a0-11ec-a95f-01aa75ed71a1.0001.02/DOC_1&format=PDF
 https://www.fsnews.it/it/focus-on/corporate/2023/1/19/energia-gruppo-fs-gara-130-milioni-20-impianti-fotovoltaici.html
 https://commission.europa.eu/document/41514677-9598-4d89-a572-abe21cb037f4_en

6 
7 

17  

  Electricity and Infrastructure Managers: Is there a need for regulation?

FSR Transport

The Florence School of Regulation (FSR) is a project within the European 
University  Institute  (EUI)  focusing  on  regulatory  topics.  It  works  closely 
with  the  European  Commission,  and  is  a  growing  point  of  reference  for 
regulatory theory and practice. It covers four areas: Communications and 
Media, Energy (Electricity and Gas), Transport, and Water.
The  FSR-Transport  Area’s  main  activities  are  the  European  Transport 
Regulation Forums, which address policy and regulatory topics in different 
transport  sectors.  They  bring  relevant  stakeholders  together  to  analyse 
and reflect upon the latest developments and important regulatory issues 
in  the  European  transport  sector.  These  Forums  inspire  the  comments 
gathered in this European Transport Regulation Observer. Complete infor-
mation on our activities can be found online at:  fsr.eui.eu

www.eui/rsc

© European University Institute, 2023
Editorial matter and selection © Matthias Finger, Juan Montero,  
Teodora Serafimova, 2023

This work is licensed under the Creative Commons Attribution 4.0 (CC-BY 4.0) 
International license which governs the terms of access and reuse for this work. 
If cited or quoted, reference should be made to the full name of the author(s), 
editor(s), the title, the series and number, the year and the publisher.

Views expressed in this publication reflect the opinion of individual authors and 
not those of the European University Institute.

Published by
European University Institute (EUI)
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18 

 RSC | Policy Brief | Issue 2023/03 | February 2023

doi:10.2870/391592
ISBN:978-92-9466-361-0
ISSN:2467-4540
QM-AX-23-003-EN-N

Co-funded by the Erasmus+ Programme of the European UnionRobert Schuman Centre for Advanced StudiesThe Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Professor Erik Jones, aims to develop inter-discipli-nary and comparative research on the major issues facing the process of European integration, European societies and Europe’s place in 21st cen-tury 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 continuously evolving, reflecting the changing agenda of European integration, the expanding membership of the European Union, developments in Europe’s neighbour-hood and the wider world.