COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2019/943, as regards future-proofing electricity bills in the Union, through reducing system costs and fostering electrification and digitalisation
Date: 2026-07-17
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, European Union Agency for the Cooperation of Energy Regulators, electrical energy, electricity supply, energy cooperation, energy efficiency, energy grid, energy transition, renewable energy, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 17.7.2026  SWD(2026) 600 final  COMMISSION STAFF WORKING DOCUMENT   Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2019/943, as regards future-proofing electricity bills in the Union, through reducing system costs and fostering electrification and digitalisation                {COM(2026) 600 final}  
 
 
TABLE OF CONTENTS 

1. 

Introduction ..................................................................................................... 3 

2.  Network charges .............................................................................................. 5 

2.1.  Policy context ........................................................................................ 5 

2.1.1.  Role of network charges in the electricity system ................... 5 

2.1.2.  Existing EU legislative framework.......................................... 5 

2.1.3.  Problem Definition .................................................................. 7 

2.2.  Objectives of the proposal ..................................................................... 8 

2.3.  Expected benefits and impacts ............................................................ 11 

2.3.1.  Benefits to the network and system users .............................. 11 

2.3.2.  Administrative costs .............................................................. 16 

2.3.3.  Environmental impact............................................................ 17 

3.  Smart Grids and Innovation .......................................................................... 18 

3.1.  Non-wire, smart and digital solutions for grids and related smart grid 
indicators ............................................................................................. 18 

3.1.1.  Policy context ........................................................................ 18 

3.1.2.  Problem definition ................................................................. 19 

3.1.3.  Objectives of the proposal ..................................................... 20 

3.1.4.  Expected benefits and impacts .............................................. 21 

3.2.  Energy data exchange for primary and secondary use ........................ 24 

3.2.1.  Policy context ........................................................................ 24 

3.2.2.  Problem definition ................................................................. 26 

3.2.3.  Objectives of the proposal ..................................................... 32 

3.2.4.  Expected benefits and impacts .............................................. 33 

4.  Smart Meters ................................................................................................. 42 

4.1.  Policy context ...................................................................................... 42 

4.1.1.  Role of smart metering in the electricity system ................... 42 

4.1.2.  Existing EU legislative framework........................................ 42 

4.1.3.  State-of-play and deployment gaps across the EU ................ 43 

4.1.4.  Problem definition and rationale for EU action..................... 44 

4.1.5.  Stakeholders’ views and market perspectives ....................... 45 

4.1.6.  Deployment benchmarks and challenges .............................. 46 

4.1.7. 

Internal market implications .................................................. 47 

4.1.8. 

Industrial supply chain and security considerations .............. 47 

 
 
 
4.1.9.  Role of public procurement and EU frameworks .................. 48 

4.2.  Objectives of the proposal ................................................................... 49 

4.2.1. 

Introduction of a two-step EU-wide deployment trajectory .. 49 

4.2.2.  Complementarity with existing EU legislation ..................... 49 

4.2.3. 

Internal market and system objective .................................... 50 

4.3.  Expected benefits and impacts ............................................................ 50 

4.3.1.  Benefits and positive impacts ................................................ 50 

4.3.2.  Costs, risks and mitigating measures ..................................... 52 

5.  Taxation ......................................................................................................... 55 

5.1.  Policy context ...................................................................................... 55 

5.1.1.  Problem definition ................................................................. 55 

5.1.2.  Current and proposed fiscal framework for energy ............... 55 

5.2.  Objectives of the proposal ................................................................... 59 

5.3.  Expected benefits and impacts ............................................................ 60 

6.  Grid connection measures ............................................................................. 67 

6.1.  Policy context ...................................................................................... 67 

6.1.1.  Problem definition ................................................................. 67 

6.1.2.  Existing EU legislative framework........................................ 68 

6.2.  Objectives of the proposal ................................................................... 68 

6.3.  Expected benefits and impacts ............................................................ 69 

6.3.1.  Benefits to network users and economic impacts .................. 69 

6.3.2.  Administrative costs .............................................................. 70 

6.3.3.  Environmental impact............................................................ 70 

7.  Summary of the costs and benefits ................................................................ 72 

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1. 

 INTRODUCTION 

The European electricity network is a cornerstone of the EU’ economy and energy security. 
As  the  world’s  most  interconnected  electricity  grid,  it  already  allows  renewables  to  be 
integrated and delivers electricity across borders. Yet the challenge facing the EU is no 
longer simply  to maintain this  system, but  to transform  it so that it can support  a more 
electrified economy and efficiently integrate the widespread deployment  of renewables. 
This  calls  for  significant  investments  into  electricity  grids  of  approximately  EUR  600 
billion by 2030 and approximately EUR 1.2 trillion by 2040 are needed.  

Considering that these investments will have to be reflected, by way of network charges, 
in the bills of European consumers, the EU must ensure that the electricity grid is operated 
at  maximum  efficiency,  while  incentivising  system  users  to  adopt  system-friendly 
behaviours to reduce costs as much as possible. This will in turn bring down energy costs 
for consumers, especially for those consumers who make the smartest use of the electricity 
grid.  

Recent geopolitical and economic developments have made it even more urgent to develop 
an efficient, smart and flexible grid. The continuing war of aggression in Ukraine, tensions 
in  the Middle East  and disruptions to  global energy supply chains  have  highlighted the 
vulnerability of the EU to fossil-fuel price shocks and import dependency. 

In light of the conflict situation in the Middle East, President Von Der Leyen stated ahead 
of the European Council of 19 March 2026 that: ‘we need to make the best use of existing 
grid infrastructure. While grid charges are essential to cover much needed investments, 
we should also ensure that grid users receive the right incentives to make optimal use of 
existing grid infrastructure, as this will avoid unnecessary and costly grid expansions. 
Grid  operators  too  can  do  more  to  improve  the  productivity  of  grid  infrastructure, 
making full use of innovative technologies. The Commission will present a legal proposal 
to achieve those goals, while allowing Member States to reduce grid charges for energy-
intensive industries’ (emphasis added) (1). 

The European Council, in its conclusions called: ‘on the Commission, in the light of the 
recent  letter  by  its  President,  including  regarding  the  intention  to  increase  the  market 
stability  reserve,  to  urgently  present  targeted  measures  –  across  all  components  of 
electricity prices – for concrete actions to lower electricity prices [...]’ (2).  

Against  this  backdrop,  the  European  Commission  (‘Commission’)  put  forward  a 
coordinated  set  of  measures  to  boost  security  and  affordability  by  reducing  the  EU’s 
reliance on imported fossil fuels. AccelerateEU (3), published on 22 April 2026, establishes 
a plan for an energy union that delivers energy security and clean, abundant, affordable, 
homegrown  energy  to  EU  consumers  and  businesses.  It  highlights  the  importance  of 
decarbonisation, the need to protect consumers and industry from price peaks and the need 
to invest in and modernise our infrastructure.  

This proposal builds on previous Commission measures to answer the call to improve the 
efficiency  of  the  electricity  system,  while  making  full  use  of  innovative  technologies, 
ultimately reducing overall energy bills.  

(1) https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_26_663.  
(2) en-20260319-european-council-conclusions.pdf. 
(3) https://energy.ec.europa.eu/strategy/accelerateeu-strengthen-eu-energy-resilience_en. 

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It does so by directly addressing two components of those bills, namely network charges 
and taxes through specific measures on network charges, smart electricity grid indicators, 
smart meters, and taxation, as well as the related question of timely grid access to enable 
electrification, by proposing measures enabling  non-discriminatory  and 
transparent 
prioritisation of grid connection requests and their maturity. 

The proposal seeks to improve the design of network charges so that both system operators 
and  system  users  are  incentivised  to  use  the  electricity  system  more  efficiently,  reduce 
peaks, make use of flexibility and limit avoidable grid costs. To support this, it introduces 
targeted measures to make those incentives effective in practice: a minimum smart meter 
trajectory, common smart  grid indicators, more effective electricity grid data exchange, 
and a voluntary EU-level framework for secure reuse of electricity grid data to develop 
and test innovative digital tools to operate and optimise the grid.  

At the same time, the proposal will play a crucial role in speeding up electrification of the 
EU’s  energy  system,  through  appropriate  tariff  design,  efficient  technologies  and 
flexibility.  Smart  meters  and  smart  grids,  supported  by  secure  and  interoperable  data 
exchange  between  system  operators,  market  participants  and  final  customers,  are  key 
enablers of such flexibility, as they allow electricity consumption, generation and storage 
to respond more efficiently to system needs and price signals. However, the transition to 
electrification is hampered where national taxation frameworks continue to favour fossil 
fuels over electricity, thereby disincentivising the shift to lower-cost, renewable and low-
carbon energy solutions. 

To lower electricity bills effectively and support the EU’s energy and climate objectives, 
the  Commission’s  proposal  takes  a  dual  approach  by  both  making  electricity  networks 
more efficient and aligning taxation principles. The measures on taxation do not harmonise 
tax rates or levels but ensure that electricity is not subject to a higher tax burden than gas.  

4 

 
 
 
2.  NETWORK CHARGES 

2.1.  Policy context 

2.1.1.  Role of network charges in the electricity system 

The main element of the proposal relates to network charges, which constitute one of the 
four elements of energy bills.  

Network charges finance the physical upgrade of grids and the operation of the electricity 
system. Put simply, network charges are what all system users connected to the electricity 
system pay for the service of having the possibility to have electricity transported from the 
point of production to where the electricity is used. Tariffs (4) allow for the cost recovery 
of  investments  into  transmission  and  distribution  grid  assets,  smart  meters,  the  cost  of 
maintenance and repairs of the existing network, running system services on a daily basis 
as  well  as  the  costs  of  transmission  system  operators  (‘TSOs’)  and  distribution  system 
operators  (‘DSOs’).  Costs  that  can  be  recovered  by  network  tariffs  include  capital 
expenditure  related  to  infrastructure  investments  (‘CapEx’);  operational  expenditure 
related to the daily management of the system (‘OpEx’); remuneration of system operators; 
the  cost  of  network  losses;  costs  of  system  balancing  and  ancillary  services;  costs  of 
congestion management; and others. 

Network  charges  are  complex  in  their  design,  as  they  have  to  balance  different  system 
needs  while  encouraging  cost-effective  multi-annual  network  investment  decisions  and 
strong incentives to keep overall operational system costs in check.  

Network charges are set for regulatory periods (typically of 4-5 years), during which the 
national  regulatory  authorities  (‘NRAs’)  determine  the  level  of  tariff  remuneration  (i.e. 
allowed  revenues  for  system  operators)  and  tariff  methodologies,  which  determine  the 
incentives for system operators and how the total costs will be distributed among system 
users in the form of network charges. This regulatory cycle provides stability, although 
there  are  often  mid-period  adjustments  or  annual  revisions  to  ensure  that  the  levels  of 
allowed  system  operator  revenue  and  network  charges  are  consistent  with  the  actions 
system operators need to take to manage any change in circumstances. 

2.1.2.  Existing EU legislative framework  

2.1.2.1.  Independent NRAs competence to fix or approve tariffs 

Under  EU  legislation,  ultimate  responsibility  for  network  tariff  design  lies  with  the 
independent  NRAs (5).  According  to  Article  59(1)(a)  of  Directive  (EU)  2019/944  (the 
‘Electricity  Directive’) (6),  NRAs  have  ‘the  duty  to  fix  or  approve,  in  accordance  with 
transparent criteria, transmission or distribution tariffs or their methodologies, or both’. 

(4)  Tariffs  and  network  charges  are  used  interchangeably,  both  in  the  staff  working  document  and  the  legislative  proposal 

accompanying it.  

(5) 

In ACER’s report tariff setting is described as a three-step process: first, the allowed or target revenues of the system operators 
(including the  remuneration  method for  TSO or  DSO costs) are determined;   second, the tariff structure  is  defined;  third,  the 
costs/revenues are allocated to each of the tariff structure’s items (i.e. charges paid by network users). See the ACER tariff report 
2025, pp. 71-72, available here: 2025-ACER-Electricity-Network-Tariff-Practices.pdf). 

(6)  Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market 
for electricity and amending Directive 2012/27/EU (recast), as amended by Directive (EU) 2024/1711 of the European Parliament 
and of the Council of 13 June 2024, OJ L, 2024/1711, 26.6.2024 (http://data.europa.eu/eli/dir/2024/1711/oj).  

5 

 
 
Member  States  are  obliged  to  guarantee  the  NRA’s  independence  and  ensure  that  it 
exercises its powers to fix or approve tariffs impartially and transparently.  

For that purpose, NRAs must be legally distinct and functionally independent from other 
public or private entities, act independently from any market interest and take autonomous 
decisions, independently from any political body (7). That requirement has no bearing on 
close cooperation with other relevant national authorities or to general policy guidelines 
issued by the government not related to the regulatory powers and duties under Article 59 
of  the  Electricity  Directive.  NRAs’  independence  from  national  governments  and 
parliaments in relation to the exercise of their competence in tariffs has been put forward 
and upheld by the Court of Justice of the European Union (‘the CJEU’). 

The Court has consistently found that NRAs must make their own decisions autonomously 
and  solely  in  the  public  interest,  to  ensure  compliance  with  the  objectives  pursued  by 
Regulation (EU) 2019/943 (the ‘Electricity Regulation’) (8) and the Electricity Directive, 
without being subject to external instructions from other public or private entities. 

To this end, the Electricity Directive requires Member States to ensure that their NRA has 
‘all the necessary human and financial resources it needs’ (9) to perform its tariff-setting 
tasks well, and in accordance with EU legislation.  

2.1.2.2.  Current tariff design principles  

As outlined above, the NRA has the responsibility to fix or approve tariff methodologies. 
The scope of this responsibility can only be defined and amended by EU legislation. The 
principles  for  developing  tariffs  are  set  out  in  the  Electricity  Regulation,  including 
subsequent  amendments  in  the  latest  reform  of  2024  (the  ‘Electricity  Market  Design 
Reform  Package’) (10).  In  addition,  governments  can  issue  general  policy  guidelines  in 
accordance with Articles 57 and 59 of Directive (EU) 2019/944. 

A  basic  principle  enshrined  in  Article  18  of  the  Electricity  Regulation  is  that  network 
charges  should  be  cost-reflective  and  encourage  efficient  use  of  the  existing  grid  by 
providing  price  signals  for  network  users  to  adapt  their  behaviour.  According  to  the 
Electricity  Regulation,  network  charges  must  be  ‘cost-reflective,  transparent,  take  into 
account the need for network security and flexibility and reflect actual costs incurred…’. 
In  addition,  the  tariff  regime  should  support  ‘overall  system  efficiency’,  provide  ‘price 
signals  to  consumers  and  producers’,  ‘locational  signals  at  Union  level  and  take  into 
account  the  amount  of  network  losses  and  congestion  caused,  and  investment  costs  for 
infrastructure’ (11). 

Traditionally,  electricity  tariff  regimes  were  split  between  CapEx  and  OpEx  under 
regulatory prices controls, with a strong bias towards CapEx investment in infrastructure 
which is typically regulated via a certain expected rate-of-return on investments. However, 
this approach had to be updated to adjust to the overarching policy of decarbonisation and 
increased  electrification,  along  with  the  decentralisation  of  energy  production.  In  the 

(7)  Article 57 of the Electricity Directive.  
(8)  Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity 
(recast),  as  amended  by  Regulation  (EU) 2024/1747  of  the  European  Parliament  and  of  the  Council  of  13 June 2024,  OJ  L, 
2024/1747,  26.6.2024,  ELI: http://data.europa.eu/eli/reg/2024/1747/oj.  See  also  relevant  CJEU  judgments:  judgment  of 
2 September 2021,  European  Commission  v  Federal  Republic  of  Germany,  Case  C-718-18;  judgment  of  3 December 2020, 
European Commission v Belgium, Case C-767/19; judgment of  11 June 2020, Prezident Slovenskej republiky, Case 378/19. 

(9)  Article 57(5)(b) of the Electricity Directive. 
(10)  Regulation (EU) 2024/1747 of the European Parliament and of the Council of 13 June 2024 and Directive (EU) 2024/1711 of the 

European Parliament and of the Council of 13 June 2024.  

(11)   Article 18 paragraphs 1 to 3of the Electricity Regulation. 

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context  of  the  Electricity  Market  Design  Reform  Package,  Article  18  of  the  Electricity 
Regulation was amended to reflect this. The legislation now requires a total expenditure 
(‘TotEx’)  approach  in  that  tariffs  should  ‘reflect  the  fixed  costs  of  transmission  system 
operators  and  distribution  system  operators  and  shall  consider  both  capital  and 
operational  expenditure  to  provide  appropriate  incentives  to  transmission  system 
operators and distribution system operators over both the short and long term including 
anticipatory investment, in order to increase efficiencies including energy efficiency.’ In 
this way, tariff methodologies should encourage holistic thinking about system needs and 
the most efficient  solutions  to  meet  these needs (12). This  approach can allow NRAs to 
incentivise TSOs, DSOs and market participants to invest in cost-effective systems that 
allow for flexibility and optimal use of the grid rather than a more traditional approach of 
only building out the grid. (13) A recent survey by the Commission’s Joint Research Centre 
focusing on major DSOs found that, in only 32% of the 26 participating EU countries in 
which the surveyed DSOs operate, NRAs apply a TotEx approach. In the remaining 68% 
of countries, NRAs apply a non-TOTEX approach. (14) 

for 

tariff  design 

further  demonstrate 

co-legislators’ 
Additional  principles 
acknowledgement of the increasing need for incentives to be provided to system users to 
develop  system-friendly  behaviour  to  increase  the  flexibility  of  the  grid.  For  example, 
Article 18(2) of the  Electricity Regulation  requires incentives to  be  provided to  system 
operators over both the short and long-term including anticipatory investments to foster 
the integration of renewables, flexibility, demand response and optimisation solutions for 
existing grids.  

Moreover, to acknowledge the changing role that distribution systems are playing – most 
new  renewables  projects  are  connected  at  the  distribution  level  –  Article  18  of  the 
Electricity  Regulation  sets  out  that  network  charges  should  not  discriminate  between 
production connected at the distribution level and production connected at the transmission 
level. 

Finally, to support NRAs in designing the national tariff regime and to mitigate the risks 
of market fragmentation, the Agency for the Cooperation of Energy Regulators (‘ACER’) 
produces a report every two years on transmission and distribution tariff methodologies. 
The  most  recent  report,  published  on  26 March 2025 (15),  highlights  best  practices  and 
contains recommendations for NRAs. NRAs should take account of these reports in their 
work while also considering national specificities. In addition, ACER published a report 
into DSO revenue setting in April 2026(16), which provides recommendations and supports 
NRAs further in their work. 

2.1.3.  Problem Definition  

The Electricity Regulation and Electricity Directive already contain a comprehensive set 
of rules on network charges design, covering both the cost coverage of system operators 
and  the  principles  of  how  this  cost  is  distributed  between  different  user  categories  to 
provide the right incentives for system-friendly behaviour. These rules largely stem from 

(12) 

In order to promote innovation and move away from CapEx bias in grid investment, RAP advocates allowing for revenue-capped 
cost recovery based on total expenditure and rewarding system operators for specific performance outputs that promote the energy 
transition to incentivise network innovation. Incentivising Network Innovation – RAP Blueprint. 
(13)  Action 12 in ACER, Unlocking flexibility: No-regret actions to remove barriers to demand response). 
(14)  See 

‘DSO  Observatory  2024  –  Unlocking  Flexibility 

(2025),  pp.  52-55,  available  at: 

in  Europe’ 

JRC, 

https://publications.jrc.ec.europa.eu/repository/handle/JRC141953. 
(15)  Available here: 2025-ACER-Electricity-Network-Tariff-Practices.pdf. 
(16)  https://www.acer.europa.eu/sites/default/files/documents/Publications/ACER-2026-DSO-revenue-setting-report.pdf.  

7 

 
 
the  2019  Clean  Energy  Package  and  were  written  with  integration  of  renewables  and 
flexibility  in  mind.  They  were  recently  amended  and  updated  as  part  of  the  Electricity 
Market Design Reform Package. 

Meanwhile, European energy systems are undergoing a paradigm shift. In the past, large, 
centralised dispatchable generation covered the demand of predictable loads. However, the 
power system now features a larger proportion of decentralised and intermittent renewable 
electricity.  At  the  same  time,  electricity  demand  is  expected  to  increase (17)  as  we 
decarbonise  and  electrify  new  sectors  of  the  economy.  The  electricity  grid  is  also 
experiencing  changes  in  patterns  of  electricity  flows  due  to  a  high  concentration  of 
renewable  power  in  certain  areas  of  the  grid  and  increased  distributed  generation  at 
household level (for example, rooftop solar). Within this context, the role of the electricity 
network and underlying charges is also evolving. Network charges can have an influence 
on steering investments and on the behaviour of system users already connected to the grid. 
Equally, network charges can encourage or discourage the flexibility needed to minimise 
system costs. 

Therefore, while cost recovery is a key purpose of network tariffs, there is substantial room 
to amend the current tariff design principles to provide stronger incentives to encourage 
system-friendly behaviour by system users and more efficient grid operation by TSOs and 
DSOs,  which  would  ultimately  drive  down  the  costs  of  grid  investment  and  system 
operation (18).  Moreover,  while  the  principle  of  tariff  transparency  is  already  set  out  in 
Article 18 of the Electricity Regulation, there is substantial room to introduce measures to 
improve transparency in tariff-setting methodologies. 

Finally, on 2 July 2025, the Commission published a notice with guidelines on future proof 
network charges for reduced system costs (the ‘Commission guidance’) (19). In that notice 
the  Commission  proposes  a  design  of  tariff  methodologies  for  network  charges  to 
incentivise  the  use  of  flexibility  and  investments  to  optimise  the  use  of  existing  grid, 
deliver grid expansion at least cost and ensure a fair and cost-reflective allocation of grid 
charges  while  encouraging  European  competitiveness,  deeper  electrification  and 
decarbonisation. However, to achieve these objectives, it is of utmost importance that the 
relevant design principles are implemented in all Member States. This can only be achieved 
through  legally  binding  instruments,  such  as  the  measures  in  this  proposal,  which  are 
consistent with the Commission guidance. 

2.2.  Objectives of the proposal 

First, the proposal aims to clarify the current rules for network charge design and introduce 
additional  rules  to  provide  stronger  incentives  to  encourage  system  users  to  adopt  a 
system-friendly behaviour and system operators to manage the grid more efficiently. A 
key overarching principle set out in the proposal is that of  incentive-based regulation. 
The overall cost and efficient use of the grid is heavily dependent on the performance of 
system  operators  and  how  their  compensation  is  calculated.  Regulatory  incentives  that 
promote a neutral approach to operational and capital expenditure can be transformative 

(17)  Electricity consumption in the EU is expected to increase by around 60% by 2030 (EU Action Plan to accelerate the roll-out of 

electricity grids for Grids, 2023). 

(18)  This is in line with the findings of the recent Commission guidelines on network charges, C(2025)4010 final. 
(19)    https://energy.ec.europa.eu/publications/communication-future-proof-network-charges-reduced-energy-system-costs_en. 

8 

 
 
 
and induce network operators to seek solutions at the most efficient total cost right from 
the planning stage. 

The following examples are illustrative of the types of design principles that are proposed 
for inclusion in Article 18(2) of the Electricity Regulation.  

The proposal also introduces certain restructuring amendments to the existing Article 18 
of the Electricity Regulation. In particular, certain elements currently in paragraphs (3) to 
(8) of Article 18 are moved to paragraph (2) as design principles, because they qualify as 
such. One example relates to providing appropriate incentives for system operators to 
operate the network in a cost-efficient way. The requirement that tariffs should provide 
appropriate incentives to system operators is currently included in Article 18(8). However, 
given  that  this  is  a  principle  according  to  which  tariffs  should  be  designed,  it  has  been 
placed as point (c) in the second paragraph of the proposed Article 18. Furthermore, this 
should be a principle applicable not only to DSOs, but also to TSOs. Another new element 
that the proposal includes in Article 18(2) (c) is that those incentives should span across 
all  voltage  levels.  The  rationale  behind  this  addition  relates  to  improving  cooperation 
between system operators. Better cooperation between TSOs and DSOs is an important 
objective  because  it  can  make  grid  planning  and  operation  more  efficient,  reduce 
unnecessary  costs  and  interventions,  improve  stability  and  reliability,  and  allow  the 
electricity system to be managed in a smarter, more flexible way.  

The  proposal  introduces  a  design  principle  in  Article  18(2),  according  to  which  tariff 
methodologies should provide appropriate incentives for system users to reduce peak load 
consumption. This proposal is in line with the Commission guidance (20). Indeed, one key 
area where network tariffs can play an invaluable role is in lowering peak demand. In a 
system with growing flexibility needs, the principle of cost-reflectivity must reflect this to 
ensure that network costs are fairly allocated among system users according to how much 
they cost or support the system. Otherwise, NRAs risk not taking actual costs that users 
generate for the grid into account correctly, leading to those network costs being charged 
to  others.  Electricity  grids  are  generally  dimensioned  to  cover  peak  demand  and  any 
incentives through network charges for energy consumers to reduce the peak leads to a 
reduction in energy system investments to cover it. The proposal indicates that one way 
for  tariffs  to  incentivise  system  users  to  reduce  peak  demand  is  by  adding  a  capacity 
element  to  the  tariff  structure,  i.e.,  elements  based  on  system  users’  peak  electrical 
demand  (measured  in  kilowatts,  kW)  rather  than  just  the  total  amount  of  energy  they 
consume  (kilowatt-hours,  kWh).  While  the  notion  of  capacity  elements  in  tariffs  is 
included in the current text of Article 18(7) of the Electricity Regulation, it only relates to 
distribution  tariffs.  The  proposal  clarifies  that  this  should  apply  to  distribution  and 
transmission tariffs alike.  

Linked to the above, the proposal includes in the amended Article 18(2) of the Electricity 
Regulation that tariff methodologies should contain time-of-use elements, i.e., elements 
based on system users’ time at which they consume energy. This proposal is in line with 
the Commission guidance (21). Adding time-of-use elements to volumetric energy charges 
increases cost-reflectivity as it incentivises system users to produce or consume electricity 

(20)  See footnote 19; Commission guidance p. 13.  

(21)  See footnote 19; Commission guidance p. 13.  

9 

 
 
in a way that reduces system peaks and utilises the full potential of renewable energy when 
abundant. Traditionally, network charges were either static with the same price for each 
hour or contained a basic temporal difference with higher charges for day rates and lower 
charges for night rates. Today, with the deployment of smart meters, the introduction of 
time-of-use elements in network charge design can be far more sophisticated and reflect 
real-time use of the grid. Moving users away from peaks reduces investment needs across 
the entire network since usage at peak times is often a cost driver for new investments. In 
addition, grid tariffs should also stimulate consumption during peak renewable production 
times when demand is flexible, such as filling battery storage or charging electric vehicles, 
for  example.  While  the  notion  of  ‘time-differentiated  network  tariffs’  already  exists  in 
Article 18(7) of the Electricity Regulation as an element for NRAs to consider when fixing 
or approving tariffs, the proposal includes it among the elements that tariffs should contain. 

Second,  the  proposal  aims  to  improve  transparency  in  the  way  in  which  tariffs  are 
structured.  

It does so:  

• 

• 

• 

Through proposing the addition of Article 18(5) and (6) to the Electricity Regulation 
which require (i) publication of the costs that are to be recovered by TSOs and DSOs 
through network charges; (ii) publication of details underlying tariff methodologies 
and (iii) NRAs to publicly consult relevant stakeholders before fixing or approving 
tariff methodologies; 

Through proposing the addition of Article 18(7) to the Electricity Regulation which 
requires ACER and NRAs to  carry out efficiency comparisons of  TSOs ad DSOs 
respectively;  

Through  proposing  an  empowerment  on  the  Commission  to  adopt  one  or  more 
Delegated Acts setting out; (i) a common structure and harmonised methodology on 
tariffs;  (ii)  detailed  conditions  under  which  regulatory  authorities  may  introduce 
separate  network  charge  regimes  for  specific  categories  of  system  users;  and  (iii) 
harmonised  rules  on  the  procedural  and  substantive  requirements  for  the  public 
consultations that need to be carried out for the relevant draft tariff methodologies. 

The  proposed  transparency  measures  will  allow  system  users  to  better  understand  the 
tariffs  set  for  both  transmission  and  distribution  network  services,  as  well  as  how  such 
tariffs have changed,  are set and may change in the future. Additionally, network users 
should be able to understand the costs underlying transmission and distribution tariffs and 
to anticipate their level to a reasonable extent.  

Last but not least, the additional measures on transparency included in the proposal will 
also  help  NRAs  in  their  task  of  setting  or  approving  ‘smarter’  tariffs  that  ensure  the 
electricity grid is managed more efficiently, by providing further targeted incentives for 
system users and system operators.  

Third, the proposal clarifies that two possibilities are available:  

• 

A  possibility  for  NRAs  to  adjust  the  tariff  regimes  to  reflect  the  different 
consumption patterns of specific categories of system users, such as energy intensive 
users, data centres and others. NRAs could calibrate and set lower tariffs for data 
centres  and  energy intensive users, insofar as this is  justified and  in  line with  the 

10 

 
principle of cost reflectivity, as set out in the proposal for Article 18(3), and without 
any  entitlement  to  State  aid  compensation.  This  was  part  of  the  Commission’s 
recommendation in the Commission guidance on future-proof network charges for 
reduced energy system costs (22).  

An  increasing  number  of  system  users  may  adjust  their  electricity  consumption 
profiles thanks to demonstrating flexibility using storage or demand response. For 
example, zinc producers already adjust their consumption profile at short time frames 
to electricity prices as part of their operations. Aluminium producers can also add 
flexibility in their consumption profile in the form of short-term interruptible load. 
For  the  iron  and  steel  sector,  there  are  a  number  of  opportunities  to  adjust  their 
electricity demand profiles in both electric arc furnaces and blast furnaces, as well 
as  in  the  use  of  electrolysers (23) .  Data centres  can  provide  grid  flexibility  by 
adjusting both their physical assets and IT operations (24). On the physical side, they 
can temporarily curtail cooling loads using thermal inertia, leverage on-site battery 
storage,  or  run  backup  generators  to  shed  grid  load  during  peak  periods.  On  the 
software  side,  they  can  perform  temporal  workload  shifting,  delaying  non-urgent 
tasks like AI model training to off-peak hours. Hyperscalers can also geographically 
redistribute computational  workloads to  regions with  abundant,  cleaner,  or lower-
cost renewable energy. In addition, recharging pools (25) can also provide flexibility 
to the grid. For example, they can react to price signals by adjusting the charging 
speed of the assets that are connected to them.  

• 

A possibility for Member States to allocate funding to the electricity network from 
their general  budget for  the purpose of supporting  large investments  to  accelerate 
decarbonisation, electrification of production processes and market integration. Such 
State injections should be subject to specific safeguards, as set out in the proposal 
for  Article  18(4).  In  this  context,  any  public  support  should  be  targeted  and 
temporary. Member States should fully assess the budgetary implications prior to 
introducing such measures, to ensure compliance with the EU fiscal rules in line with 
the objectives of the Stability and Growth Pact (26). 

Member  States  maintain  their  right  to  notify  under  applicable  State  aid  rules 
measures  aimed  to  reduce  energy  costs, including  network  charges for  specific 
categories of system users, while preserving incentives provided to system users to 
choose their location and adjust their consumption to lower the overall costs of the 
transmission and distribution systems.  

(22)  Commission notice on Guidelines on future proof network charges for reduced energy system costs, (C/2026/126), p. 13.  

(23)  JRC Publications - Flexibility options in a decarbonising iron and steel industry (2024). 

(24)  CERRE (2025) Flexibility in the energy sector. 

(25)  See Article 2, point (51) of Regulation (EU) 2023/1804 of the European Parliament and of the Council of 13 September 2023 on 
the deployment  of  alternative  fuels  infrastructure, and  repealing  Directive  2014/94/EU,  (OJ  L 234, 22.9.2023, pp. 1–47,  ELI: 
http://data.europa.eu/eli/reg/2023/1804/oj). 

(26)  See link: Stability and Growth Pact - Economy and Finance - European Commission.  

11 

 
 
2.3.  Expected benefits and impacts 

2.3.1.  Benefits to the network and system users 

As  the  European  power  system  changes,  so  should  the  design  of  network  tariffs.  As 
mentioned  above,  today’s  power  system  features  a  growing  proportion  of  decentralised 
and intermittent renewable energy, as well as changes in patterns of electricity flows due 
to  a  high  concentration  of  renewable  energy  in  certain  parts  of  the  grid  and  increased 
distributed generation such as small-scale batteries and rooftop solar. Aligning the network 
tariff  design  with  these  changes  can  significantly  benefit  the  system  as  a  whole.  Tariff 
designs  already  tend  to  vary  both  across  and  between  EU  households  and  industries. 
Indeed, according to the European Central Bank, network costs accounted for an average 
of  27%  of  household  bills  and  12%  for  those  of  energy-intensive  industries  in  2024 
indicating  that  network  charges  constitute  a  higher  proportion  of  the  bill  for 
households (27). 

One of the drivers of network costs is the need for new investments and the modernisation 
of  the  existing  grid.  To  build  a  decarbonised  EU  energy  system,  investments  of  an 
unprecedented  magnitude  of  approximately  EUR  1.3  trillion  will  be  needed  in  the 
transmissions  and  distribution  grids (28).  More  specifically,  electricity  distribution 
dominates, accounting for nearly half of the total investment needs (€730 billion) over the 
period 2024-2040 driven by the shift to renewable energy and electrification, which require 
extensive  modernisation  and  expansion  of  networks.  Transmission  infrastructure  also 
attracts  considerable  investment,  with  over  €472  billion  of  investment  needs  in  the 
respective years, largely due to investments in national transmission infrastructure which 
constitute more than 70% of the investment needs.  

Designing  network  charges  to  reduce  peak  load  through  capacity  charges  can  play  a 
crucial role in reducing the overall need for grid reinforcements. For example, according 
to a 2025 report published by the Dutch government, estimated total investment needs until 
2040 for the electricity grid in the Netherlands is EUR 195 billion but, importantly, analysis 
also shows that making better use of the network could reduce the cumulative investment 
by  up  to  EUR  22.5  billion  for  the  Netherlands  alone (29).  Similar  effects  have  been 
demonstrated in other Member States, where more cost-reflective network charges have 
significantly  reduced  peak  load  consumption  and  hence  the  necessary  build-out  of  the 
electricity  grid.  This  was  the  case  in  Belgium (30),  where  capacity-based  charges  were 
introduced to provide clear price signals to minimise the synchronous peak, thus avoiding 
the need for further grid investment. Evidence shows that the industrial synchronous peak 
decreased  by  4%  between  2019  and  2024  despite  the  actual  volume  of  withdrawals 
increasing  by  10%.  This  approach  can  therefore  enable  more  capacity  on  the  grid  and 
support electrification. 

Adding a dynamic time-of-use element to the charges for system users is a significant 
tool  to  drive  more  grid-friendly  behaviour.  Currently,  14  Member  States  distinguish 

(27)  See link: https://www.ecb.europa.eu/press/economic-bulletin/focus/2026/html/ecb.ebbox202601_02~a552b71378.en.html. 

(28) 

Investment needs of European energy infrastructure to enable a decarbonised economy (2025), available here: Investment needs 
of European energy infrastructure to enable a decarbonised economy - Publications Office of the EU.  

(29)   https://open.overheid.nl/documenten/e914cc94-ffcd-42dd-9989-bf7c3fdd44f9/file. 
(30)   https://energy.ec.europa.eu/document/download/8789f345-a6ae-46b6-97d2-

a7366e516cdc_en?filename=C_2025_4010_1_EN_annexe_acte_autonome_cp_part1_v4.pdf. 

12 

 
 
between seasons (31), for example. This could be built on further to incentivise users to 
produce or consume electricity when prices are lower and renewable energy is abundant, 
and limit, to the extent possible, the more expensive times for using electricity. This goes 
hand-in-hand with the deployment of smart meters, and with the expected high additional 
deployment rates of distributed generation and demand (e.g. electric vehicles and electric 
heating), time-of-use incentives can have a significant impact.  

The central role of dynamic time-of-use tariffs was analysed by Agora Energiewende in a 
study focused on the potential for flexibility at household level in Germany (32). It found 
that applying dynamic time-of-use grid tariffs can reduce grid expansion costs at the low 
voltage  level  by  around  50%  compared  to  having  no  price  signals  at  grid  level  and 
flexibility only reacting to the market price signal. Furthermore, it found that households 
with  dynamic  tariffs  could  save  EUR  600  per  year  in  the  long  term.  These  significant 
financial savings also imply lower electricity costs for all consumers if dynamic time-of-
use tariffs are widely used.  

In Spain (33), the tariff structure applies energy and capacity-based charges (75% of the 
tariff is  capacity-based at  the transmission level  and is  84.6%  at  the distribution  level). 
Additional charges are levied for excess power withdrawal above the contracted capacity, 
and the time-of-use element is divided into six periods, depending on the season, day of 
the week and time of day. The purpose of this pricing structure is to incentivise efficient 
behaviour,  allowing  for  increased  consumption  outside  of  system  peaks  and  therefore 
reducing  the  requirement  for  investment  in  electricity  networks.  The  evidence  suggests 
that  this  tariff  methodology  reduced  transmission  and  distribution  charges  by  5.6% 
between 2019 and 2020. While the biggest savings are available to customers better able 
to adapt to price signals, even consumers who did not adjust their consumption at the low 
voltage level experienced a 0.6% reduction in charges. 

In Slovenia (34), the design of capacity and energy-based time-of-use tariffs allows end-
users  to  increase  electricity  consumption  (such  as  for  heating  and  transport)  without 
substantially increasing their network charges, by utilising flexibility and managing their 
peak  demand.  This  supports  electrification  and  facilitates  the  integration  of  distributed 
renewable  energy.  The  updated  tariff  methodology  substantially  increased  the  share  of 
power-based  charges,  improving  cost-reflectiveness.  This  is  supported  by  widespread 
smart metering and a national data hub with access to 15-minute real-time data. The design 
helps to prevent speculative under-contracting, while transitional exemptions protect small 
users  (<  43kW)  during  the  tariff  methodology  shift.  Within  three  months  of 
implementation,  the  system  observed  over  50MW  in  load  relief  (which  corresponds  to 
about 2.4% of the national peak in January) and new demand response business models 
also emerged.  

(31)  https://op.europa.eu/en/publication-detail/-/publication/08843617-9cf8-11f0-97c8-01aa75ed71a1/language-en. 

(32)  Agora  Energiewende  and  Forschungsstelle  für  Energiewirtschaft  e.  V.  (2023):  The  benefits  of  energy  flexibility  at  home 

https://www.agora-energiewende.org/fileadmin/Projekte/2023/2023-
14_DE_Flex_heben/AEW_326_energy_flexibility_at_home_WEB.pdf.  

(33)  50 ACER (2025) Best Practice Report. 
(34)  https://op.europa.eu/en/publication-detail/-/publication/08843617-9cf8-11f0-97c8-01aa75ed71a1/language-en?.  

13 

 
 
Analysis  from  ACER (35) has  found  that  more  advanced  differentiation  in  time  and 
location through fully dynamic tariffs could further increase the cost-reflectivity of tariffs 
and incentivise efficient network behaviour.  It  is  therefore  an important  principle  when 
designing  network  charges.  However,  NRAs  need  to  balance  this  with  complexity  of 
design, the level of smart meter rollout in a given country and interplay with dynamic retail 
pricing.  

In relation to locational charges, increased decentralised generation from renewable and 
other sources has implications for overall system costs especially at distribution level (36). 
Therefore,  smarter  design  of  network  tariffs,  through  a  diversified  connection  charging 
regime, can help to direct investments in generation closer to demand (and vice-versa). In 
cases where grid capacity already exists (for example in places where fossil fuel power 
plants are being decommissioned or there was previously high industrial demand), such 
charges ensure grid-friendly network usage. Over time, this helps to reduce costly network 
congestion, reduce overall investment needs and minimise network costs for all users. It 
can also help to direct investments to non-fossil flexibilities, such as storage and demand 
response,  and  to  steer  these  flexibilities  towards  certain  areas,  for  example,  near  areas 
characterised by significant variable renewable generation. This is particularly relevant in 
Member States which suffer from significant internal network congestion. Although not 
directly  covered  by  the  proposal,  differentiated  connection  charges  could  be  further 
complemented by locational charges for injecting into the grid as a way to reduce or time-
shift peak supply in certain areas where the grid is particularly congested.  

Denmark, for example,  has included several  design  elements  in  the network charges to 
enable locational incentives (37). It considers differentiated connection charges based on 
the geographical location of the network user (based on generation surplus areas versus 
demand  surplus  areas).  Use-of-network  charges  are  also  calculated  by  applying  a 
locational factor, whereby producers in areas with high demand surplus pay lower charges, 
thereby  reducing  bottlenecks.  From  2023,  injection  charges  apply  for  distribution  costs 
(previously  only  for  transmission  costs)  and  new  legislation  in  2023  also  expanded  the 
possibilities  for  industrial-scale  co-located  production  and  consumption  through  one 
connection point to the grid, with the aim of encouraging co-location of renewables and 
consumption. 

As  mentioned  above,  the  proposal  aims  to  ensure  that  tariffs  provide  the  necessary 
incentives  for  a  neutral  approach  to  operational  and  capital  expenditure.  The  impact  of 
creating more balanced incentives that encourage a move away from  a focus on capital 
expenditure and that incentivises optimal choices can be significant. According to a 2026 
study (38),  if  inefficient  TSOs  moved  closer  to  the  performance  level  of  more  efficient 
TSOs today, they could already achieve savings of up to 3%. This does not include future 
performance improvements expected with increased flexibility.  

(35)  https://www.acer.europa.eu/sites/default/files/documents/Publications/2025-ACER-Electricity-Network-Tariff-Practices.pdf. 

(36)  Between 60-90% of new connections are at distribution level (Clean Energy Package Impact Assessment, 2016).  
(37)  ACER report on network tariff practices (2025)  https://www.acer.europa.eu/sites/default/files/documents/Reports/2025-ACER-

Electricity-Network-TariffPractices.pdf. 

(38)  Guidehouse (2026) Study on tariff structures, incentives for flexibility and efficient investments. 

14 

 
 
Indeed, at national level, some NRAs are already looking into what can be achieved in the 
longer  term.  For  example,  in  France,  the  NRA  expects (39)  that  appropriately  reflecting 
flexibility solutions as an input to grid capacity sizing should bring significant savings for 
the power system; savings for the TSO alone are estimated to be nearly EUR 7 billion over 
15  years.  Furthermore,  the  French  DSO  ENEDIS  is  testing  the  use  of  flexibilities 
(overlapping between consumption and production and between sectors, balancing, local 
flexibility) to optimise the sizing of its grid in a project expected to bring EUR 250 million 
savings  by  2035 (40).  Furthermore,  studies  show  that  deploying  more  innovative  grid 
technologies  could  increase  overall  existing  network  capacity  between  20%  to  40%  by 
2040 (41), thereby reducing the need for grid expansion and its related costs.  

Without solid incentive-based regulation to ensure the best outcomes for consumers, there 
is  a  risk  that  these  benefits  may  not  be  realised.  Indeed,  system  operators  should  be 
encouraged to innovate and look to existing examples deployed globally. In Australia (42), 
for example, which has shifted towards software-enabled flexibility, supported by more 
storage  (i.e.  grid-forming  batteries)  and  infrastructure  connectivity  via  harmonised  grid 
communication protocols with grid operators, the impact has been significant. There is a 
reduced peak load in pilots in some states (such as in New South Wales), and essential grid 
stability services are less expensive than the cost of traditional solutions. 

In addition, a 2026 study identified stronger cooperation between TSOs and DSOs as a 
key  driver  of  efficiency (43)  which  should  be  incentivised  at  national  level  due  to  its 
multiple benefits. Integrated planning between TSOs and DSOs can lead to more efficient 
grid  development  by  aligning  their  investment  plans  and  strategies,  avoiding  redundant 
infrastructure investments, and ensuring that grid expansions are made where they are most 
needed. Establishing joint operational procedures for managing grid stability and reliability 
can improve the overall efficiency of the grid by ensuring coordinated actions during peak 
demand periods, emergency situations, and maintenance activities. Encouraging the use of 
flexibility services provided by DSOs can help manage local grid constraints and reduce 
the need for TSO interventions, balancing supply and demand at local level and reducing 
the  strain  on  the  transmission  network.  Developing  regulatory  frameworks  that  support 
TSO-DSO coordination is therefore essential, including creating incentives for both TSOs 
and  DSOs  to  collaborate  and  share  resources  and  addressing  issues  related  to  cost 
allocation and revenue sharing to ensure fair compensation for their contributions to grid 
efficiency. Integrating advanced technologies is key to enabling this cooperation to allow 
for real-time monitoring and control of the grid and therefore more responsive and adaptive 
grid management.  

Such cooperation is also essential given the highly diverse landscape of DSOs in Europe. 
According to a 2026 ACER report (44), there are 2 674 DSOs across 28 countries serving 

(39)  CRE  (2023)  “Report  on  the  performance  of  system  operators  in  the  development  of  a  smart  electricity  grid” 

https://www.cre.fr/fileadmin/Documents/Rapports_et_etudes/2023/2024-02_Rapport_indicateurs_eng.pdf.  

(40)  Agora 

Energiewende 

(2024) 

“Boosting 

flexibility 

in 

distribution 

grids” 

https://www.agoraenergiewende.org/fileadmin/Projekte/2023/2023-23_EU_boosting_flexibility/24- 
0184_Rev.2_DNV_Report_Agora_Energiewende_-_Boosting_flexibility_in_distribution_grids.pdf.    

(41)  https://www.currenteurope.eu/wp-content/uploads/2024/06/CL-CurrENT-BE-Prospects-for-Innovative-Grid-Technologies-final-

report-20240617-2.pdf.  

(42)  https://cdn.digitaleurope.org/uploads/2026/06/Study-White-paper_grid-performance.pdf. 

(43)  Guidehouse (2026) Study on tariff structures, incentives for flexibility and efficient investments.  
(44)  https://www.acer.europa.eu/sites/default/files/documents/Publications/ACER-2026-DSO-revenue-setting-report.pdf. 

15 

 
 
a  wide  range  of  customer  bases,  from  as  few  as  one  customer  to  nearly  40  million. 
Therefore, integrated planning and grid operation across voltage levels is crucial to drive 
efficiencies.  

The proposed measures on network charges could help mitigate energy cost pressures for 
EU companies, particularly in sectors facing intense global competition and high exposure 
to volatile energy markets. 

2.3.2.  Administrative costs  

To provide stronger incentives for efficient use of European grids, the proposed measures 
introduce transparency rules in Article 18(5) and (6) as well as an obligation on ACER and 
NRAs to carry out efficiency comparisons of TSOs and DSOs respectively in Article 18(7). 
These  provisions  may  result  in  additional  administrative  costs  for  NRAs  and  system 
operators, as explained below. For the additional costs for ACER, the Legal and Financial 
Statement accompanying the proposal suggests additional staff for ACER. The proposal is 
not expected to result in any administrative costs on small and medium-sized enterprises 
(SMEs).  

Transparency rules  

The newly introduced transparency rules in Article 18(5) and (6) may lead to an increased 
administrative  burden  and  higher  compliance  costs  for  NRAs  and  system  operators,  as 
regards the additional elements they will need to make publicly available. However, these 
costs are not expected to be significant because the publication requirements are kept to a 
minimum  and  are  in  line  with  those  transparency  elements  that  have  been  flagged  by 
ACER in its latest best practices report, published on 26 March 2025 (45). The fact that 
these  elements  have  been  included  in  ACER’s  2025  report  also  means  that  they  have 
already been discussed between ACER and the NRAs. Moreover, any administrative costs 
for NRAs and system operators are proportionate, because they are necessary to achieve 
the objectives of increasing  the comparability of tariff-setting,  improving  system  users’ 
understanding of the tariffs they have to pay, and ultimately allowing system operators to 
manage the network more efficiently.  By improving  transparency,  system  users will be 
able to develop system-friendly behaviour, ultimately leading to lower bills and reducing 
costs for the electricity system. 

Moreover, the proposed requirement  for NRAs to conduct public consultations on their 
draft tariff methodologies may also lead to increased administrative costs. However, given 
the  regulatory  frequency  of  new  tariff  methodologies,  any  administrative  costs  are 
expected to be low to moderate and in any event necessary to achieve the objectives of (i) 
improving system users’ understanding of the tariffs they have to pay, and (ii) giving them 
the opportunity to submit comments or communicate concerns to the NRAs when the latter 
are setting or fixing the final tariff methodologies. 

Efficiency comparisons by NRAs 

The proposal introduces a requirement on NRAs to perform efficiency analyses of their 
DSOs, insofar as the Member State in question has more than one DSO. Considering that 
it  is  proposed  that  such  analyses  be  carried  out  every  four  years,  the  resulting 

(45)  2025-ACER-Electricity-Network-Tariff-Practices.pdf.  

16 

 
 
administrative costs should remain moderate and, in any event, necessary to achieve the 
overarching objective of ensuring the efficient management and operation of the network.  

Finally,  the  proposal  includes  an  obligation  for  NRAs  to  set  performance  indicators  as 
regards the efficient operation and development of the network, including smart electricity 
grid  indicators.  This  obligation  is  not  expected  to  significantly  increase  administrative 
costs  for  NRAs,  because,  as  per  Article  59(1)(l)  of  the  Electricity  Directive,  NRAs  are 
already responsible for assessing ‘the performance of transmission system operators and 
distribution system operators in relation to the development of a smart grid that promotes 
energy efficiency and the integration of the energy from renewable sources, based on a 
limited  set  of  indicators,  and  publish  a  national  report  every  two  years,  including 
recommendations’. The proposal adds two elements to the existing legal framework. First, 
it requires that the indicators be broader, relating to the efficient operation and development 
of the network, and second, it establishes a link between those indicators and their role in 
setting tariff methodologies. Hence, any additional administrative costs stemming from the 
proposal are expected to be insignificant.  

2.3.3.  Environmental impact 

Applying the design principles for tariff methodologies set out in the proposal is expected 
to result in the existing grid capacity being used more efficiently, which in turn is expected 
to result in reductions in greenhouse gas emissions by integrating renewable energy into 
the network in a more cost-effective way. In addition, the tariffs set on the basis of the 
design principles in the proposal will provide more accurate price signals to system users, 
untapping the potential for non-fossil flexibility and demand response.  

3.  SMART GRIDS AND INNOVATION 

3.1.  Non-wire,  smart  and  digital  solutions  for  grids  and  related  smart  grid 

indicators  

3.1.1.  Policy context 

Digitalising and making the energy sector and electricity grids smarter has been a policy 
priority of the Commission for the last few years. Electricity grids, in particular distribution 
grids,  must  become  smarter  to  deliver  electricity  efficiently  and  reliably  during  the 
transition  towards  a  low-carbon  energy  system (46).  Examples  of  non-wire,  smart  and 
digital  solutions  for  grids  include  dynamic  line  rating,  power-flow  control  devices, 
advanced sensors, smart meters, real-time monitoring and automation systems, and other 
digital  tools  that  help  system  operators  observe,  manage  and  optimise  grid  use  more 
efficiently. 

EU energy policy has therefore been geared towards smart grids from an early stage. Smart 
grids are a broad concept that often combines the efficient use of network assets and the 
resources  connected  to  them  with  environmental  sustainability,  uptake  of  renewable 
energy sources and energy efficiency. To this end, the first TEN-E Regulation (347/2013) 
already  included  a  separate  category  for  smart  electricity  grids (47),  to  accelerate  their 

(46)  According to ACER, annual electricity distribution grid investments in Europe increased from around EUR 23.5 billion in 2021 
to EUR 35.3 billion in 2024 and are projected to reach EUR 46.7 billion by 2027, underlining the scale of the investment challenge 
and the need to ensure that these investments are complemented by smart-grid, digital and flexibility solutions - ACER, Managing 
the ramp-up of electricity distribution investments to better serve grid users – ACER report on distribution system operator (DSO) 
revenue  setting  practices,  14  April  2026,  p.  19.  https://www.acer.europa.eu/sites/default/files/documents/Publications/ACER-
2026-DSO-revenue-setting-report.pdf. 

(47)  A definition of smart electricity grids is foreseen in article 2.9 of the TEN-E regulation. 

17 

 
 
adoption  across  the  EU,  and  further  broadened  the  category  with  the  2022  revision 
(2022/869). In this regard, CEF Energy already allocated 445 million EUR to smart grid 
projects. (48)  

Smart grid indicators (SGIs) can be used to analyse the situation of electricity grids and 
identify whether and how the operators of those grids are reacting to the network users’ 
changing  needs  and  to  the  opportunities  provided  by  technological  developments,  in 
particular in digital technologies. The Clean Energy Package, in particular the revision of 
the Electricity Directive, proposed by the European Commission in November 2016 and 
finalized in 2019, gave NRAs a role in promoting this via Article 59(1)(l) of the Electricity 
Directive,  which  lays  down  that  NRAs  must,  among  their  duties,  “monitor[...]  and 
assess[...]  the  performance  of  transmission  system  operators  and  distribution  system 
operators in relation to the development of a smart grid that promotes energy efficiency 
and  the  integration  of  the  energy  from  renewable  sources,  based  on  a  limited  set  of 
indicators, and publish a national report every two years, including recommendations.” 

The  2022  Digitalising  the  Energy  System  –  EU  Action  Plan (49)  then  turned  that  legal 
requirement  into  a  practical  EU  energy  policy  workstream:  it  announced  that  the 
Commission would support ACER and national regulators in defining common smart grid 
indicators, so that regulators could monitor smart and digital investments in the grid and 
measure progress towards a more intelligent, digitalised electricity system, including the 
future digital twin of the grid. 

An  EU  Action  Plan  for  Grids,  adopted  in  2023 (50)  proposed  to  further  strengthen 
implementation of smart grid projects via a dedicated workstream on Technopedia to share 
best practices in the TSO, DSO and regulatory community, as well as via ACER work on 
addressing CapEx-bias including via benefit-sharing. 

Successive meetings of the Copenhagen Forum on Energy Infrastructure have focused on 
the need to promote the development of a limited set of common indicators for smart grids 
and have invited ACER, CEER, ENTSO-E and the EU DSO Entity to work together in 
this area. In particular, the 11th Energy Infrastructure Forum called upon “CEER and ACER 
in cooperation with ENTSO-E, EU DSO Entity and the relevant stakeholders to deliver the 
respective reports, in a coordinated manner, on the common indicators for smart grids at 
all  voltage  levels,  including  both  output  and  input  indicators,  by  the  next  Forum” (51). 
ACER and CEER published two reports in January 2026 focusing respectively on SGIs 
for transmission and distribution networks (52).  

Under  the  European  Grids  Package (53),  the  proposed  revision  of  the  TEN-E 
Regulation (54) introduces an obligation for non-wire solutions (55) to be considered as a 
priority  in  network  planning  on  both  EU-wide  and  national  transmission  level.  A  new 

(48)  https://cinea.ec.europa.eu/cef-energy-connecting-europe-affordable-secure-and-green-future_en. 
(49)  COM(2022) 552 final. 
(50)  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52023DC0757.  
(51)  Copenhagen  Infrastructure  Forum  –  Conclusions  3  June  2025,  available  at:  https://energy.ec.europa.eu/events/11th-energy-

infrastructure-forum-2025-06-02_en.  

(52) ACER, ‘Output performance indicators to monitor the application of electricity transmission grid-enhancing technologies – Position 

Paper’ (ACER, 2026), and CEER, ‘Electricity “Smart Grid” Performance Indicators” (CEER, 2026). 

(53)  https://ec.europa.eu/commission/presscorner/detail/en/ip_25_2945.  
(54)  Proposal for a Regulation of the European Parliament and of the Council on guidelines for trans-European energy infrastructure, 
amending Regulations (EU) 2019/942, (EU) 2019/943 and (EU) 2024/1789 and repealing Regulation (EU) 2022/869, Brussels, 
10.12.2025, COM(2025) 1006 final. 

(55)  Examples of non-wire solutions include demand response, storage, smart charging and vehicle-to-grid, as well as grid-enhancing 
and digital solutions such as dynamic line rating, power-flow control devices, network reconfiguration, advanced voltage control 
and digital congestion-management tools. 

18 

 
 
category of Projects of Common Interest (PCIs) to support broader deployment of non-
wire solutions on existing high voltage network infrastructure that contribute to increases 
in net transfer capacity was also proposed. 

3.1.2.  Problem definition 

Despite the long-term EU focus on smart electricity grids, the use of innovative and digital 
solutions in operating and planning electricity grids in the EU varies across Member States 
and between the transmission and distribution levels and overall is not satisfactory. While 
the control of transmission grids is fully digitalised and most modern switchyards in such 
grids are controlled by digital relays, this is not always the case at the distribution level, 
despite the fact that most of the challenges related to the penetration of renewable-based 
generation  and  of  decentralised  flexibility  resources  are  emerging  and  will  continue  to 
emerge in distribution systems. The current situation regarding the use of alternatives to 
network  development  like  grid-enhancing  technologies  is  also  mixed,  also  due  to  the 
different regulatory approaches adopted by NRAs vis-à-vis TSOs and DSOs (56). 

Europe’s  grid  challenge cannot  be  addressed  only  by  expanding  grids.  It  needs  to  be 
complemented by using existing infrastructure more efficiently for affordability. Changes 
proposed  under  the  revision  of  the  TEN-E  Regulation  as  part  of  the  European  Grids 
Package,  are  focusing  mostly  on  cross-border  electricity  infrastructure,  in  line  with  the 
TEN-E  scope.  However,  to  ensure  that  the  cost-efficiency  principle  is  followed  at  all 
electricity  infrastructure  levels,  and  notably  distribution  grid  level,  deployment  of  non-
wire,  smart  and  digital  solutions  should  be  promoted  whenever  they  provide  a  more 
efficient but effective alternative to grid expansion, both at transmission and distribution 
level. 

Specifically, smart grid indicators serve to assess the development of smart electricity grids 
and capture the related increases in  grid performance  and efficiency.  While ACER and 
CEER reports (57) were adopted early 2026, recent evidence also pointed to rather limited 
adoption  of  indicators  on  transmission  and  distribution  levels.  At the  distribution  level, 
national legal or regulatory requirements to monitor utilisation of the grid were present in 
12 out of 26 countries in 2026. Only around a third of EU countries adopted measures to 
combat  CapEx-bias  (58)  A.t  the  level  of  the  transmission  system,  the  ACER  report (59) 
points to a significantly different scope of indicators being used, while the development of 
(smart) transmission grids is directly relevant for the internal electricity market, enabling 
cross-borders flows. There is thus currently no common practice regarding SGIs and their 
use at European level. Some EU Member States have developed and monitor a series of 
smart grid indicators (60). Some of them also publish the results of this monitoring exercise, 

(56)  See for instance the latest ACER report on Increasing cross-zonal capacity and system flexibility in Southeast Europe, noting the 
deployment  of  dynamic line  rating  in this  region is  not  satisfactory:  https://www.acer.europa.eu/monitoring/MMR/crosszonal-
adoption  map:  https://www.currenteurope.eu/technologies/grid-
electricity-trade-capacities-2026,  or  CurrEnt  DLR 
compass/dynamic-line-rating-adoption/#.  

(57)  https://www.ceer.eu/wp-content/uploads/2026/01/Electricity-smart-grid-performance-indicators-combined-2.pdf  

Fourteen output indicators corresponding to six dimensions of a smart grid are presented in the paper: integration of renewable 
energy generation; integration of increased electrification of energy uses; continuity of supply and resilience to extreme events; 
other quality of supply objectives; energy efficiency; and data made available to market participants. 

(58)  https://www.acer.europa.eu/sites/default/files/documents/Publications/ACER-2026-DSO-revenue-setting-report.pdf.  
(59)  https://www.acer.europa.eu/sites/default/files/documents/Position%20Papers/ACER-Position-Paper-Smart-grid-output-KPIs-

for-electricity-transmission-2025.pdf  
In its paper, ACER proposes three KPIs to measure the performance of smart grid solutions applied by the TSOs: performance of 
existing transmission assets in real-time system operations; performance of operational security; and grid expansion performance. 
(60)   CEER collected 343 indicators in use across CEER member countries and classified them according to nine smart grid dimensions. 
See CEER, ‘Electricity “Smart Grid” Performance Indicators” (CEER, 2026), p. 16. A brief presentation of some national practices 
with regard to SGIs is available in ACER, ‘Output performance indicators to monitor the application of electricity transmission 
grid-enhancing technologies – Position Paper’ (ACER, 2026). 

19 

 
 
either as a standalone report or as part of the NRA annual report. However, Member States 
may monitor different dimensions of smart grids and, even when they focus on the same 
dimensions, they may use similar but slightly different indicators and metrics that make 
any comparison across countries more difficult (61). 

Broader adoption of non-wire technologies, smart and digital solutions has strong support 
among  stakeholders,  as  evidenced  by  the  open  public  consultation  carried  out  while 
preparing the European Grids Package. Some 62% of respondents agreed that more EU-
level  action  is  needed  to  improve  the  visibility  and  quantified  benefits  of  digital, 
innovative,  and  grid-enhancing  technologies,  with  14%  reporting  neutrality.  A  larger 
majority,  76%  of  respondents  argued  that  further  measures  are  needed  to  increase  the 
efficiency of the existing grid (62). 

3.1.3.  Objectives of the proposal 

Provisions under paragraph 1 of the proposed Article 18a of the Electricity Regulation aim 
to ensure that non-wire, smart and digital solutions are effectively promoted whenever they 
provide a cost-efficient way to improve the usable capacity, flexibility and reliability of 
electricity  networks.  In  this  way,  the  proposal  seeks  to  improve  grid  productivity,  by 
making use of innovative tools. Improving grid productivity means making better use of 
existing electricity network infrastructure so that the grid can connect and transport more 
renewable generation, electrified demand and flexibility resources, with fewer losses, less 
congestion  and  lower  system  costs,  rather  than  relying  only  on  conventional  grid 
expansion. 

Provisions  under  paragraphs  2  and  3  of  the  proposed  Article  18a,  as  well  as  under  the 
proposed  amendment  in  Article  61(5)  aim  to  tackle  information  asymmetry  between 
system operators and regulatory authorities in system performance by equipping them with 
a unified set of smart grid indicators to measure progress and uptake of smart electricity 
grid solutions, and to facilitate coordination between national approaches and exchange of 
best practices. It also aims to ensure existing CapEx-bias in two-thirds of EU countries is 
addressed by linking such indicators to regulatory incentives. 

As explained in the previous section, there is currently no common practice about SGIs 
and their use at EU level. A provision on smart grid indicators is therefore needed because 
the current voluntary framework does not:  

• 

provide  tools  to  facilitate  coordination  between  national  approaches  and  exchange 
good practices. 

• 

adequately link such indicators to tariff-setting and regulatory incentives.  

The proposal creates a more coherent EU approach by asking ACER to structure the 
work through a recommendation and regular progress reporting, while requiring regulatory 
authorities to set performance indicators for network operation and development, including 
smart grid indicators. This provides a consistent basis for measuring the uptake of smart 
solutions,  identifying  best  practices  and,  where  needed,  enabling  further  harmonisation 
through implementing acts. 

(61)   CEER, ‘Electricity “Smart Grid” Performance Indicators” (CEER, 2026). 
(62)  European Commission, ‘COMMISSION STAFF WORKING DOCUMENT {SWD (2025) 2000 final}, IMPACT ASSESSMENT 

REPORT [European Grids Package]’ Annex 2 Stakeholder consultation synopsis report (2025), p.70. 

20 

 
 
3.1.4.  Expected benefits and impacts 

The  main  benefit  is  the  prospect  of  avoiding  or  deferring  conventional  grid 
reinforcement  costs,  because  smart,  digital  and  grid-enhancing  solutions  can  achieve 
network benefits quicker and, in some cases, cheaper than classical investments.  

Energy  system  benefits  -  When  appropriately  defined  and  monitored,  SGIs  can  help 
generate energy system benefits in two ways. On the one hand, the uptake of smart grid 
technologies can be demonstrated and mobilised. On the other hand, the performance and 
achievement of smart grid solutions can be emphasised. Both approaches are expected to 
have  a  positive  and  complementary  effect  on  the  performance  and  efficiency  of 
transmission and distribution grids. SGIs can therefore be an important regulatory tool to 
evaluate and promote smart grid solutions that deliver, among other things, additional grid 
capacity faster and at lower cost than conventional reinforcements. In the current context 
of Europe’s energy transition, not taking SGIs into account carries a risk of increased grid 
tariffs, curtailing renewables and delays in connecting new grid users. 

In terms of quantifying the benefits: 

•  The Impact Assessment Report of the European Grids Package highlights that grid-
enhancing technologies, if prioritised,“could expand network capacity by 20-40% by 
2040 and save up to 35% in conventional grid expansion costs.” (63) More specifically, 

“the  deployment  of  dynamic  line  rating  […]  on  most  congested  network  elements 
could  bring  net  benefits  of  EUR  2.67  billion  over  a  period  of  20  years  through 
additional 27 GW of available transmission capacity.”(64) 

•  Digital flexibility helps grids serve more load without additional infrastructure – the 
average  peak  is  reduced  by  20–40%  through  digital  demand  management  and 
integrating distributed energy resources (i.e. batteries, solar panels, EVs) (65); 

•  Digitalisation reduces outages and maintenance costs – Artificial Intelligence (AI) cuts 
grid  fault  detection  from  hours  to  minutes,  preventing  major  blackouts.  European 
utilities  using  digital  monitoring  and  predictive  maintenance report  that  outage 
duration is reduced by up to 30% (66); 

•  Real-time visibility lets grids run closer to actual limits, enabling more cross-border 
exchanges  and  hence  better  ability  to  harness  the  benefits  of  internal  market 
integration - AI and digitalisation allow up to 20-30% more load on the same grid (67) 

(63)  European Commission, ‘COMMISSION STAFF WORKING DOCUMENT {SWD (2025) 2000 final}, IMPACT ASSESSMENT 

REPORT [European Grids Package]’ (2025), p. 34. 

(64)  Commission analysis for the Impact Assessment Report of the European Grids Package. The analysis is based on ACER data and 
considers DLR deployment on the 143 most congested critical network elements used for capacity calculation in the CORE region. 
More  details  can  be  found  in  Annex  4 of  European  Commission,  ‘COMMISSION  STAFF  WORKING  DOCUMENT  {SWD 
(2025) 2000 final}, IMPACT ASSESSMENT REPORT [European Grids Package]’ (2025), p. 86. 

(65)  Schneider Electric Research Institute; Grid Relief from Smart Buildings; April 2026. 
(66)   DIGITALEUROPE; Powering Europe’s future: How AI and digital grids can secure Europe’s climate and industrial leadership, 

November 2025. Available at: 
 https://cdn.digitaleurope.org/uploads/2026/01/DIGITALEUROPE_position-paper_Roadmap-for-digitalisation-and-AI-in-
energy-1-1.pdf. 

(67)   DIGITALEUROPE; Advancing Europe’s Grid Performance Why Europe must digitalise its grids, May 2025. 

21 

 
 
In addition, experiences of those national regulators which have already adopted measures 
to promote smart and digital solutions show that significant benefits can be delivered to 
grid users and, therefore, electricity consumers (68). 

Digitalisation  and  innovation  -  Monitoring  the  uptake  and  efficiency  of  smart  grid 
technologies  through  SGIs  is  expected  to  have  a  positive  impact  on  the  deployment  of 
flexible, digital and data-driven solutions by TSOs and DSOs. The development of these 
solutions  will  also  positively  contribute  to  innovation,  by  providing  clear  investment 
signals for such technologies. Mutual learning between national regulatory authorities and 
system  operators,  which  will  partly  be  driven  by  the  reporting  of  best  practices  and 
recommendations by ACER, is further expected to reinforce these effects.  

Competitiveness and strategic autonomy - The energy system benefits described above 
are likely to reduce the energy costs of European companies (especially in energy-intensive 
industries) and improve their competitiveness on international markets. Furthermore, as 
smart grid indicators are expected to promote the uptake of innovative grid solutions, they 
might positively expand the market for providers of these solutions, including non-wire, 
smart and digital solutions. By making indicator-based assessment a more systematic part 
of regulatory oversight, the measure should improve the visibility of issues that matter for 
competitiveness  and market  entry, including  connection times, hosting  capacity, losses, 
and access to consumption/injection data. 

This  is  also  relevant  from  an  industrial  policy  perspective.  The  EU  already  hosts 
competitive  manufacturers  in  several  smart  grid  technology  segments,  while  European 
research and innovation actors are at the forefront of work on smart grids, digitalisation 
and AI for energy, notably through the Strategic Energy Technology Plan (69) and Smart 
Networks  for  Energy  Transition  (SNET)  of  the  European  Technology  &  Innovation 
Platforms (ETIPs)  (70). By strengthening the regulatory visibility and uptake of smart-grid 
solutions,  the proposal  can therefore  also  support European industrial  leadership in  this 
strategic market. The Strategic Roadmap for Digitalisation and AI in the Energy Sector 
provides measures to assist smaller DSOs that may need targeted assistance to build the 
necessary capabilities. It puts forward that the 2026 LIFE Clean Energy Transition sub-
programme includes a EUR 10 million action on smart grids to strengthen DSOs in-house 
digital and AI skills , alongside broader support through the Pact for Skills, Erasmus+ and 
the European Institute of Innovation & Technology (71). 

The  main  direct  cost  of  the  proposed  provisions  is  the  implementation  and  assessment 
effort for national regulators and network operators, including integrating these solutions 
into  planning,  regulatory  review  and  monitoring.  Nonetheless,  several  regulatory 
authorities have already adopted performance-based regulation and are considering non-
wire, digital and smart solutions as alternatives in network planning, as required by the 
existing Articles 32 and 51 of the Electricity Directive. The measure is therefore likely to 
create  low  to  moderate  administrative  costs,  but  potentially  much  larger  system-cost 
benefits where it changes investment choices at project level. At the same time, it must be 
noted  that  the  expected  costs  will  primarily  impact  ACER  –  which  would  receive 
additional resources as per the Legislative and Financial Statement -, which is tasked with 
issuing  recommendations  on  smart  grid  solutions  and  the  efficient  use  of  electricity 

(68)   A summary of other relevant NRA practices in Belgium, France, Finland, Germany, Portugal, Slovenia and Sweden can be found 
in ACER, ‘Output performance indicators to monitor the application of electricity transmission grid-enhancing technologies – 
Position Paper’ Annex A (2026), as from p. 27. 

(69)  https://energy.ec.europa.eu/topics/research-and-technology/strategic-energy-technology-plan_en.  
(70)  https://smart-networks-energy-transition.ec.europa.eu/.  
(71)  COM(2026) 501. 

22 

 
 
infrastructure. If further implementing acts on SGIs are to be developed, additional costs 
for the European Commission might also apply. 

Some  administrative  costs  for  system  operators  might  be  generated  by  the  proposed 
provisions on SGIs, as they require system operators to provide the data necessary for that 
purpose  to  the  national  regulatory  authorities  and  to  ACER.  The  costs  of  measurement 
infrastructure  and  reporting  obligations  are  expected  to  be  marginal  compared  to  the 
expected  savings  in  grid  efficiency.  However,  some  system  operators  might  be 
disproportionally affected, especially smaller DSOs. 

No direct administrative or compliance costs of the proposal on smart grid indicators on 
non-regulated energy companies, including SMEs, were identified. More transparent and 
comparable indicators on connection and data access can reduce information asymmetries 
for smaller suppliers, aggregators and technology providers. 

Consumer costs and empowerment - The energy system benefits that could be generated, 
at least indirectly, by smart grid indicators are expected to result in lower electricity bills 
for end consumers, in the form of avoided grid tariff increases and potential lower energy 
costs.  It  is,  however,  not  possible  to  credibly  quantify  the  magnitude  of  these  savings, 
which might also differ between Member States (72). Making the electricity grid smarter 
might  also  empower  end  consumers  (for  example,  by  facilitating  the  provision  of 
flexibility) and bring additional opportunities for consumers to take an active role in the 
energy transition.  

Skills and employment  -  No direct  impact  of the proposal  on smart  grid indicators on 
skills and employment was identified. 

System security and cybersecurity - As smart grid indicators generally lead to improved 
grid observability and performance, a positive impact on secure grid operation (including 
cybersecurity) by transmission and distribution system operators can be expected.  

Environmental impacts - When the deployment of smart grid indicators leads to better 
utilisation  and  more  efficient  management  of  the  existing  electricity  grid  capacity, 
reductions in greenhouse gas emissions can be expected as a result of more cost-effective 
renewable energy integration.  

3.2.  Energy data exchange for primary and secondary use  

3.2.1.  Policy context 

The  increasing  digitalisation  of  the  energy  system  is  reshaping  the  conditions  for  the 
operation of electricity markets and networks in the Union. In a system characterised by 
growing  electrification,  decentralised  assets,  variable  renewable  generation  and  rising 
flexibility  needs,  data  becomes  a  strategic  asset  for  both  operational  and  innovation 
purposes. The timely, secure and interoperable exchange of energy data is essential not 
only for established market processes, but also for smarter grid operation, consumer-facing 
energy  services  and  the  development  of  advanced  digital  and  AI-based  applications. 
Against this background, it is necessary to assess whether the existing Union framework 

(72)  ACER estimated a 60% increase in average total grid costs between 2022 and 2050. The use of SGIs is expected to contribute to 
keeping this cost increase in check. See ACER, ‘Electricity infrastructure development to support a competitive and sustainable 
energy system – 2024 Monitoring Report’ (ACER, 2024), p. 32. 

23 

 
 
on energy data access, exchange and reuse provides a sufficiently coherent basis to support 
these evolving needs. 

The EU has developed a comprehensive framework of legislative and  policy initiatives 
addressing data access, sharing and use in the energy sector. This framework combines 
horizontal instruments, such as the Data Act (73), the General Data Protection Regulation 
(GDPR)  (74),  the  Data  Governance  Act  (DGA) (75),  the  Electronic  Identification 
Regulation  (eIDAS) (76)  and  EU  cybersecurity  legislation  (77),  with  sector-specific 
legislation, such as the Electricity Directive  and the Electricity Regulation . This broader 
framework  is  also  evolving  through  newer  cross-sector  digital  initiatives,  including  the 
Commission’s digital simplification agenda under the Digital Omnibus (78), the proposed 
European Business Wallets (79), and the rollout of the EU Digital Identity Wallets (80).All 
of  these  may  further  shape  the  practical  conditions  for  trusted  digital  identification, 
authentication, data portability and cross-border administrative simplification relevant to 
energy-data  exchanges.  Together,  these  instruments  provide  the  legal  foundation  for 
energy data exchange, particularly with respect to the primary use of data necessary for 
system operation and market functioning. 

Within this framework, sectoral legislation plays a central role in structuring data access 
and exchange in electricity markets. The Electricity Directive, the Electricity Regulation, 
the  Commission  Implementing  Regulations  on  Interoperability  Requirements  and  Non-
discriminatory  and  Transparent  Procedures  for  Data  Access (81)  ex  Article  24  of  the 
Electricity  Directive,  and  the  Energy  Performance  of  Buildings  Directive (82)  establish 
rules governing metering and consumption data, customer switching procedures and the 
functioning of energy services such as demand response, energy communities and energy 
sharing. They also provide the basis for cooperation between TSOs and DSOs in market 
operations.  For  these  specific  use  cases  they  aim  to  enable  access  to  relevant  data  for 
eligible parties and support the day-to-day functioning of the energy system. 

Horizontal data legislation also contributes to this framework by facilitating data access 
and reuse across sectors. The Data Act, the  DGA, the Free Flow of Non‑Personal Data 

(73)   Regulation (EU) 2023/2854 of the European Parliament and of the Council of 13 December 2023 on harmonised rules on fair 

access to and use of data and amending Regulation (EU) 2017/2394 and Directive (EU) 2020/1828 (Data Act). 

(74)   Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons 
with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General 
Data Protection Regulation). 

(75)   Regulation (EU) 2022/868 of the European Parliament and of the Council of 30 May 2022 on European data governance and 

amending Regulation (EU) 2018/1724 (Data Governance Act). 

(76)   Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust 

services for electronic transactions in the internal market and repealing Directive 1999/93/EC. 

(77)   Directive (EU) 2022/2555 of the European Parliament and of the Council of 14 December 2022 on measures for a high common 
level of cybersecurity across the Union, amending Regulation (EU) No 910/2014 and Directive (EU) 2018/1972, and repealing 
Directive (EU) 2016/1148 (NIS 2 Directive); Regulation (EU) 2019/881 of the European Parliament and of the Council of 17 
April  2019  on  ENISA  (the  European  Union  Agency  for  Cybersecurity)  and  on  information  and  communications  technology 
cybersecurity certification and repealing Regulation (EU) No 526/2013 (Cybersecurity Act) L 151/15; Regulation (EU) 2024/2847 
of the European Parliament and of the Council of 23 October 2024 on horizontal cybersecurity requirements for products with 
digital  elements  and  amending  Regulations  (EU)  No  168/2013  and  (EU)  2019/1020  and  Directive  (EU)  2020/1828  (Cyber 
Resilience Act) L series. 

(78)  https://digital-strategy.ec.europa.eu/en/library/digital-omnibus-regulation-proposal. 
(79)  https://digital-strategy.ec.europa.eu/en/policies/business-wallets. 
(80)  https://ec.europa.eu/digital-building-

blocks/sites/spaces/EUDIGITALIDENTITYWALLET/pages/694487738/EU+Digital+Identity+Wallet+Home.  

(81)   Two of a series of Commission implementing regulations ex art. 24 of the Electricity Directive have already been adopted. They 
are:  1)  Commission  Implementing  Regulation  (EU)  2023/1162  of  6  June  2023  on  interoperability  requirements  and  non-
discriminatory  and  transparent  procedures  for  access  to  metering  and  consumption  data;  and  2)  Commission  Implementing 
Regulation (EU) 2026/855 of 14 April 2026 on interoperability requirements and non-discriminatory and transparent procedures 
for access to data required for customer switching. More implementing regulations are expected to be adopted in the future.  
(82)   Directive (EU) 2024/1275 of the European Parliament and of the Council of 24 April 2024 on the energy performance of buildings 

(recast). 

24 

 
 
Regulation  (83),  the  Open  Data  Directive (ODD)  (84)  and  the  High-Value  Datasets 
framework (85) aim to support data availability, promote interoperability and enable cross-
border data flows, including in the energy sector. These instruments are intended to foster 
a broader European data ecosystem where energy data can be accessed and reused more 
efficiently.  However,  data  held  by  public  undertakings  is  explicitly  excluded  from  the 
scope of the DGA’s provisions on the reuse of protected data (86). This means that the reuse 
of energy data held by TSOs and DSOs, for example, would not be covered by the DGA 
and the ODD, given that their industrial or commercial character would prevent them from 
qualifying as a body governed by public law (87). Indeed, TSOs and DSOs may sometimes 
not be classified as public undertakings. This is based on the definition of the term ‘public 
undertaking’ in both the DGA and ODD  

‘any undertaking over which the public sector bodies may exercise directly or indirectly 
a  dominant  influence  by  virtue  of  their  ownership  of  it,  their  financial  participation 
therein,  or  the  rules  which  govern  it;  for  the  purposes  of  this  definition,  a  dominant 
influence on the part of the public sector bodies shall be presumed in any of the following 
cases in which those bodies, directly or indirectly:  

(a) hold the majority of the undertaking’s subscribed capital;   

(b) control the majority of the votes attaching to shares issued by the undertaking;   

(c)  can  appoint  more  than  half  of  the  undertaking’s  administrative,  management  or 
supervisory body’. (88) 

Only data held by those TSOs and DSOs subject to such dominant influence by public sector 
bodies would thus be included in the scope of the ODD.  

The ODD designates certain datasets as high‑value, for which the applicable rules are set 
out in an Implementing Regulation (89). The high-value datasets with particular relevance 
for secondary energy data use are geospatial data, earth observation and environment data, 
meteorological  data,  company  and  company  ownership  data,  and  mobility  data (90). 
However, the High-Value Datasets Regulation only applies to high-value datasets that are 
held by public sector bodies as defined in the ODD (91). This means that the High-Value 
Datasets Regulation does not apply to data held by public undertakings (92). Thus, high-
value  datasets  held  by,  for  example,  TSOs  or  DSOs,  even  where  these  are  considered 
public undertakings, are excluded from the scope of the High-Value Datasets Regulation 
and from the access and reuse rules on high-value datasets discussed below.  

(83)   Regulation (EU) 2018/1807 of the European Parliament and of the Council of 14 November 2018 on a framework for the free flow 

of non-personal data in the European Union. 

(84)   Directive (EU) 2019/1024 of the European Parliament and of the Council of 20 June 2019 on open data and the re-use of public 

sector information (recast). 

(85)   Commission Implementing Regulation (EU) 2023/138 of 21 December 2022 laying down a list of specific high-value datasets and 

the arrangements for their publication and re-use. 

(86)   DGA, Article 3(1)(a).  
(87)   DGA, Article 2(18).  
(88)  DGA, Article 2(19); ODD, Article 2(3).  Note that the ODD’s definition of public undertaking applies only to the undertakings 

active in the sectors covered by the Directive.   

(89)   Commission Implementing Regulation (EU) 2023/138 of 21 December 2022 Laying down a List of Specific High-Value Datasets 

and the Arrangements for Their Publication and Re-Use, OJ L19/43 (High-Value Datasets Regulation).  

(90)   The thematic categories of high-value datasets are (1) Geospatial; (2) Earth observation and environment; (3) Meteorological; (4) 

Statistics; (5) Companies and company ownership; (6) Mobility. See High-Value Datasets Regulation, Article 13 and Annex I  

(91)   Full definition in ODD, Article 2(3).  
(92)    See  also  High-Value  Datasets  Regulation,  Recital  7,  which  states  that  ‘[the  ODD]  stipulates  in  its  Article  14(3)  that  this 
Implementing Regulation shall provide that the availability of high-value datasets free of charge is not to apply to specific high-
value datasets held by public undertakings where that would lead to a distortion of competition in the relevant markets. However, 
data held by public undertakings are not included in the scope of this Implementing Regulation’ (emphasis added). 

25 

 
 
At the same time, the EU legal framework includes safeguards designed to ensure trust in 
data exchange. The GDPR, together with the eIDAS Regulation and the EU cybersecurity 
legislation, lays down requirements related to data protection, identification, authentication 
and  system  security.  These  elements  contribute  to  establishing  a  secure  and  reliable 
environment for energy data sharing across the EU. 

In  addition,  the  EU  has  established  a  horizontal  framework  for  AI.  The  AI  Act (93) 
introduces  rules  aimed  at  ensuring  the  safe  and  trustworthy  deployment  of  AI  systems, 
while  policy  initiatives  such  as  the  AI  Continent  Action  Plan (94)  and  the  Apply  AI 
Strategy (95)  seek  to  promote  the  uptake  of  AI  and  strengthen  the  EU’s  position  in  the 
global AI landscape.  

Taken  together,  these  legislative  and  policy  initiatives  have  contributed  to  progress  in 
structuring energy data exchange and supporting digitalisation in the sector. At the same 
time, several instruments are still in an early phase of implementation, and their combined 
practical  effects  will  need  time  to  materialise.  For  now,  the  framework  still  appears 
insufficiently integrated to address in a fully coherent way certain energy-sector-specific 
challenges,  notably  as  regards  interoperability,  data  availability,  governance  and 
innovation. This is explained in the next section. 

3.2.2.  Problem definition 

Power  systems  are  becoming  increasingly  complex  due  to  the  growing  integration  of 
variable renewable energy sources, the electrification of end-use sectors and the increasing 
decentralisation of generation and flexibility resources. This translates into an increasing 
need to monitor (and control) the electricity system in more detail. System operators need 
to be able to process large quantities of data as the basis for network operations, in order 
to  observe  the  system  at  higher  granularity.  Therefore,  innovative  tools  such  as  smart 
energy services and AI applications for the energy sector are essential to support a more 
informed operation of a complex system. Such tools will help make systems more flexible, 
efficient and resilient and increase grid productivity. This matters at European scale as it 
is one big interconnected and interdependent system: vulnerabilities can spread and cause 
negative  effects  beyond  an  individual  system  operators’  system.    This  also  requires  an 
appropriate  digital  backbone  for  the  energy  system,  including  interoperable  data 
infrastructures, cloud-edge computing capacities, AI-IoT platforms and digital twins that 
can support trusted data exchange and real-time operational intelligence across the system.  
At  the  same  time,  many  of  the  enabling  technologies,  infrastructures  and  capabilities 
required  for  this  transformation  are  not  specific  to  the  energy  sector  alone.  The  energy 
system  can  benefit  from  synergies  with  the  wider  digital  economy  and  with  adjacent 
sectors such as mobility, buildings and industry, including through the reuse and adaptation 
of  cloud-edge  infrastructures,  AI  models,  digital  twins,  interoperable  IoT  architectures, 
software  components  and  digital  skills.  Such  cross-sectoral  synergies  can  help  reduce 
development costs, avoid duplication and shorten time to market for digital and AI-enabled 
solutions in the energy sector.   

(93)   Regulation (EU) 2024/1689 of the European Parliament and of the Council of 13 June 2024 laying down harmonised rules on 
artificial intelligence and amending Regulations (EC) No 300/2008, (EU) No 167/2013, (EU) No 168/2013, (EU) 2018/858, (EU) 
2018/1139 and (EU) 2019/2144 and Directives 2014/90/EU, (EU) 2016/797 and (EU) 2020/1828 (Artificial Intelligence Act). 
(94)   Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 

and the Committee of the Regions, AI Continent Action Plan, COM(2025) 165 final. 

(95)   Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 

and the Committee of the Regions, Apply AI Strategy, COM(2025) 723 final. 

26 

 
 
Effective  energy  data  exchange  and  interoperability  are  critical  to  enable  smart  energy 
services and the development of robust AI models. Smart energy services – such as demand 
response, dynamic pricing and smart charging – enable consumers to take full advantage 
of retail market liberalisation and digitalisation. The EU legal framework already covers 
the primary use of energy data, meaning the operational data exchanges between specific 
actors for services such as metering, billing, supplier switching, demand response and grid 
operation. However, implementation varies significantly across Member States, creating 
complexity,  legal  uncertainty  and  barriers  to  cross-border  smart  energy  services. 
Furthermore,  horizontal  legislation  like  the  Data  Act,  with  in  Chapter  III  horizontal 
provisions applicable to data sharing in a business-to-business relationship does not fully 
address  the  specificities  of  regulated  energy  data  and  regulated  entities.  As  a  result, 
providers of demand-response or smart electric-vehicle charging services, often redesign 
software  interfaces  and  renegotiate  data-access  procedures  for  each  national  market 
hindering  the  cross-border  growth  of  smart  energy  services.  At  the  same  time,  the 
framework for the secondary use of energy data, meaning the pooling and reuse of energy 
data  beyond  its  original  operational  purpose,  for  example,  for  research,  analytics  or  AI 
model development, is less developed. Public datasets remain fragmented or limited for 
advanced  analytics.  While  horizontal  legislation  provides  safeguards  on  data  protection 
and cybersecurity, there is no clear sector-specific framework for structured energy data 
pooling or for the use of AI models. As a result, energy companies or grid operators often 
hesitate to share detailed data for research purposes or to train AI models. This limits access 
to high-quality real-world datasets and means that developers often have to rely instead on 
limited, incomplete or synthetic datasets, which can slow down the development, testing 
and validation of robust AI models.  

The latter, the development and deployment of European AI models and model-based 
applications in energy, including energy-specific models as well as the adaptation and 
fine-tuning  of  more  general-purpose  models  for  energy-system  use  cases,  in 
particular is constrained by barriers to data exchange/access and data pooling.  

As the energy sector moves towards greater investment in use-case-specific models, there 
is an increased need for access to specialised datasets, which may be controlled by one 
company or a small number of companies (96). These companies might limit data access 
for a range of reasons, including commercial and privacy considerations. On the one hand, 
data holders may withhold datasets to protect business models or fend off competition (97). 
On the other hand, privacy concerns can contribute to hesitancy in information sharing, 
particularly around individual-level data (98). While the anonymisation or aggregation of 
data can be a solution in this regard, it might come at the cost of accuracy and efficiency. 
Technical fragmentation and lack of interoperability are another barrier to data access by 
AI  developers  (99).  Data  silos,  legacy  infrastructure  and  absence  of  harmonised  data 
standards further limit AI’s effectiveness (100). 

Existing  data  access  regimes  focus  primarily  on  primary  use  (e.g.  billing,  customer 
services, network operation) and are often limited to specific datasets such as consumption 
data. They do not allow systematic access to the diverse, large-scale datasets required to 

(96)   CERRE, ‘What policy interventions for a competitive AI sector?’ Section 2 (2025). 
(97)   Ibid. 
(98)   See Use Case 3 in European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., Haack, 
J. et al., Support for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications Office of 
the European Union, 2026, https://data.europa.eu/doi/10.2833/3572353. 

(99)  BRIDGE, Data Management Working Group, ‘Artificial Intelligence’ (2025); ETIP SNET, ‘Unlocking the Potential of AI and 

Generative AI in European Smart Grids: A Strategic Position Paper and Guide for Action’ Section 4.2.2 (2025). 

(100)   Ibid. ENTEC2 study. 

27 

 
 
train  general-purpose  AI  models,  including  grid  operational  data,  flexibility  data,  and 
aggregated system data. While the Chapters II and III of the Data Act provide a framework 
for sharing data, including sensitive data, with the appropriate safeguards, electricity grid 
operators  face  legal  uncertainty  and  are  reluctant  to  share  sensitive  or  commercially 
valuable  data  in  the  absence  of  a  clear  public-interest  legal  basis,  safeguards,  and 
governance. There is  no framework that allows lawful, trusted secondary use of energy 
data. Despite the potential of AI, several challenges hinder its widespread deployment in 
grid operation and planning. Models that perform well in simulations often struggle in real-
world  environments  where data may be  noisy, incomplete or inconsistent. High-quality 
real-world datasets remain scarce, and access is often restricted due to privacy, regulatory, 
or commercial concerns. In research and benchmarking, simplified network models and 
synthetic datasets are therefore widely used to ensure comparability across methods, since 
access  to  detailed  real-world  grid  data  is  often  restricted.  While  highly  useful  for 
innovation  and  reproducibility,  such  benchmarks  remain  abstractions  and  often  omit 
details that are essential for industry-grade operations. 

Besides the impact on innovation, this absence of a trusted data exchange framework also 
undermines Europe’s strategic autonomy, as it increases reliance on non-European 
AI models trained on non-EU datasets and governed by foreign legal and technological 
standards  for  the  operation  of  critical  European  energy  infrastructure.  In  a  fragmented 
European landscape, individual  TSOs, DSOs or  energy  companies often  lack the scale, 
bargaining power and technical ecosystem to negotiate access to data, cloud infrastructure 
and model-development capacities on terms comparable to those available to large global 
technology firms (101). This creates a structural advantage for large non-European data and 
cloud  companies,  which  can  leverage  their  control  over  key  layers  of  the  AI  stack  — 
including hyperscale cloud, computing infrastructure, machine-learning frameworks and 
proprietary models — to position themselves as the natural providers of AI services for 
grid  operation  and  planning (102).  Where  European  operators  act  in  isolation  and  data 
remains  fragmented  across  jurisdictions  and  entities,  operators  are  less  able  to  pool 
sufficient high-quality datasets to develop viable European alternatives foreign providers, 
on the other hand, can offer ready-made models and services trained on broader datasets 
and supported by superior compute capacity. 

If not addressed, this risks locking the operation of critical European energy infrastructure 
into  non-European  technological  dependencies.  If  grid  observability,  forecasting, 
congestion management or optimisation increasingly rely on foreign AI models, the EU 
may face vulnerabilities not only in terms of transparency and accountability, but also in 
terms  of  continuity  of  access,  cybersecurity  and  operational  resilience.  In  a  context  of 
geopolitical  tensions,  trade  restrictions  or  changes  in  foreign  legal  or  commercial 
conditions, access to updates, support, computing resources or even the underlying service 
itself  could  become  uncertain,  with  possible  implications  for  security  of  supply.  At  the 
same time, such dependence  would weaken the  emergence of a  European industrial  AI 
sector in one of the EUs most promising strategic application domains. Energy is one of 

(101)  European Economic and Social Committee, & Centre for European Policy Studies. (2025). Generative AI and foundation models 
in  the  EU:  Uptake,  opportunities,  challenges,  and  a  way  forward.  Publications  Office  of  the  European  Union. 
https://doi.org/10.2864/8377116 ; Widuto, AI and the energy sector. Briefing, European Parliamentary Research Service (EPRS), 
PE 775.859, Jul. 2025. 

(102)  European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., Haack, J. et al., Support 
for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications Office of the European 
Union,  2026, Section  2.6.4  “Ensuring  Technological  Sovereignty  in  the  Adoption  of  AI  in  Europe’s  Energy  Sector” 
https://data.europa.eu/doi/10.2833/3572353. 

28 

 
 
the  sectors  where  Europe  has  real  industrial  depth,  engineering  know-how  and  system 
expertise.  

In this context, several structural challenges affect the availability, use and exchange of 
energy data in the EU. 

Fragmentation  and  insufficient  interoperability  of  existing  data  exchange  frameworks 
represent  a first  significant  barrier. Differences in data models,  formats, ontologies and 
interfaces persist between Member States and between system operators, and the uptake 
of  common  standards  and  open  application  programming  interfaces  (APIs)  remains 
limited.  As  a  result,  effective  data  exchange  between  TSOs,  DSOs  and  other  market 
participants is hindered, affecting coordination both within and across borders, as well as 
system optimisation and innovation (103). In this context, open-source approaches can also 
play  an  important  enabling  role,  as  they  can  support  transparency,  auditability, 
interoperability and vendor independence, while facilitating the collaborative development 
and uptake of digital tools across the electricity system. 

In the second half of 2025 the European Commission  ran an Open Public Consultation 
(OPC) to  support the  development  of a Strategic Roadmap for Digitalisation and AI in 
energy. Respondents very often cited limited access to high-quality data, cybersecurity 
and  data  privacy  concerns,  and  a  lack  of  interoperability  and  standards  as  main 
barriers  to  the  adoption  of  digital  and  AI  technologies  in  the  energy  sector  (104). 
Moreover, respondents considered the lack of data interoperability and insufficient use 
of  commonly  agreed  data  exchange  standards,  the  absence  of  an  established  data 
governance framework, and the lack of consistent data access regulatory frameworks to 
be  the  first,  second  and  third  barriers,  respectively,  to  the  establishment  of  a  common 
European energy data space to  enable demand-side flexibility  and smart energy service 
(105). Questionnaires answered by Member States in preparation for the second meeting of 
the Smart Energy Expert Group (SEEG) in autumn 2025 show that convergence at the EU 
level is generally welcomed and that a European governance or coordination layer is 
considered  necessary  to  ensure  continuous  alignment (106).  Similarly,  one  of  the  main 
recommendations  of  the  BRIDGE  Regulation  Working  Group  in  its  report  on  energy 
sharing is to establish a clear EU-level framework for data governance in the energy sector 
(107).  

Respondents  to  the  OPC  identified  power  grid  management  (real-time  monitoring, 
predictive  maintenance,  grid  balancing),  demand  management  (smart  consumption, 
demand-side  flexibility,  dynamic  pricing)  and  renewable  energy  integration  (grid 
integration, dispatch optimisation) as the three  areas of the energy system that would 
benefit most from the deployment of digital and AI technologies, (108).  

(103)  The JRC has recently surveyed DSOs about data sharing. The survey revealed that only 63% of DSOs share data about demand 
and generation forecasts with the TSOs. The number is lower for data about power generation facilities. The granularity with 
which data are shared varies. See JRC, ‘DSO Observatory 2024 – Unlocking Flexibility in Europe’ (2025), pp. 52-55, available 
at: https://publications.jrc.ec.europa.eu/repository/handle/JRC141953. 

(104) See ‘Task 5: Analysis of the Open Public Consultation to the Strategic Roadmap for Digitalisation and Artificial Intelligence (AI) 
in the Energy Sector’ in European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., 
Haack, J. et al., Support for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications 
Office of the European Union, 2026, https://data.europa.eu/doi/10.2833/3572353. 

(105)  Ibid, p. 22. 
(106)  DG ENER, ‘Summary of responses by associations and Member States to the SEEG plenary of 23/10/2025’ (2025). 
(107)  BRIDGE, Regulation Working Group, ‘Report on energy sharing’ (2025). 
(108)  Ibid ‘Task 5 Report: Analysis of the Open Public Consultation to the Strategic Roadmap for Digitalisation and Artificial 

Intelligence (AI) in the Energy Sector’ ENTEC2 Study.  

29 

 
 
 
The European Parliament has also underlined the importance of digitalisation and smart 
grids  for  the  future  operation  of  the  electricity  system.  In  its  resolution  on  electricity 
grids (109), it highlights the role of smart grids in improving congestion management and 
optimising the electricity distribution of renewables, while stressing their contribution to 
network  flexibility  through  the  integration  of  digital  tools  that  facilitate  demand-side 
response  and  collective  self-consumption.  The  Parliament  further  notes  that  data 
management  technologies  and  smart  energy  appliances,  often  leveraging  artificial 
intelligence,  can  significantly  increase  the  efficiency  of  existing  grid capacities  and 
maximise the use of existing assets, thereby reducing the need for new infrastructure, for 
example by providing real-time information on energy flows. On that basis, it urges the 
Commission and the Member States to further enable and increase the digitalisation of the 
European electricity system in order to optimise power system operation, and calls on the 
Commission, TSOs and DSOs to develop an energy data exchange framework based 
on technical expertise and practice, ensuring the secure, transparent and interoperable 
management, exchange and storage of energy data in the Union. Such a framework, in 
the Parliament’s view, should facilitate data pooling and sharing through appropriate 
governance structures and data-sharing services, while enabling system operators and 
other relevant actors to operate the grid securely and intelligently through the integration 
of flexibility and innovative technologies. 

Experts  and  stakeholders  have  collaborations  in  many  areas,  particularly  technical  and 
semantic  interoperability  for  certain  use  cases.  Some  of  these  initiatives  operate  within 
formal European standardisation  frameworks, such as  the CEN-CENELEC-ETSI Smart 
Grid  Coordination  Group (110),  while  others  are  voluntary  initiatives  or  expert-led 
groupings, such as the Coalition of the Willing on Bidirectional Charging (111) 

The Joint Report of the SEEG, the Sustainable Transport Forum (STF) and the European 
Coalition of the Willing (CoW) on Bidirectional Charging (112) recommends establishing 
a harmonised, cross-sector European interoperability and testing ecosystem, backed up by 
relevant sectoral legislation, in order to define a common European testing environment. 
Such an environment should align with energy and other sectoral frameworks, incorporate 
relevant  use  cases  and  EU-wide  mandatory  certification  processes,  and  integrate  with 
adjacent domains such as mobility and buildings. 

Digital  Europe  released  a  recent  white  paper  on  grid  performance,  developed  with  its 
Energy  Executive  Council  –  comprising  11  senior  executives  from  leading  energy  and 
green  technology  companies  –  in  which  data  access  and  grid-level  interoperability  are 
highlighted as one of the main priority policies to future-proof Europe’s grids (113).  

Finally, a number of EU strategies and stakeholder-led initiatives support the digitalisation 
of  the  energy  system  and  the  development  of  interoperable  data  ecosystems.  The 
Digitalising the Energy System Action Plan (114), the Strategic Roadmap for Digitalisation 

(109)  European Parliament, Resolution of 19 June 2025 on “Electricity grids: the backbone of the EU energy system” (2025/2006(INI)), 

P10_TA(2025)0136. Available at https://oeil.europarl.europa.eu/oeil/el/procedure-file?reference=2025/2006(INI).  

(110)  See, for example, CEN-CENELEC, ‘Smart Grids and Meters’ CEN-CENELEC Topics (2026) https://www.cencenelec.eu/areas-

of-work/cen-cenelec-topics/smart-grids-and-meters/cen-cenelec-etsi-coordination-group-on-smart-grids-cog-sg/. 

(111)  See, for example, Coalition of the Willing on Bidirectional Charging, ‘Joint Report by European Working Group 1 “Car Charging 
and Aggregators” and European Working Group 2 “Energy and Grid Topics” in the “Coalition of the Willing on Bidirectional 
Charging’ (2024). 

(112)  EC, ‘Joint Report - Data Exchange for Demand-Side Flexibility and Smart and Bidirectional Charging’ (European Commission, 
Directorate-General  for  Energy  2026).  -  https://op.europa.eu/en/publication-detail/-/publication/f56915a6-5582-11f1-b3e2-
01aa75ed71a1. 

(113)  DIGITALEUROPE; Advancing Europe’s Grid Performance Why Europe must digitalise its grids, May 2025. 
(114)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 

and the Committee of the Regions, Digitalising the Energy System – EU Action Plan, COM(2022) 552 final. 

30 

 
 
and  AI  in  the  Energy  Sector (115)  and  the  European  Data  Strategy  (116),  together  with 
initiatives  such  as  BRIDGE (117)  and  Data4Energy (118)  and  projects  like  EDDIE (119), 
Enershare (120),  Data  Cellar (121),  Synergies (122),  Omega-X (123),  all  supported  under 
Horizon  Europe,  and  INSIEME (124),  launched  under  the  Digital  Europe  Programme, 
contribute to the development and testing of use cases, technical solutions and governance 
approaches for energy data exchange. 

Another example is AI.grids, which is a pan-European, bottom-up collaborative initiative 
launched in June 2026 (125), as a flagship action of the Strategic Roadmap for Digitalisation 
and AI in energy (126), to develop AI foundation models specifically designed for power 
system operations . It brings together 48 organisations, representing TSOs, DSOs, research 
institutions,  technology  providers  and  SMEs.  Its  purpose  is  to  address  the  growing 
complexity of Europe’s electricity system, driven by variable renewables, electrification 
and distributed energy resources, by training and deploying AI foundation models for grid 
planning and operation. Data availability is identified as a key condition for success.  

Existing  EU  legislation  covers  important  aspects  of  the  primary  use  of  energy  data, 
including secure and non-discriminatory access to metering and consumption data, but it 
does  not  sufficiently  incentivise  grid  operators  to  make  operational  and  system  data 
available  for  broader  innovative  uses,  such  as  AI  training.  This  leaves  an  important 
regulatory gap for secondary use.  

Although  AI.grids  is  putting  in  place  project-specific  contractual  and  governance 
arrangements for data exchange among participants, these are ad-hoc solutions designed 
for one initiative. They do not provide a scalable or durable basis for broader research and 
innovation across the European energy sector. 

A  common  EU  framework  would  reduce  fragmentation  by  establishing  shared  data 
governance rules, secure data exchange mechanisms, and interoperability arrangements. 
This  would  make  it  easier  for  different  actors  to  collaborate  across  borders  and  across 
transmission and distribution levels. Standardised legal and contractual provisions at EU 
level  would  lower  transaction  costs  and  legal  uncertainty  for  research  and  innovation 
projects.  Instead  of  each  consortium  having  to  negotiate  its  own  arrangements  from 
scratch,  actors  could  rely  on  common  rules  and  governance  mechanisms.  Finally,  a 
European framework would help ensure that the benefits of initiatives such as AI.grids are 
not limited to a small set of participants. The project is intended to benefit European system 
operators broadly, especially those with fewer resources, and a common framework would 
support wider access, replication, and scaling across many energy-sector use cases. 

(115)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 
and the Committee of the Regions - Strategic Roadmap for Digitalisation and AI in the Energy Sector, COM(2026) 501 final. 
(116)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 

and the Committee of the Regions, A European Strategy for Data, COM(2020) 66 final. 

(117)  BRIDGE Data management Working Group. 
(118)  Sub-group on "Data for Energy" (D4E) (E03926/3) of the  Smart Energy Expert Group (E03926). 
(119)  https://eddie.energy/. 
(120)  https://cordis.europa.eu/project/id/101069831. 
(121)  https://datacellarproject.eu/. 
(122)  https://energydataspaces.eu/. 
(123)  https://omega-x.eu/. 
(124)  https://insieme.energy/index.html. 
(125)  Digitalisation of the energy system. 
(126)  Strategic roadmap for digitalisation and AI in energy. 

31 

 
 
 
Complementing  these  governance-oriented  efforts,  emerging  digital  infrastructure 
initiatives are beginning to provide parts of the digital backbone needed for a more data-
driven  energy  system,  including  digital  twins  and  federated  cloud-edge  and  AI-IoT 
platforms  developed  in  projects  such  as  TwinEU,  ODEON (127)  and  HEDGE-IoT (128). 
These efforts  also  create opportunities for cross-sector learning and reuse. Many of the 
underlying technologies and building blocks for smart energy services and AI applications 
— such as federated data infrastructures, open interfaces, digital twins, edge computing, 
AI  benchmarking  tools  and  secure  cloud  environments  —  are  being  developed  in 
interaction with the wider digital sector and with other sectors undergoing parallel digital 
transitions. This can support faster deployment and reduce costs by allowing the energy 
sector  to  build  on  existing  technological  and  organisational  capabilities  rather  than 
developing all components from scratch. 

3.2.3.  Objectives of the proposal 

The proposal aims to enhance the exchange of and access to energy data for both primary 
and secondary use, with the objective of increasing the productivity of the grid by making 
use of innovative tools. 

Regarding the primary use of energy data, the proposed Article 18a(4) obliges TSOs and 
DSOs to manage and exchange grid data (129) in a manner that enables the development, 
deployment and effective use of smart grids in order to  ensure the efficient, secure and 
flexible operation of the electricity system. These exchanges would take place within the 
principles of Chapter III of the Data Act. (130). TSOs and DSOs should also collaborate in 
using available data and develop and implement data-driven solutions to monitor, optimise 
and coordinate network operation. 

Regarding  the  secondary  use  of  energy  data,  the  proposed  Article  18a(5)  mandates  the 
establishment of a voluntary secure electricity grid data exchange framework by DSOs and 
TSOs, facilitated by ENTSO-E and the EU DSO Entity. Detailed governance rules for this 
data exchange framework would be developed by ENTSO-E and the EU DSO Entity and 
would be complemented by Commission requirements on the lawful, secure and controlled 
reuse of data for public-interest research and innovation purposes. The objective of this 
provision is to support the development of innovative data-driven technologies enabling 
efficient and safe grid operation and optimisation, including through the use of AI. Under 
the proposal, all European TSOs and DSOs should be able to access any such innovative 
technologies by filing a request through the coordinated arrangement jointly facilitated by 
the ENTSO-E and the EU DSO Entity.  

(127)  ODEON  (https://odeonproject.eu/)  which  aims  to  enable  a  reference  Federated  Energy Data Spaces  implementation  that  will 

facilitate the integration of the value chain around energy (and other sectors) data. 

(128)  HEDGE-IoT (https://hedgeiot.eu/) is a Horizon Europe project that develops an interoperable IoT, edge/cloud and AI framework 
to  digitalise  Europe's  energy  system,  enabling  secure  data exchange,  greater grid  flexibility, higher  renewable integration  and 
smarter energy services through large-scale demonstrations across Europe. 

(129)  As explained in the recital 13 of the proposal electricity grid data can include, depending on the use case, network topology, grid 
parameters and asset characteristics, connection and capacity data, real-time measurements from Supervisory Control and Data 
Acquisition (SCADA) systems and other operational measurements, state estimation and power flow data, voltage, load flow and 
congestion  data,  outage  and  maintenance  data,  dispatch,  redispatch  and  curtailment  data,  flexibility  needs,  and  operational 
forecasts, as well as limits and constraints relevant for transmission and distribution system operation. 

(130)  Electricity Regulation creates the obligation; TSOs and DSOs must cooperate and exchange/use relevant grid data. Sector-specific 
rules  define  the  purpose  and  safeguards;  The  data  may  be  used  only  for  specific  electricity-system  objectives,  namely  the 
development, deployment and effective use of smart electricity grids in order to ensure the efficient, secure and flexible operation 
of the  electricity  system.  Data  Act Chapter  III  may apply  in  the background. The  rule  creates a  B2B obligation to  make  data 
available, so the terms should be fair, reasonable, non-discriminatory and transparent. 

32 

 
 
3.2.4.  Expected benefits and impacts 

As explained in the previous section, the existing EU legal framework already contains 
important  building  blocks  on  digitalisation  and  access  to  electricity  data,  but  these 
provisions do not create a sufficiently clear and operational framework for system-level 
grid data exchange for smart grid operation and innovation. 

The first  way in  which the proposal  adds  value is that  Article 18a(4)  creates in  a more 
explicit and operational way a direct legal obligation on TSOs and DSOs themselves to 
manage and exchange grid data with each other for clearly identified system purposes. 
Existing law points in that direction, especially Article 57 of Regulation (EU) 2019/943 on 
TSO-DSO  cooperation,  but  it  remains  relatively  general  and  focused  on  cooperation  in 
network planning and operation. It does not spell out with comparable precision that TSOs 
and DSOs must exchange grid data in a manner that enables the development, deployment 
and effective use of smart grids, nor that they must do so specifically to ensure efficient, 
secure and flexible system operation and to support innovative, data-driven solutions for 
monitoring, optimisation and coordination of network operation. 

The second area of added value concerns the relationship between retail-level data rules 
and  system-level  data  needs.  The  current  EU  legislation  is  strongest  where  the  market 
function  is  already  clearly  defined,  notably  for  metering,  consumption  data,  customer 
switching and demand response. That is why Article 24 of Directive (EU) 2019/944 could 
already  underpin  detailed  implementing  rules,  and  why  Implementing  Regulation  (EU) 
2023/1162  could  focus  on  interoperability  requirements  and  access  procedures  for 
metering and consumption data. However, those instruments are not designed as a general 
framework for all forms of grid-relevant data exchange across operators and voltage levels.  

A third way in which the proposal adds value pertains to the legal basis for secondary use 
of energy data in Article 18a(5). Access to interoperable and high-quality real-world data 
is  a  critical  factor  for  the  development  of  AI  applications  in  the  energy  sector,  as 
highlighted by reports by BRIDGE (131), CERRE (132), ENTEC (133) and ETIP SNET (134). 
The scarce availability of these datasets currently hinders AI innovation in use cases in 
grid operation, flexibility activation, forecasting, and maintenance (135). 

Current  EU law, such as  the Data Act  provides  a horizontal governance framework for 
controlled and trusted data sharing and reuse but as several instruments, especially the Data 
Governance Act does not apply to most of the TSOs and DSOs, there is a clear need for an 
electricity-specific  framework  secondary  use  framework.  Such  a  framework  would 
effectively enable TSOs and DSOs to pool or make available relevant data under common 
safeguards  and  governance  in  a  trusted  setting  in  order  to  develop,  test  and  validate 
innovative digital tools for grid planning, operation and optimisation. 

(131)  BRIDGE, Data Management Working Group, ‘Artificial Intelligence’ (2025). 
(132)  CERRE, ‘What policy interventions for a competitive AI sector?’ (2025). 
(133)  European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., Haack, J. et al., Support 
for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications Office of the European 
Union, 2026, https://data.europa.eu/doi/10.2833/3572353, p13. 

(134)  ETIP SNET, ‘Unlocking the Potential of AI and Generative AI in European Smart Grids: A Strategic Position Paper and Guide 

for Action’ Section 3.6 (2025). 

(135)  Use Cases 1-4 (2025) in European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., 
Haack, J. et al., Support for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications 
Office of the European Union, 2026, https://data.europa.eu/doi/10.2833/3572353. 

33 

 
 
3.2.4.1.  Energy system benefits 

Available  analysis,  referenced  below,  supports  the  assumption  that  smoother,  enhanced 
data exchange for grid operation and the development and use of innovative technologies 
will  contribute  to  the  objective  of  making  the  operation  of  electricity  systems  more 
efficient, secure and flexible. 

Regarding  the  primary  use  of  energy  data  (Article  18a(4),  the  proposal  will  lead  to 
enhanced  data  exchange  and  the  deployment  of innovative  grid  technologies  and  smart 
energy  services.  This  will  release  more  capacity  on  the  existing  grid,  in  particular  by 
unlocking flexibility resources that are increasingly needed by electricity systems.  

In  2022,  the  European  Commission’s  Energy  Transition  Expertise  Centre  (ENTEC) 
provided high-level modelling of the maximum flexibility potential that a series of use 
and business cases based on digital solutions could deliver in 2030 and 2050 (136). The 
study considered use and business cases such as price-responsive charging and discharging 
of  EVs,  district  heating  and  cooling,  virtual  power  plants  for  the  intraday  market, 
congestion management and ancillary services using EVs. Although some of these use and 
business cases remain challenging and may require support, the study concluded that they 
have a flexibility potential of 230 GW in 2030 and an additional 600 GW in 2050 (137). 
Remarkably, the study states that this potential could fully cover the flexibility needed to 
deliver congestion management and ancillary services in 2050; it could also roughly match 
the flexibility needed in wholesale energy markets (138). 

A  similar  conclusion  emerges  from  a  2026  ENTEC  study  published  as  part  of  the 
preparation of the strategic roadmap for digitalisation and AI in the energy sector (139):  

•  Peak  load  reduction  and  cost  savings:  By  activating  flexibility  (trough 
(DSM)  can 
digitalisation),  AI-optimised  demand 
significantly cut peak demand. By 2030, up to 60 GW of peak supply needs could 
be met by flexible demand instead of new power plants, saving roughly EUR2.7 
billion per year in generation capacity investments. Full-scale Demand Response 
deployment across Europe could yield between EUR11.1 and EUR29.1 billion in 
annual savings on investment needs between 2023 and 2030; 

side  management 

• 

Integration of renewables and emissions reduction: DSM improves the alignment 
of demand with renewable supply (e.g. shifting EV charging to midday solar peak 
or  windy  nights). This  reduces  curtailment  of  renewables  and  reliance  on  fossil 
backup, cutting emissions. A full deployment of demand flexibility in the EU could 
save an estimated 37.5 Mt of CO₂ in 2030 (an ~8% reduction of power sector 
emissions) by avoiding fossil generation during peak times; 

•  Grid resilience and reliability: Active demand management can alleviate grid stress 
during contingencies, e.g. AI can reduce loads in a region to prevent an overload or 

(136)  European Commission: Directorate-General for Energy, McKinsey & Company, Guidehouse, Fraunhofer Institute for Systems 
and Innovation Research ISI, Trinomics, Utrecht University, TNO, Antretter, M., Klobasa, M., Kühnbach, M., Singh, M., Knorr, 
K.,  Schütt,  J.,  Boer,  J.  d.,  Rolser,  O.,  Hernandez  Diaz,  D.,  Fitzschen,  F.,  Garcerán,  A.,  Reina,  R.,  Stemmer,  S.,  Steinbach, 
J.Popovski, 
European  Union, 
energy 
E., Digitalisation 
2022, https://data.europa.eu/doi/10.2833/113770. 

Publications  Office 

flexibility, 

the 

of 

of 

(137)  Ibid. p. 15 These estimates are net of possible duplications and resource competition. The overall gross estimate was 255 GW 

higher.. 
(138)  Ibid., pp. 13-14. 
(139)  European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., Haack, J. et al., Support 
for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications Office of the European 
Union, 2026, p 15 https://data.europa.eu/doi/10.2833/3572353. 

34 

 
 
help balance the grid during a supply shortfall, acting as an automatic safety net. 
This fast adaptive load control adds to grid stability; 

Regarding the secondary use of energy data (Article 18a(5)), the complexity of electricity 
systems,  including  the  way  power  is  generated,  transmitted,  distributed  and  consumed, 
creates  the  potential  for  innovative  technologies,  including  those  using  AI,  to  provide 
benefits by improving efficiency, decision-making, and resilience (140). More specifically, 
AI can create benefits for renewable generators and system operators through improved 
operation and maintenance (141). Although the potential for AI in system planning was also 
mentioned by various stakeholders in the OPC, the available evidence and examples were 
more  limited  (142),  and  this  aspect  was  therefore  not  further  developed.  The  following 
paragraphs  summarise  the  potential  benefits  for  system  operators  in  grid  operation  and 
maintenance.  

Regarding the operation of grids by system operators, AI can bring important benefits in 
short‑term applications, leading to (1) increased system observability and more efficient 
use of existing network capacity and (2) improved forecasting of system imbalances (143).  

First,  with  respect  to  increased  system  observability  and  more  efficient  use  of  existing 
network capacity, dynamic line rating systems could activate 115–175 GW of additional 
transmission capacity globally at a fraction of the cost of equivalent new power lines. The 
value of AI in this context lies in maximising the benefit of this additional capacity (144). 
Furthermore, AI can identify or calibrate grid models based on smart meter and other grid 
measurements  and can estimate the state of power grids, including voltage, current  and 
transformer  temperatures  (145).  Distribution  grids,  in  particular,  tend  to  have  low 
observability, which AI can improve (146). AI techniques can also enhance optimisation 
processes  for  complex  distribution  grids  through  improved  optimal  power  flow 
calculations,  potentially  reducing  computational  needs  relative  to  traditional  tools.  In 
addition, AI methods have been shown to be up to 100–400 times faster than traditional 
AC  powerflow  solvers.  They  can  screen  millions  of  contingency  scenarios  in  minutes 
rather than days, although accuracy decreases in larger or more congested systems (147).  

AI  can  find  solutions  that  minimise  transmission  losses  and  generation  costs  more 
effectively  than  static  methods.  In  power  generation,  AI-based  operations  and 

(140)  IEA, ‘Energy and AI’ World Energy Outlook Special Report (2025). Beyond this extensive study by the IEA, see also IRENA, 

‘Digitalisation and AI for power system transformation’ (IRENA, 2025). 

(141)  ETIP SNET, ‘Unlocking the Potential of AI and Generative AI in European Smart Grids: A Strategic Position Paper and Guide 
for Action’, Chapter 4.1.3 (2025). More broadly, IEA (2025) estimates the potential benefits of AI application in power plants. In 
their Widespread Adoption Case, the application of AI in power plant operations and maintenance yields potential cost savings of 
up to  USD 110 billion  annually by 2035  from  avoided  fuels and lower  costs.  For  a  summary  of the  impact on infrastructure 
planning and maintenance, see also Nicolò Rossetto and Valerie Reif, ‘Digitalization of the electricity infrastructure: a key enabler 
for the decarbonization of the power sector’ in Juan Montero and Matthias Finger (edited by), A Modern Guide to the Digitalization 
of Infrastructure (Edward Elgar Publishing 2021), pp. 228-231. 

(142)  For an example of the impact of digitalisation of grids more broadly on planning, a recent paper by DIGITALEUROPE provides 
the example of the Italian DSO Areti, which is using digital strategic flexibility management to ‘optimise its hardware investments 
by 45 per cent, saving €420 million over the next eight years’. See Vincenzo Renda and Katrin Saarep, ‘Powering Europe’s Future: 
How AI and Digital Grids Can Secure Europe’s Climate and Industrial Leadership’ (DIGITALEUROPE 2025), p. 12. 

(143)  IEA (2025) highlights that despite the potential benefits of short-term operational applications, adoption remains limited. A survey 
of grid operators across 13 countries from all over the world found that only 23% use AI for real-time operations, compared with 
54% for grid-development planning and nearly 70% for asset maintenance and operation planning. IEA, ‘Energy and AI’ World 
Energy Outlook Special Report Chapter 3.4.1 (2025). 

(144) Ibid. 
(145) ETIP SNET, ‘Unlocking the Potential of AI and Generative AI in European Smart Grids: A Strategic Position Paper and Guide for 

Action’, Chapter 4.1.1 (2025). 

(146) Ibid. 
(147) Ibid. 

35 

 
 
maintenance optimisation could save up to USD110 billion annually by 2035 in fuel 
and operation and maintenance costs (Widespread AI adoption scenario) (148). 

Second, with respect to improved forecasting for system imbalances TSOs such as RTE in 
France and Elia in Belgium already use AI for real-time imbalance forecasting, helping 
reduce  uncertainty  and  informing  more  accurate  reserve  sizing  (149).  This  also  leads  to 
savings in balancing costs (150), 

AI-driven  predictive  maintenance  helps  cut  unexpected  outages  and  costly  emergency 
repairs, which could lead to  maintenance cost reductions of approximately 25–30%, 
breakdown  incidents  cut  by  approximately  70%,  and  downtime  reduced  by 
approximately  40%  on  average  when  moving  from  reactive  to  predictive 
maintenance (using AI/Internet of Things) (151). Avoiding just one major transformer 
failure or power plant forced outage can save millions in damage and lost revenue, leading 
to  lower  system  costs (152).  TSOs  and  DSOs  are  beginning  to  integrate  predictive 
maintenance  tools  into  their  workflows  to  extend  asset  lifetimes,  reduce  unplanned 
outages,  optimise  maintenance  planning  and  ensure  grid  stability (153).  According  to 
McKinsey, AI-driven predictive maintenance can increase asset productivity by up to 20% 
and reduce overall maintenance costs by up to 10% (154). 

3.2.4.2.  Digitalisation and innovation 

Innovation, especially from companies new to the industry, may be hindered by barriers to 
data access. The proposal will support easier exchange of electricity grid data, which will 
boost innovation and enhance the development of technologies, including those using AI, 
that  enable  more  efficient  grid  operation.  The  business  model  of  smart  energy  service 
providers usually relies on the availability of data and their inexpensive integration into 
their business processes.  

Insufficient  data  interoperability  poses  a  persistent  barrier  to  the  uptake  and  the 
development  of  smart  energy  services,  including  for  grid  operation.  Beyond  a  physical 
infrastructure  able  to  generate  and  transmit  data,  data  exchange  relies  on  data 
interoperability and the use of commonly agreed data exchange standards. To be able to 
exchange data, the parties involved need to agree on the way the elements forming the data 
are structured (data models), on the way the elements of the data are “written down” using 
bits and bytes (data formats), on the relationship between concepts in the real world and 
concepts in computer systems (data ontologies), and on the protocols used to communicate 
the data (155). Without an agreement on those aspects, which can take the form of standards 
and open APIs, exchanging data becomes technically difficult, if not impossible. Open-
source  software  and  open-source  reference  implementations  can  further  support  this 
process  by  making  technical  specifications  more  easily  reusable,  testable  and  scalable 
across  Member  States,  while  reducing  vendor  lock-in  and  lowering  entry  barriers  for 
innovative market participants. In case the parties willing to exchange data use different 
standards,  a  middleware  must  be  developed  to  deal  with  the  interfaces  and  enable  data 

(148) IEA, Energy and AI Special Report, Chapter 3 (International Energy Agency, 2023). 
(149) IEA, ‘Energy and AI’, World Energy Outlook Special Report, Chapter 3.4.1 (2025). 
(150) Ibid. ENTEC2, Study - Use Case 3 (2025); IEA, ‘Energy and AI’, World Energy Outlook Special Report, Chapter 3.4.1 (2025). 
(151) Ibid. ENTEC2, Study – p 12. 
(152) Ibid. ENTEC2, Study – p 12 
(153) Ibid. ENTEC2, Study - Use Case 4 (2025); ETIP SNET, ‘Unlocking the Potential of AI and Generative AI in European Smart 

Grids: A Strategic Position Paper and Guide for Action’, Chapter 4.1.1 (2025). 
(154) Ibid. ENTEC2, Study - Use Case 4 (2025), citing McKinsey & Company (2017). 
(155)  For an introduction to these concepts and other technical aspects of data exchange, see Tim Schittekatte, Valerie Reif and Leonardo 

Meeus, ‘The EU electricity network codes (2020 ed.)’, pp. 122-147 (Florence School of Regulation, 2020). 

36 

 
 
exchange to happen. Developing a dedicated middleware can be costly and represents a 
barrier to scalable data exchange.  

The proposal further strengthens the cross-border provision and use of innovative energy 
services by providing for a coordinated arrangement for interoperable electricity grid data 
exchange. It supports the suitability and use of innovative solutions for grid operation by 
providing a means for developing such solutions based on data from all Member States 
that are part of the voluntary arrangement for secondary grid data use based on common 
frameworks  for  testing,  benchmarking  and  validation  of  outputs.  The  proposal  also 
explicitly requires that any developed innovative solutions must be allowed to be used 
by all European TSOs and DSOs, thereby ensuring that the benefits of data-driven 
energy systems innovation can manifest themselves across the entire Union. 

3.2.4.3.  Competitiveness and strategic autonomy 

The  efficient  and  secure  operation  of  electricity  networks  increasingly  depends  on  the 
development and deployment of advanced digital and data-driven solutions. By fostering 
the development of such solutions, including AI solutions, the proposal will increase the 
EU’s  competitiveness  and  contribute  to  enhance  its  strategic  autonomy.  The  following 
paragraphs illustrate these expected impacts.   

Access  to  large  and  high-quality  datasets  is  a  precondition  for  testing  and  training 
competitive AI foundation models (156). In this respect, the EU is well positioned thanks 
to  its  extensive  scientific  and  geospatial  datasets  (such  as  Copernicus  and  Eurostat), 
ongoing deployment of sector-specific data spaces, and open-science practices (157). By 
requiring system operators to establish a secure electricity grid data exchange framework 
for  the  voluntary  exchange  of  electricity  grid  data  enabling  the  development,  testing, 
integration and deployment of innovative technologies supporting the efficient and safe 
grid  operation  and  optimisation,  the  proposal  fills  the  gap  in  EU  legislation  on  the 
secondary  use  of  energy  data.  Specifically,  it  facilitates  the  accessibility  and 
interoperability of high-quality data, i.e. granular and context-rich data (possibly coupled 
with their metadata), with the benefit of scaling up the use of AI in the energy sector. This 
will help make the training of AI models more efficient and effective, and their application 
in the energy sector will ultimately enhance the EUs competitiveness.  

Regarding the concept of strategic autonomy, given its diffusion beyond national security, 
it now also extends to questions of who controls critical technology, standards and data 
flows (158). Efforts to create the incentives and conditions for the development of European 
AI capabilities for the energy sector, including energy-specific foundation models and the 
adaptation  of  more  general-purpose  models  to  energy-system  use  cases  and  the  EU’s 
legislative action on AI take place in the context of fierce global competition in all aspects 
of the development of such models. In such a context, this proposal, consistently with the 
measures announced under the ‘AI Continent Action Plan’, will reduce the risk of the 
EU’s dependence on third  countries concerning the development of  AI foundation 
models designed to smarten the electricity grid.  

(156)  A  recent  ETIP  SNET  report  defines  AI  foundation  models  broadly  as  ‘[l]arge  AI  models  trained  on  vast  datasets,  capable  of 
performing a wide range of tasks and adaptable (fine-tunable) to specific applications’. See ETIP SNET, ‘Unlocking the Potential 
of AI and Generative AI in European Smart Grids: A Strategic Position Paper and Guide for Action’ (2025), p. 84. 

(157)  Vaida Gineikyte-Kanclere, Militsa Eggert and Goda Skiotyte, ‘European Software and Cyber Dependencies. Study Requested by 
at: 

the 
https://www.europarl.europa.eu/RegData/etudes/STUD/2025/778576/ECTI_STU(2025)778576_EN.pdf. 

Committee’ 

available 

(2025), 

ITRE 

(158) Ibid.  

37 

 
 
3.2.4.4.  Administrative and compliance costs 

The proposal provides for a governance framework for the secondary use of electricity grid 
data and the deployment of innovative solutions. The framework is to be compliant with 
applicable energy and data legislation, including the Data Act, the GDPR and the AI Act, 
and further supported by Commission  requirements.  Setting  up a secure  framework for 
voluntary electricity data exchange will entail administrative and compliance costs for the 
TSOs and DSOs participating, as well as for ENTSO-E and the EU DSO Entity.   

Analysis  by  CERRE,  ENTEC  and  SEEG  (referenced  above)  shows  that  the  current 
complexity of the European legal framework (including the GDPR and the AI Act) creates 
significant  barriers  and  compliance  costs,  particularly  for  smaller  firms  or  challenger 
firms (159)This can constrain innovation and competition across the AI supply chain (160). 
One example is the compliance costs for AI systems classified as "high-risk" under the AI 
Act,  which  can  reach  hundreds  of  thousands  of  euro  (161).  By  providing  an  energy-
specific  governance  framework  for  data  exchange  for  secondary  use,  the  proposal 
could simplify this complexity and remove some of the barriers and compliance costs. 

3.2.4.5.  Consumer costs and empowerment 

Smart  energy  services  can  deliver  concrete  economic  benefits  to  active  customers  by 
optimising the use of their energy-related assets. A SmartEN and DNV study estimates the 
direct  benefits  of  demand-side  flexibility  to  consumers  to  be  in  the  order  of  EUR  100 
billion per year, while indirect benefits are calculated to reach up to EUR 300 billion per 
year  by  2030 (162).  Seamless  data  exchange  is  particularly  important  to  reward  final 
customers who purchase aggregation services that compensate demand response based on 
actual  performance  rather  than  on  a  statistical,  and  inevitably  somewhat  artificial, 
baseline (163). Smooth data exchange between assets located on the customer premises and 
the  rest  of  the  system  is  also  important  to  run  these  aggregation  services  in  a  highly 
automated way without burdening the final customer with the need to take frequent action 
(164).  

An improved secondary use of energy data help contain network tariffs. Network tariffs 
are  collected  to  ensure  the  recovery  of  investment  and  operational  costs  of  system 
operators; they represent about 20% of the final average electricity price paid by household 
consumers. These tariffs are expected to increase significantly over the coming years (165). 
Increased  efficiency  in  network  operation  due  to  the  use  of  digital  technologies, 
including AI-based solutions, can limit the increase in costs for system operators and 
thus  the  increase  in  network  tariffs  paid  by  consumers.  Improved  secondary  use  of 
energy data can also facilitate the tasks of system operators and improve the reliability of 
electricity systems.  Therefore, consumers could benefit from a better electricity supply, 
with a reduced frequency and duration of interruptions.   

(159)  Challenger firms refer to non‑incumbents and new entrants competing with established actors in the market. They are typically 

smaller companies, start‑ups, or later entrants that lack the regulatory capacity and resources of dominant firms. 

(160)   CERRE, ‘What policy interventions for a competitive AI sector?’ (2025); DG ENER, ‘Summary of responses by associations and 
Member States to the SEEG plenary of 23/10/2025’ (2025);  Ibid. ENTEC2 Study - Task 2: Market analysis of AI in energy’ 
(2025). 

(161)  Ibid. ENTEC2 Study, referring to Haataja & Bryson (2021). 
(162)  SmartEN and DNV, 'Demand-side flexibility - Quantification in the EU’ (SmartEN, 2022), pp. 30-32. 
(163)  For an introduction to the challenges associated with demand-response baselining, see Nicolò Rossetto, ’Measuring the intangible: 

an overview of the methodologies for calculating costumer baseline load in PJM’, FSR Policy Brief 2018/05 (2018). 

(164)  On the challenges of customer engagement with energy markets, see OneNet project, ’D11.5 Recommendations for customer 

engagement strategies’ (2023). 

(165)  ACER and CEER, ‘Rewarding Flexibility: How retail contract choice can help unlock consumer flexibility  – 2025 Monitoring 

Report’ (ACER, 2025), p. 24. 

38 

 
 
3.2.4.6.  Skills and employment 

The  deployment  of  data  exchange  and  AI-based  solutions  impacts  the  people  who  use 
them. Without  proper training, employees may struggle to  understand or trust  AI tools, 
limiting their effectiveness. The deployment of these technologies is also likely to change 
the  needs  of  firms  active  in  the  energy  sector,  expanding  demand  for  ICT  and  digital 
experts. According to DigitalEurope, over one million new roles will be needed by 2030 
to support the energy transition and scale up clean tech manufacturing, spanning emerging 
domains such as smart grids, renewable energy systems and data infrastructure. They will 
require  not  only  engineering  capabilities  but  also  advanced  competencies  in  AI, 
cybersecurity and digital technologies (166).  

3.2.4.7.  System security and cybersecurity 

Cybersecurity is a key enabler for many critical sectors to successfully embrace the digital 
transformation  and  fully  grasp  the  economic,  social,  and  sustainable  benefits  of 
digitalisation. As such, it plays an important role in primary and secondary energy data 
use,  constituting  a  necessary  precondition  to  both  facilitate  the  uptake  of  smart  energy 
services and the development of energy-specific AI foundation models. 

However,  the  infrastructure  for  the  generation  and  transmission  of  energy  data  can  be 
inadequate  from  a  cybersecurity  point  of  view.  The  digitalisation  of  the  energy  system 
naturally  increases  the  possible  points  where  malicious  actors  can  attack,  potentially 
combining  cyber  and  physical  attacks  (hybrid  attacks).  There  is  an  inevitable  tension 
between  data  sharing  and  cybersecurity:  the  more  data  flows  are  allowed  between  the 
centre and the periphery of a system, the higher the risks in terms of cybersecurity (167). 
These risks increase further in case the data flow can support the malicious disconnection 
and  re-connection  of  a  certain  load  or  generation  asset  from  the  electricity  grid.  For 
instance,  the  hacking  of  smart  meters  of  final  customers  can  have  potentially  serious 
consequences, as it can lead to the sudden disconnection and reconnection of a significant 
part of the load in an electricity system, which may be quite difficult, if not impossible, for 
system operators to handle. 

It is also important to highlight that the secondary use of electricity data to develop and 
test  AI  models  for  electricity  grid  operations  may  involve  cybersecurity-sensitive 
information. As AI is increasingly integrated into core grid functions, including stability 
control, flexibility management and predictive maintenance, the importance of addressing 
AI-specific risks grows accordingly (168). Identified risk categories include unintentional 
AI failure, adversarial attacks such as data poisoning or model poisoning techniques (169), 
and  supply  chain  compromises,  where  AI  software  ecosystems  are  targeted  through 

(166)  DIGITALEUROPE, ‘Advancing Europe’s Grid Performance Why Europe must digitalise its grids’ (2023), p. 6. 
(167)  Different views exist with regard to the higher or lower level of cyber risks that different data management models (DMMs) in the 
energy sector would generate. Some argue that centralised DMMs are riskier than decentralised DMMs, while others argue the 
opposite. The Commission considers that each type of DMM has advantages and disadvantages in terms of cybersecurity. 
(168)  DG ENER, ‘Summary of responses by associations and Member States to the SEEG plenary of 23/10/2025’ (2025); ENTEC2, 
‘A2  Study:  Digitalisation  and  Artificial  Intelligence  (AI),  Task  2:  Market  analysis  of  AI  in  energy’  (2025);  ETIP  SNET, 
‘Unlocking the Potential of AI and Generative AI in European Smart Grids: A Strategic Position Paper and Guide for Action’, 
Section 2.5 (2025). 

(169)    Based  on  JRC,  ‘Generative  AI  Outlook  Report:  Exploring  the  Intersection  of  Technology,  Society,  and  Policy’  (2025),  data 
poisoning and model poisoning can be summarised as follows. Data poisoning is the insertion of adversarial samples into large 
and often unverified internet-sourced training datasets, allowing attackers to introduce vulnerabilities, backdoors, or biases that 
may compromise a model’s performance and lead to harmful outputs. Model poisoning is the manipulation of GenAI systems, 
especially  open  weight  models,  by  distributing  models  that  contain  hidden  threats  such  as  malware  or  backdoors  that  remain 
inactive until triggered and may persist even after fine-tuning or additional safety training. A recent ETIP SNET report defines 
‘GenAI’ as ‘AI systems capable of generating novel content (text, images, code, data) based on patterns learnt from training data, 
often  prompted  by  user  input’.  ETIP  SNET,  ‘Unlocking  the  Potential  of  AI  and  Generative  AI  in  European  Smart  Grids:  A 
Strategic Position Paper and Guide for Action’ (2025), p. 84. 

39 

 
 
conventional cybersecurity threats (170). In this context, the proposal mitigates some of 
these  risks  by  requiring  the  ENTSO-E  and  the  EU  DSO  Entity  to  define  and 
communicate to the Commission safety and cybersecurity measures to ensure the safe 
integration  of  developed  solutions  within  system  operators’  internal  processes  and 
operations.  In  addition  to  that,  the  proposal  empowers  the  Commission  to  adopt 
implementing  acts  setting  out  requirements  to  enable  the  lawful,  secure  and  controlled 
reuse of data for research and innovation public-interest purposes, supporting the operation 
and optimisation of the electricity system.  

3.2.4.8.  Environmental impacts 

AI  models  could  enhance  system  performance  by  significantly  improving  forecasts  of 
renewable  energy  output  and  consumption  patterns.  Accurate  predictions  of  weather-
driven fluctuations in energy generation and demand enable grid operators to anticipate 
imbalances and take proactive measures. This improved foresight allows for more efficient 
dispatch of resources (171), better utilisation of storage and flexible loads, and smoother 
integration  of  intermittent  renewables  into  the  grid.  Consequently,  AI  contributes  to 
increased system stability while supporting higher shares of clean energy. 

If  flexible  resources  are  not  effectively  harnessed  through  data-driven  approaches  and 
smart services, the energy system may have to continue to rely heavily on traditional forms 
of flexibility. Utility-scale assets such as natural gas power plants could continue to play a 
significant  role  in  balancing  supply  and  demand.  While  these  assets  provide  reliable, 
dispatchable capacity, their continued prominence may slow  down  decarbonization and 
limit the overall environmental benefits of renewable integration. Therefore, maximising 
the potential of smart  energy services and AI-driven optimisation is  crucial to  reducing 
dependence  on  fossil-based  flexibility  and  advancing  a  cleaner,  more  resilient  energy 
system. 

At the same time, the increasing reliance on digital solutions, in particular the boom of AI, 
as well as smarter energy services that rely on many more data sources raise concerns about 
the environmental footprint of growing data collection and processing needs. In the coming 
years, larger volumes of data are expected to be gathered, transmitted, and analysed, and 
used  for  training  AI  models,  which  will  drive  demand  for  data  centres  and  digital 
infrastructure.  At  the  same  time,  technological  developments  such  as  edge  computing, 
distributed machine learning, frugal AI, more efficient use of computing resources and, 
where relevant, islanding and local control capabilities are beginning to alleviate some of 
these  pressures  by  enabling  more  data  processing  and  decision-making  closer  to  where 
data  is  generated,  reducing  unnecessary  data  transfers  to  central  systems,  lowering 
compute  and  energy  needs,  and  improving  the  resilience  and  efficiency  of  digitalised 
energy-system operation. These facilities can be energy-intensive and, if powered by non-
renewable sources, may contribute to additional greenhouse gas emissions. Moreover, the 
expansion  of  data  infrastructure  can  place  further  pressure  on  electricity  systems  and 
natural  resources,  including  water.  As  put  forward  in  the  Strategic  Roadmap  on 
digitalisation  and  AI  in  the  energy  sector (172)  addressing  these  challenges  requires 
improving the energy efficiency of data centres, increasing their use of renewable energy, 
connecting them in optimal locations in relation to energy generation and grid access, and 
promoting  responsible  data  management  practices  to  ensure  that  the  digitalisation  of 

(170)  ETIP SNET, ‘Unlocking the Potential of AI and Generative AI in European Smart Grids: A Strategic Position Paper and Guide 

for Action’ Section 2.5 (2025). 

(171)  Benedikt Nilges et. al, ‘Is demand-side management environmentally beneficial? Analyzing the greenhouse gas emissions due to 

load shifting in electric power systems’, Journal of Cleaner Production 434 (2024). 

(172)  COM(2026) 501 final. 

40 

 
 
energy systems supports, rather than undermines, overall sustainability goals. The Cloud 
and AI Development Act aims to achieve the same objectives for data centres deployed in 
data centre acceleration zones.  

41 

 
 
 
4.  SMART METERS 

4.1.  Policy context 

The current EU framework has led to uneven and, in several cases, insufficient smart meter 
deployment,  limiting  the  development  of  demand-side  flexibility  and  the  effective 
functioning of the internal electricity market. 

4.1.1.  Role of smart metering in the electricity system 

The proposed smart metering provisions aim to help improve the efficient use and overall 
performance  of  electricity  grids  by  strengthening  the  electricity  system’s  technical  and 
digital  capabilities.  This  allows  grid  conditions  to  be  monitored  more  effectively  and 
operations to be optimised in near real time, while enabling consumers, and other market 
actors to make better use of demand-side flexibility.  

In practice, this contributes to a more efficient use of the electricity network by aligning 
demand  more  closely  with  generation. As  a  result,  congestion  and  redispatch  needs  are 
reduced, system costs are lowered, and renewable curtailment is limited. In addition, this 
improved efficiency facilitates the electrification of end uses, including electric mobility 
and heating.  

This  objective  is  supported  by  a  broader  enabling  framework  combining  smart  meters, 
smart  and  digitalised  grids,  and  better  use  of  electricity  system  data.  Together,  these 
elements support more flexible and efficient electricity systems, dynamic retail markets 
and greater consumer empowerment. 

Within  this  framework,  smart  meters  play  a  central  role.  They  go  beyond  measuring 
electricity consumption and form a key part of the digital layer needed for a more flexible, 
electrified and decentralised electricity system. By providing near real-time insights and 
access to granular data, they make it possible to support flexible consumption and time-
based billing. Without smart meters, dynamic and time-differentiated contracts cannot be 
accurately  billed,  and  suppliers  and  aggregators  cannot  develop  offers  that  reward 
flexibility (173).  They  therefore  constitute  a  key  enabler  of  demand-side  flexibility, 
particularly in a system with increasing shares of variable renewable energy. 

4.1.2.  Existing EU legislative framework 

Directive (EU) 2019/944 already provides a framework for smart metering deployment. 
Article 19 requires Member States to ensure the deployment of smart metering systems 
that  support  the  active  participation  of  final  customers  in  the  electricity  market,  while 
Annex II sets out the principles governing deployment decisions. In particular, Annex II 
provides that the deployment of smart metering systems may be subject to an economic 
assessment of the long-term costs and benefits for the market and individual consumers. 
Where such an assessment is positive, at least 80% of final customers should be equipped 
with smart meters within seven years of the positive assessment, or by 2024 for Member 
States  that  started  systematic  deployment  before  4 July 2019.  This  80%  level  therefore 
constitutes a conditional benchmark rather than a binding EU-wide target, as its application 
depends on the outcome of national cost-benefit assessments. 

(173)   COM(2026)  850  final,  Report  on  market-based  electricity  supply  prices,  effective  retail  market  competition  and  promoting 

remuneration of flexibility in retail contracts. 

42 

 
 
The Directive further requires smart metering systems to be interoperable and capable of 
supporting  consumer  energy  management  systems.  Article  20  establishes  minimum 
functional  requirements  relating  to  interoperability,  data  access,  cybersecurity,  data 
protection and the provision of near real-time consumption information to consumers. This 
ensures  that  smart  metering  systems  can  support  consumer  participation  and  the 
development of digital energy services. 

However, the possibility to subject deployment to national cost-benefit assessments has 
contributed to uneven outcomes across the EU, including delayed or partial rollouts. As a 
result,  system-wide  benefits  are  not  fully  realised  and  the  development  of  flexibility 
services remains limited in several Member States. While Annex II envisages a forward-
looking assessment of costs and benefits, experience from across Member States suggests 
that  many  cost-benefit  analyses  did  not  fully  capture  certain  categories  of  benefits,  in 
particular  those  related  to  demand-side  flexibility,  renewable  integration,  consumer 
participation  and  the  development  of  innovative  services.  At  the  same  time,  some  cost 
components  may  have  been  overstated,  as  meter  replacement  and  system  maintenance 
would in any case have been required over time. 

4.1.3.  State-of-play and deployment gaps across the EU 

Overall  smart  meter  penetration  across  the  EU  remains  just  over  60%,  with  significant 
differences across Member States. This is a result of cost-benefit assessments that are not 
always  comprehensive.  According  to  the  available  state-of-play  data (174),  15  Member 
States are already above 80% (175) while five remain below 80% (176) and seven are lagging 
behind (177) either because rollouts are delayed or because no large-scale deployment has 
been decided. 

This uneven distribution is further illustrated in Table 1, which provides an overview of 
deployment  levels  across  Member States, including penetration  rates,  rollout  status  and 
market  uptake  indicators.  Several  Member  States  remain  significantly  below  the  levels 
required to enable effective participation in flexibility markets, with some still below 10% 
penetration.  

This  situation  highlights  a  clear  structural  problem:  the  current  framework  has  led  to 
uneven and, in several cases, insufficient deployment of smart metering systems across the 
EU. As a result, a significant share of consumers and market actors are unable to access 
flexibility-based  services,  and  the  associated  system-wide  efficiency  gains  remain 
underexploited.  This  fragmentation  limits  the  effective  functioning  of  the  internal 
electricity market and constrains the development of demand-side flexibility at scale. 

(174)  ACER-CEER Energy Retail Market Monitoring Report 2024 and 2025. 
(175)  Fifteen Member States have a penetration rate for electricity smart meters over 80% (DK, EE, ES, IT, LV, LU, AT, PT, SI, FI, 

SE, have an almost 100% penetration, followed by IE, FR, MT, NL, with penetration rates between 80% and 95%). 
(176)  Five Member States are still below 80% (BE with 46%, HR with 34%, LT with 58%, PL with 36%, RO with 27%). 
(177)  Seven Member States lag behind either because their rollouts are delayed (EL, CY) or because they have not decided to go ahead 

with a large-scale rollout (BG, CZ, DE, HU, SK). 

43 

 
 
 
 
 
 
Table 1: Overview of smart meter rollout for electricity across the EU  

Smart meter 
rollout - 
households 
(ref ACER 
Electricity 
Country sheets 
– July 2025) 

Smart meter 
rollout - 
households 
(ref ACER 
Electricity 
Country sheets 
– December 
2024) 

Smart meter 
rollout  
– non-households 
(ref ACER 
Electricity 
Country sheets – 
July 2025) 

Belgium 
Bulgaria 
Czechia 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Croatia 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 

46% 
Not available 
Not available 
100% 
2% 
99% 
84% 
12% 
99% 
94% 
34% 
100% 
0% 
99% 
51% 
99% 
Not available 
93% 
90% 
97% 
36% 
99% 
27% 
97% 
Not available 
99% 
100% 

35% 
0% 
3% 
100% 
1% 
99% 
69% 
1% 
99% 
94% 
24% 
100% 
0% 
99% 
58% (180) 
99% 
9% 
93% 
90% 
80% 
27% 
86% 
23% 
95% 
15% 
99% 
100% 

79% 
Not available 
Not available 
Not available 
2% 
100% 
78% 
Not available 
99% 
95% 
95% 
100% 
0% 
99% 
95% 
99% 
Not available 
87% 
90% 
97% 
65% 
0% 
45% 
Not available 
Not available 
100% 
100% 

Uptake of 
market based 
dynamic price 
contracts among 
households 
(ref ACER 
Monitoring 
Report 2025 
– ACER dataset) 
0% 
0% 
1% 
Not available 
1% 
Not available 
0% 
0% 
31% 
0% 
Not available 
1% 
Not available 
16% 
3% 
0% 
0% 
0% 
6% 
Not available 
0% 
0% 
0% 
3% 
Not available 
27% 
17% 

Number of 
metering 
points 
(millions) 
(ref ACER) 

Number of 
DSOs 
(the entity 
usually 
tasked with 
the rollout) 
(ref EUDSO 
Entity) 

6.28 
5.3 
6.28 
3.2 
47.5 (178) 
0.76 
2.55 
7.71 
30.49 
40.13 
2.58 
37.61 
0.7 
0.8 
1.82 
0.36 
5.71 
0.39 
8.7 
4.91 
19.3 
6.51 
9.02 
0.99 
2.7 
3.81 
5.64 

16 
4 
252 
38 
866 (179) 
32 
1 
1 
333 
138 
1 
123 
1 
10 
3 
5 
6 
1 
6 
124 
231 
13 
8 
1 
146 
77 
150 

4.1.4.  Problem definition and rationale for EU action 

Against  this  identified  problem  of  uneven  deployment  and  insufficient  smart  meter 
deployment,  which  limits  system  efficiency  and  market  functioning,  the  proposal 
introduces a minimum deployment trajectory across the EU including targeted flexibility 
for Member States with particularly low levels of deployment. 

The proposed smart meter provisions would affect Member States that remain below 50%–
75%  penetration  or  have  not  initiated  an  effective  large-scale  rollout.  In  particular,  the 
measure  is  expected  to  primarily  affect  countries  such  as  Bulgaria,  Czechia,  Germany, 

(178)  52.2  million  connection  points  according  to  EU  DSO  Entity  https://eudsoentity.eu/wp-content/uploads/2024/11/DSO-

map_web.pdf. 

(179)  Distribution system operator and supplier-led rollout. 
(180)  National figure corrected in the 2025 reporting. 

44 

 
 
 
 
Hungary,  and  Slovakia,  which  currently  have  only  partial  deployment and  no plans  for 
wide-scale rollout of smart meters. Germany, for instance, had originally opted for a more 
restricted  deployment  on  the  basis  of  its  2013  cost-benefit  assessment (181),  but  is  now 
planning to roll out around 20 million smart meters by 2030 (182), corresponding to around 
40% of total metering points in the country. 

The  objective  of  a  wider-scale  rollout  is  also  reflected  in  recent  EU  policy  initiatives, 
including  the  AccelerateEU  framework,  which  emphasises  the  need  to  speed  up  the 
deployment  of  smart  metering  systems  as  a  key  enabler  of  a  more  digital,  flexible  and 
efficient  electricity  system,  supporting  consumer  participation,  demand  response  and 
renewable energy integration. 

4.1.5.  Stakeholders’ views and market perspectives 

Stakeholders  across  the  electricity  value  chain  consistently  highlight  the  importance  of 
accelerating  smart  meter  deployment  as  a  prerequisite  for  flexibility,  active  customer 
engagement  and  the  digitalisation  of  the  electricity  system.  In  response  to  the 
AccelerateEU  initiative,  ESMIG,  representing  smart  meter  manufacturers  and  solution 
providers,  welcomed (183)  the  introduction  of  an  EU-level  smart  meter  deployment 
objective, noting that widespread deployment is necessary to unlock flexibility services 
and empower consumers.  

Similarly,  SmartEn,  representing  the  flexible  demand  management  industry  highlighted 
that flexibility market development is still restricted in some Member States by the slow 
rollout  of  smart  meters  and  that  deployment  is  essential  for  devising  innovative  tariff 
structures,  including  dynamic  electricity  price  offers (184).  Service  providers  further 
underlined  that  dynamic  tariffs,  smart  charging  and  other  flexibility  services  rely  on 
granular smart meter data, enabling consumers to respond to price signals and lower their 
electricity costs (185).  

Electricity companies and network operators likewise identify smart meters as a key pillar 
of  digitalised  distribution  networks  and  an  essential  enabler  of  demand  response, 
renewable integration and efficient grid operation (186). 

These  views  are  broadly  consistent  with  those  of  public  authorities  and  regulators, 
including ACER (187), which highlighted the importance of consumer access to flexibility 
services and dynamic retail offers for electricity markets to work properly. 

(181)  Ernst  &  Young,  Cost-benefit  analysis  for  the  comprehensive  use  of  smart  metering  systems  –  Final  report  –  Summary, 
commissioned  by 
July  2013, 
https://www.bundeswirtschaftsministerium.de/Redaktion/EN/Publikationen/cost-benefit-analysis-for-the-comprehensive-use-of-
smart-metering-systems.pdf?__blob=publicationFile&v=1. 

the  German  Federal  Ministry  of  Economics  and  Technology,  published  30 

(182)  This  is  an expected  outcome of the measures introduced  in the  German national  bill to  restart the digitilisation  of  the energy 
the  Metering  Point  Operation  Act  (MsbG);  see  also 

transition  (GNDEW)  which  entails  some  amendments 
https://www.ffe.de/en/publications/the-smart-meter-rollout-in-germany-and-europe/. 

to 

(183)  ESMIG on AccelerateEU, 22 April 2026 https://www.esmig.eu/european-commission-launches-accelerate-eu-initiative/; and on 
AI and energy digitalisation roadmap, 3 June 2026, https://www.esmig.eu/roadmap-on-ai-and-digitalisation-in-the-energy-sector-
recognises-importance-of-smart-metering/. 
(184)  SmartEn  position  paper:  Recommendations 

improvements,  15 December 2022, 

electricity  market  design 

for 

https://smarten.eu/wp-content/uploads/2022/12/FINAL-smartEn_EMD_PositionPaper-1.pdf. 

(185)  Octopus Energy: How smart meters are the key to a flexible grid, 5 September 2025, https://octopus.energy/blog/smart-meters-

and-flexibility/. 

(186)  For example, Eurelectric’s publications: Power2People – supporting residential customers in their energy transition, 4 June 2025, 
2025, 

https://www.eurelectric.org/publications/residential-customers/; 
https://powerbarometer.eurelectric.org/wp-content/uploads/2025/09/Power-Barometer-2025-full-report.pdf.  

Barometer 

Power 

and 

(187)  ACER-CEER Market Monitoring  Report:  “How  electricity  contract choices  can  unlock  consumer  flexibility and  lower bills”, 
27 November 2025, acer.europa.eu/sites/default/files/documents/Publications/ACER-CEER-2025-Retail-monitoring.pdf.  

45 

 
 
Regulatory monitoring (188) further confirms that access to smart metering data is a key 
enabler  for  dynamic  contracts  and  consumer  participation,  while  low  smart  meter 
penetration continues to be a structural barrier to developing flexibility markets in several 
Member States. 

Overall,  this  indicates  broad  support  across  manufacturers,  service  providers,  utilities, 
network operators and regulators for accelerating smart meter deployment. 

4.1.6.  Deployment benchmarks and challenges 

Reaching 50% by 2030 in all Member States, including those currently lagging behind, 
requires faster deployment in slower Member States. This means reaching sustained annual 
rollout rates  broadly  in  line with those achieved  in  leading  Member States during peak 
rollout phases, while allowing for a limited extension in duly justified cases.  

Experience from Member States that have already completed or are close to completing 
large-scale  rollouts  provides  useful  benchmarks.  During  the  peak  phase  of  the  Linky 
rollout, France deployed approximately 4–6 million smart meters per year, corresponding 
to around 10–15% of its total metering points annually. Italy followed a similar path, while 
Ireland achieved rollout rates of around 12–14% annually. These examples indicate that 
sustained annual deployment rates in this range are achievable if Member States come up 
with a clear deployment plan. 

Compared  with  these  benchmarks,  some  Member  States,  in  particular  those  with  low 
current penetration, are likely to face significant acceleration requirements. Germany, for 
example,  with  approximately  47.5  million  metering  points  and  current  penetration 
estimated at around 2% according to the latest ACER figures, would need to install around 
23 million additional smart meters to reach 50% coverage by the target date. This would 
mean a rollout pace of 5 million meters per year, corresponding to 10% of total metering 
points annually. 

The benchmarks indicate that these deployment rates are technically feasible. However, 
the conditions under which rollouts take place vary significantly across Member States.  

One factor influencing the speed and efficiency of smart meter deployment is the structure 
of the DSO landscape in each Member State (see Table 2). DSOs are typically responsible 
for  installing  and  operating  smart  metering  systems,  which  form  part  of  their  regulated 
asset base and are therefore closely linked to network investment decisions. In countries 
with few DSOs or a more centralised structure, rollout programmes have generally been 
implemented through coordinated and standardised approaches, allowing for economies of 
scale, streamlined procurement and faster deployment. By contrast, Member States with 
more  fragmented  DSO  landscapes,  in  some  cases  involving  several  hundred  operators, 
need  to  ensure  well-coordinated  deployment,  align  technical  specifications  and  achieve 
sufficient scale in procurement and implementation. Without a clear Member State rollout 
programme,  fragmentation  can  increase  administrative  complexity,  lead  to  different 
technical  solutions  and  slow  down  deployment  compared  to  more  coordinated  models. 
Austria is a Member State with many DSOs (124 for a population of 9.2 million) which 
successfully rolled out smart meters to practically all consumers (97%). 

Germany’s experience (with many DSOs) shows how regulatory and structural factors can 
negatively  affect  deployment  speed  (smart  meter  penetration  reaching  around  2%  of 

(188)  ACER-CEER 2024 and 2025 Market Monitoring Reports. 

46 

 
 
consumers by the end of 2024). However, recent national legislation (189) is now seeking 
to accelerate deployment, potentially by around 20 million intelligent metering systems by 
2030 (190). 

In  such  contexts,  or  where  more  complex  requirements  or  less  mature  deployment 
frameworks are involved, reaching rollout speeds similar to the frontrunners’ may require 
closer coordination at national level, including developing common technical standards, 
joint or centralised procurement approaches and stronger regulatory guidance. Cooperation 
between DSOs, national regulatory authorities and public authorities, as well as exchange 
of  best  practices  across  Member  States,  can  help  speed  up  deployment  while  ensuring 
interoperability and cost-efficiency. This is particularly relevant for Member States with 
both a fragmented DSO structure and low current penetration levels, where achieving rapid 
scale-up may depend on more coordinated deployment frameworks.  

Overall, this clearly underscores the importance of robust coordination mechanisms and 
supportive regulatory conditions to sustain high and consistent deployment rates over time 
across the EU.  

4.1.7. 

Internal market implications 

The  current  uneven  distribution  of  smart  meters  across  the  EU  limits  the  effective 
functioning of the single market and constrains the development of innovative products 
and  services,  as  consumers  and  market  actors  in  low-deployment  Member  States  are 
structurally excluded from flexibility-based offers.  

Ensuring  that  smart  meters  are  deployed  with  the  functionalities  required  under  EU 
legislation, including access to near real-time data, interoperability and compatibility with 
home energy management systems and other smart devices, is therefore essential for full 
flexibility and consumer participation. 

4.1.8. 

Industrial supply chain and security considerations 

From a strategic perspective, smart meter deployment also has implications for industrial 
competitiveness, supply chains and critical infrastructure resilience.  

Most smart meters deployed in the EU are currently supplied by European or European-
headquartered firms, but global supply chains, including components and sub-assemblies 
sourced from non-EU countries, are becoming increasingly relevant. 

Stakeholders (191) (192) indicate that the European smart metering sector remains globally 
competitive, but faces structural challenges linked to fragmentation of the single market. 
Differences  in  national  technical  standards,  communication  protocols,  cybersecurity 

(189)  The German Gesetz zum Neustart der Digitalisierung der Energiewende, GNDEW is the 2023 law restarting the digitalisation of 
the energy transition. On smart meters, it sets a binding rollout path for intelligent metering systems (intelligente Messsysteme / 
iMSys), with targets for mandatory installation cases. For most relevant cases, the law requires rollout to start immediately or by 
2025, with at least 20% installed by 31 December 2025, 50% by 31 December 2028, and 95% by 31 December 2030. For some 
larger, specific cases starting later, the timetable shifts to 20% by 2028, 50% by 2030 and 95% by 2032. 

(190)   See consumer policy analysis by ConPolicy, https://www.conpolicy.de/en/project/evaluation-of-the-implementation-of-european-

energy-consumer-rights-in-germany. 

(191)   For example, stakeholders such as the European association of smart energy solution providers ESMIG, and the PRIME (PRIME 
= PoweRline Intelligent Metering Evolution) Alliance which focus on developing a telecom solution in support of smart metering 
functionalities and the smart grid. 

(192)  ESMIG:  Position  paper  on 

the  Cybersecurity  Act,  12 May 2026,  https://www.esmig.eu/esmig-
publications/position-paper-on-revised-cybersecurity-act/ and Position paper on the revision of the EU Public Procurement rules, 
26 January 2026, https://www.esmig.eu/esmig-publications/position-paper-on-the-revision-of-eu-public-procurement-rules/. 

revision  of 

the 

47 

 
 
requirements and procurement practices have limited economies of scale, increased costs 
and affected growth prospects for European manufacturers.  

At the same time, the presence of non-EU suppliers has grown significantly in recent years. 
This  reflects  the  increasing  globalisation  of  supply  chains,  while  calling  into  question 
resilience and security of supply. Industry estimates suggest that non-EU suppliers account 
for around 20% of the EU smart metering market. Evidence from procurement procedures 
also indicates that price differentials between bids can be substantial, which may cast doubt 
on  the  level  playing  field  in  public  procurement,  including  in  relation  to  potential 
distortions affecting competition.  

It should be also borne in mind that smart metering systems form part of critical electricity 
infrastructure, with long asset lifetimes (typically 15 years or more) and direct interaction 
with  grid  management  and  sensitive  consumption  data.  This  raises  additional  questions 
about cybersecurity, resilience and potential vendor dependency risks. 

In this context, a coordinated and predictable EU deployment trajectory can help create a 
competitive European ecosystem by enabling economies of scale, fostering innovation and 
strengthening  resilience.  At  the  same  time,  EU  requirements  on  functionality, 
interoperability,  cybersecurity (193)  and  data  protection, 
together  with  evolving 
procurement (194) and foreign subsidy frameworks (195), help ensure a level playing field 
and mitigate risks associated with global supply chains. 

4.1.9.  Role of public procurement and EU frameworks 

In  practice,  EU  and  national  public  procurement  frameworks  are  a  key  instrument  for 
addressing these challenges. Smart meters fall within the scope of existing EU procurement 
rules  when  purchased  by  contracting  authorities,  utilities  or  energy  sector  contracting 
entities, in particular under Directive 2014/25/EU (196). Procurement procedures may be 
used, in compliance with applicable EU law, as a strategic lever to ensure that smart meter 
rollouts are secure, interoperable and resilient. 

Procurement  requirements  may  include  technical  and  functional  specifications  on 
cybersecurity,  data  protection,  interoperability,  access  to  updates,  auditability,  incident 
response  and  security  of  supply.  This  is  particularly  relevant  in  light  of  the  increasing 
reliance  on  complex  global  supply  chains.  The  requirements  should  be  designed  in  a 
proportionate, non-discriminatory and technology-neutral manner that is consistent with 
EU procurement principles. At the same time, full use should be made of existing tools 
under  the  utilities  procurement  framework,  including  provisions  on  tenders  involving 
products originating in non-EU countries, as set out in Article 85 of Directive 2014/25/EU. 

(193)   See  Regulation  (EU)  2024/2847  (Cyber  Resilience  Act);  Directive  (EU)  2022/2555  (NIS2);  and  Regulation  (EU)  2019/881 

(Cybersecurity Act).  

(194)  On 14 October 2025, the Commission published its evaluation of the three EU public procurement Directives (SWD(2025)332 
final and SWD(2025)333 final), namely Directive 2014/23/EU on Concessions, Directive 2014/24/EU on Public Procurement and 
Directive 2014/25/EU on Utilities. Covering the 2016-2024 period, the evaluation forms part of the preparations for the upcoming 
Public Procurement Act, expected in the second quarter of 2026, and follows the Better Regulation Guidelines.  

(195)   Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting 

the internal market, OJ L 330, 23.12.2022, ELI: http://data.europa.eu/eli/reg/2022/2560/oj. 

(196)   Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating 
in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, OJ L 94, 28.3.2014, p. 243, 
ELI: http://data.europa.eu/eli/dir/2014/25/oj.  

48 

 
 
Smart metering systems are not explicitly identified as a standalone technology category 
under Regulation (EU) 2024/1735 (197) (Net-Zero Industry Act - NZIA). However, as set 
out  in  the  Annex  to  the  Regulation,  smart  meters,  elements  of  advanced  metering  and 
control  infrastructures  are  included  under  electricity  grid  technologies.  Smart  metering 
systems therefore form part of the broader grid technology ecosystem, and act as enabling 
digital infrastructure for the electricity system. Their deployment is closely aligned with 
the objectives of strengthening the EU’s net-zero technology ecosystem, including through 
procurement practices that support sustainability, resilience and security of supply. In this 
context, the relevance of the NZIA should be taken into account. 

4.2.  Objectives of the proposal 

4.2.1. 

Introduction of a two-step EU-wide deployment trajectory 

The  proposal  introduces  targeted  measures  on  smart  metering  deployment,  namely  a 
minimum EU-wide deployment trajectory of at least 50% of final customers by the end of 
2030, rising to 75% by the end of 2033. For Member States with deployment levels below 
30% at the date of entry into force of the proposal, a limited extension of the deadlines 
would be appropriate. Cost-benefit assessments would apply only to deployment beyond 
that 75% level. 

The  proposed  two-step  deployment  trajectory  is  designed  to  reflect  how  benefits 
materialise in practice. A first threshold at 50% is intended to ensure a sufficient level of 
deployment for demand-side flexibility, dynamic pricing and competitive retail offers to 
emerge  across  all  Member  States.  Increasing  this  level  to  75%  allows  these  benefits  to 
scale  and  deliver  system-wide  gains,  including  more  efficient  use  of  the  network  and 
improved renewable energy integration. 

Based  on  current  deployment  levels,  a  50%  requirement  for  all  would  bring  EU-wide 
penetration close to  around 75–80%, while a 75% requirement would raise it to  almost 
90%. At the same time, maintaining cost-benefit assessments beyond 75% is intended to 
ensure  proportionality  and  allow  Member  States  to  reflect  national  circumstances.  This 
approach strikes a balance between ambition, efficiency and flexibility, while supporting 
consumer empowerment and the effective functioning of the single energy market. 

4.2.2.  Complementarity with existing EU legislation 

This  proposal  does  not  alter  the  functional  and  technical  requirements  set  out  in  the 
Electricity  Directive.  Rather,  it  complements  the  existing  framework  by  introducing  a 
minimum deployment trajectory across the EU.  

It thus addresses persistent rollout disparities that have emerged under the current approach 
based on cost-benefit assessments, while maintaining  flexibility  beyond that  level.  This 
approach  ensures  a  minimum  level  of  deployment  for  market  functioning  and  system 
efficiency, while preserving the role of cost-benefit assessments where appropriate.  

Moreover,  the  proposed  measures  do  not  affect  Member  States’  responsibilities  for 
organising their energy systems. 

(197)  Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of 

measures for strengthening Europe’s net-zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724, 
OJ L, 2024/1735, 28.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1735/oj.  

49 

 
 
4.2.3. 

Internal market and system objective 

The  proposal  establishes  a  clear  EU-level  minimum  deployment  trajectory  for  Member 
States lagging behind. This will help reduce fragmentation and avoid the emergence of a 
two-speed single market. It will also ensure that consumers and SMEs in low-deployment 
countries are not structurally excluded from smart energy services, such as flexible supply 
contracts and active participation. 

In  aggregate,  increasing  smart  meter  penetration  to  levels  up  to  75%  per  country, 
corresponding to an EU-wide penetration rate of 80–90% of final customers would enable 
the EU to capture most of the associated benefits. These include not only direct operational 
savings,  but  also  broader  system  efficiencies,  such  as  improved  use  of  existing 
infrastructure, reduced curtailment of renewable generation and lower peak demand. 

These  effects  help  lower  overall  system  costs  and,  over  time,  improve  affordability  for 
households and businesses. The scale of these benefits depends on the level of deployment: 
at  lower  levels,  impacts  remain  localised  and  fragmented,  whereas  higher  levels  of 
deployment  allow  flexibility  services  and  market-based  solutions  to  scale  and  generate 
system-wide effects. 

The  proposed  thresholds  are  designed  to  ensure  the  single  market  works  properly  and 
flexibility services are created, while remaining proportionate in light of costs and national 
circumstances. 

Overall,  the  objective  is  to  achieve  a  sufficient  and  more  even  level  of  smart  meter 
deployment across the EU. This will help boost consumer participation, improve system 
efficiency,  facilitate  renewable  energy  integration  and  support  electrification,  while 
preserving  flexibility  for Member States beyond  the minimum  trajectory  to  account  for 
national circumstances. 

4.3.  Expected benefits and impacts 

4.3.1.  Benefits and positive impacts 

The impacts of smart metering deployment can be seen across retail markets, the electricity 
system and the wider economy, and are closely linked to the level of deployment. At lower 
levels of penetration, impacts remain limited and fragmented, whereas higher levels allow 
flexibility services and consumer participation to scale, generating system-wide effects. 

4.3.1.1.  Market functioning and access to services 

Smart  meters  are  a  prerequisite  for  flexible  retail  offers,  including  dynamic  and  time-
differentiated contracts. Without them, suppliers cannot create offers that reward flexibility 
or  accurately  bill  such  contracts,  and  consumers  cannot  access  price  signals  reflecting 
system conditions. 

Evidence from regulatory monitoring (198) indicates that access to smart metering data is 
key for developing flexible contracts, while low smart meter penetration remains a barrier 
in several Member States (199).  

(198)  ACER-CEER 2025 Market Monitoring Report. 
(199)  ACER/CEER note that limited smart meter roll-out prevents consumers from engaging in flexibility and demand shifting, while 

it also makes it more difficult for suppliers and third parties to offer flexibility services. 

50 

 
 
Ensuring a minimum level of deployment is therefore necessary for the effective 
functioning of competitive and innovative retail electricity markets. 

4.3.1.2.  Benefits for the retail market, consumers, SMEs 

For consumers, including SMEs, smart meters improve access to dynamic and time-of-use 
contracts,  increase  billing  accuracy,  facilitate  switching,  and  provide  more  transparent 
consumption information.  

Empirical  evidence,  as  also  shown  in  the  Commission  smart  metering  benchmarking 
report (200), suggests energy savings in the range of approximately 5%–8% for electricity, 
depending  on  consumer  engagement.  These  savings  can  translate  into  lower  electricity 
bills, particularly when combined with dynamic pricing or time-of-use tariffs.  

SMEs, particularly those with flexible loads, such as refrigeration, heating/cooling, electric 
vehicle charging or storage, can benefit from more granular price signals allowing them to 
shift their consumption and reduce their electricity costs. 

4.3.1.3.  System-level benefits and efficiency gains 

At  system  level,  smart  meters  enable  demand  to  respond  to  system  conditions.  This 
contributes  to  reduced  peak  demand,  lower  balancing  and  redispatch  costs,  improved 
network planning and better renewable energy integration.  

By  allowing  consumption  to  shift  towards  periods  of  high  renewable  generation,  smart 
meters reduce renewable curtailment and make better use of existing infrastructure. These 
effects:  (i)  translate  into  significant  efficiency  gains;  (ii)  reduce  the  need  for  costly 
investments  in  generation  and  network  capacity;  and  (iii)  support  a  more  cost-efficient 
energy transition. Lower system costs translate over time into improved affordability for 
households and businesses. 

4.3.1.4.  Evidence from cost-benefit analyses and benchmarking 

Available  evidence  from  the  Commission  smart  metering  benchmarking  report  and 
national  cost-benefit  analyses  shows  that  the  deployment  of  smart  metering  systems  is 
associated with positive net benefits in most Member States. Across positively assessed 
cases, the weighted average cost per electricity metering point is found to be approximately 
EUR 172, while the corresponding benefits amount to around EUR 253. However, for the 
reasons  set  out  below  it  is  likely  that  these  assessments  overestimated  costs  and,  more 
importantly, underestimated benefits. 

Although deployment requires significant upfront investment, particularly given the scale 
of national metering systems, the benefits are expected to outweigh costs when system-
wide and long-term impacts are taken into account. Since this benchmarking exercise was 
carried out, both the costs of individual smart meters and supporting ICT infrastructure are 
likely  to  have  decreased,  while  –  more  importantly  –  the  associated  benefits  have 
increased, in particular because earlier assessments did not fully capture system-level and 
flexibility related benefits. 

(200)  European  Commission:  Directorate-General  for  Energy,  Tractebel  Impact,  Alaton,  C.  and  Tounquet,  F.,  Benchmarking  smart 

metering deployment in the EU-28 – Final report, Publications Office, 2020, https://data.europa.eu/doi/10.2833/492070. 

51 

 
 
 
These benefits include operational savings for distribution system operators (e.g. remote 
reading,  fewer  field  interventions),  improved  billing  accuracy  and  reduced  losses.  In 
addition, smart metering enables broader system-level benefits that are more difficult to 
quantify but potentially significant.  

These  benefits  extend  beyond  operational  savings  and  contribute  to  a  structural 
improvement  in  the  functioning  of  the  electricity  system,  enabling  a  shift  from  supply-
driven to demand-responsive system operation. The measure is therefore expected to boost 
competitiveness: a more flexible demand side can reduce system costs and wholesale price 
peaks, helping make electricity more affordable for households and businesses. Benefits 
include:  (i)  improved  network  planning;  (ii)  more  efficient  integration  of  renewable 
energy;  (iii)  reductions  in  balancing  and  redispatch  needs;  and  (iv)  a  reduced  need  for 
network reinforcement, particularly as electrification increases demand flexibility. 

4.3.1.5.  Practical examples of realised benefits 

Practical experience illustrates how these benefits materialise.  

For consumers, smart meters enable the use of dynamic or time-of-use contracts, allowing 
households to shift consumption, for example for electric vehicle charging or heating, to 
periods of lower prices and higher renewable generation. In some markets, this is reflected 
in  retail  offers  that  provide  significantly  reduced  or  even  zero-priced  electricity  during 
certain  hours,  enabling  consumers  to  cut  and  better  manage  their  electricity  bills  while 
contributing  to  lower  peak  demand  and  less  reliance  on  more  expensive  and  carbon-
intensive generation. 

At  system  level,  smart  meters  provide  system  operators  with  granular  and  timely 
information on consumption patterns, enabling more effective demand response. In periods 
of network congestion or high renewable output, consumption can be shifted or increased 
locally,  reducing  the  need  to  curtail  renewable  generation  or  invest  in  costly  network 
reinforcement. This contributes to improved use of existing infrastructure, lower system 
costs and more stable network charges over time. 

Experience in Member States with high smart meter penetration, such as Finland, shows 
that  widespread  deployment  has  contributed  to  a  significant  uptake  of  flexible  retail 
contracts, including dynamic price offers and digital energy services, enabling consumers 
to respond to price signals and participate more actively in energy markets. 

4.3.1.6.  Broader economic and innovation impacts 

The measure also helps create a European digital energy ecosystem, including metering 
technologies, data services, cybersecurity solutions and flexibility platforms. This boosts 
innovation, competitiveness and the emergence of new market services. 

4.3.2.  Costs, risks and mitigating measures 

4.3.2.1.  Costs of deployment and distributional effects 

The main cost relates to the investment required for smart meter deployment, including 
metering devices, installation and supporting systems. This cost is typically borne initially 
by  distribution  system  operators  and  recovered  through  network  tariffs  or  metering 
charges. 

52 

 
Costs  are  not  expected  to  be  evenly  distributed  across  Member  States.  Those  with  low 
deployment levels at present will clearly face higher costs to reach the minimum levels – 
as other Member States have already incurred those costs. Any burden associated with this 
proposal  will  thus  lie  with  those  Member  States  with  particularly  low  smart  meter 
deployment.  

Additionally, Member States with fragmented distribution system structures may also face 
procurement challenges and administrative burdens related to coordinating the actions of 
many  individual  actors.  However,  it  should  also  be  noted  that,  in  any  case,  the  energy 
transition and the growth in distributed generation included in the system are increasing 
the need for more cooperation between distribution system operators, and the rollout of 
smart meters can fit into a more general framework.  

4.3.2.2.  Limitations of previous cost-benefit assessments 

The  Commission  benchmarking  report  estimated  average  costs  per  metering  point  of 
EUR 202  (weighted  average  EUR 172)  and  benefits  of  EUR 271  (weighted  average 
EUR 253). However, since this study was carried out, the costs of individual smart meters 
has  probably  decreased  and,  more  importantly  the  benefits  of  smart  meters  have  also 
increased.  The  benchmarking report also  clarifies that weighted averages are calculated 
using only positively assessed cases, that is, Member States’ rollout scenarios where the 
cost-benefit  analysis  was  favourable.  Within  these  cases,  values  are  weighted  by  the 
number of metering points. As a result, the weighted average reflects cost and benefit levels 
observed  in  large-scale,  economically  justified  deployment  scenarios,  with  greater 
influence  from  countries  with  larger  rollout  volumes.  The  lower  weighted  average 
therefore reflects this stronger influence of large-scale rollout programmes, which tend to 
be associated with lower unit costs.  

Moreover, although these figures provide a useful reference, available evidence suggests 
that earlier cost-benefit analyses did not fully reflect the range of impacts associated with 
smart  metering  deployment.  In  particular,  benefits  related  to  demand-side  flexibility, 
renewable integration, consumer participation and the development of innovative energy 
services are difficult to quantify and were not systematically included. As the volume of 
variable renewable production in the energy system expands, these benefits will become 
increasingly  important.  More  specifically  related  to  this  proposal  the  introduction  of 
network  tariffs  that  reward  flexibility  and  lead  to  more  efficient  grid  operation  and 
development will not be possible without the rollout of smart meters. This represents a key 
component necessary to keep network costs, and thereby energy prices, affordable.  

At the same time, certain cost components may have been overstated due to technological 
uncertainty and limited standardisation at the time of the assessments. In addition, the costs 
associated with replacing conventional meters and maintaining legacy systems over time 
were not always fully taken into account.  

Experience from Member States with advanced deployment indicates that realised benefits 
can  exceed  initial  projections,  particularly  where  smart  metering  is  combined  with 
enabling market frameworks. 

These limitations highlight the need for a policy approach that ensures a minimum level of 
deployment  despite  uncertainties 
in  earlier  cost-benefit  assessments,  provides 
proportionate flexibility for Member States starting from low deployment levels, and takes 
national circumstances into account beyond that minimum threshold. 

53 

 
4.3.2.3.  Risks and mitigating measures 

Potential risks include: (i) cost pass-through to consumers and SMEs via network tariffs; 
(ii) cybersecurity and data protection concerns; (iii) interoperability challenges; and (iv) 
stranded assets where early-generation meters lack required functionalities (201). There is 
also  a  risk  that  benefits  may  not  fully  materialise  without  appropriate  market 
developments. 

These  risks  are  mitigated  by  the  phased  approach,  which  ensures  a  minimum  level  of 
deployment,  includes  a  limited  extension  of  the  deadlines  in  duly  justified  cases,  and 
preserves  flexibility  beyond  75%  by  allowing  Member  States  to  rely  on  updated  cost-
benefit assessments where appropriate.  

In parallel, existing EU  requirements on interoperability, data access, cybersecurity and 
consumer protection ensure that deployed systems meet the necessary functional standards 
and safeguard sensitive data.  

Public procurement frameworks  also contribute to mitigating supply chain  and security 
risks  by  allowing  contracting  authorities  and  utilities  to  set  appropriate  requirements, 
including for non-EU suppliers, in line with Directive 2014/25/EU.  

The  progressive  rollout  further  reduces  the  risk  of  stranded  assets  by  allowing  for 
technological upgrades and alignment with evolving requirements over time. 

4.3.2.4.  Role of the broader regulatory framework 

The effectiveness of the proposed measure for smart meter deployment is supported by the 
broader regulatory framework, including provisions on dynamic pricing, data access (202) 
and consumer empowerment under the Citizens Energy Package (203). 

These measures enable active consumer participation and the development of flexible retail 
offers, ensuring that the benefits of smart metering are realised in practice.  

4.3.2.5.  Cost-efficiency over time 

As deployment progresses and reaches a sufficient level, it becomes more cost-efficient 
due to economies of scale and established operational processes, while marginal benefits 
may decrease.  

This supports the choice of 75% as an appropriate balance between ambition, efficiency 
and proportionality. 

(201)  Smart metering systems must comply with Article 20 of the Electricity Directive on functionalities, while the specific provision 

on validated and near real-time data is crucial for energy services rewarding flexible consumption. 

(202)  Including the technical rules set out in Commission Implementing Regulation (EU) 2023/1162 of 6 June 2023 on interoperability 
requirements  and  non-discriminatory  and  transparent  procedures  for  access  to  metering  and  consumption  data,  OJ  L  154, 
15.6.2023, p. 10, ELI: http://data.europa.eu/eli/reg_impl/2023/1162/oj.  

(203)  Communication 

on 

the  Citizens  Energy 

Package 

(COM(2026)115 

final) 

and 

the 

related  web-site: 

https://energy.ec.europa.eu/topics/markets-and-consumers/energy-consumers-and-prosumers/citizens-energy-package_en.  

54 

 
 
 
 
5.  TAXATION 

5.1.  Policy context 

5.1.1.  Problem definition 

The price of electricity as reflected in consumers' energy bills is determined by a complex 
interplay of factors, including wholesale commodity costs, network charges, taxes, levies 
and other charges. These factors are influenced by policies adopted at EU, Member State 
or, in some cases, sub-national level. For example, excise duties on energy products and 
electricity  must  comply  with  minimum  rates  established  under  the  Energy  Taxation 
Directive, but may also be subject to additional taxes and levies established at Member 
State or sub-national level.  

Taxation  has  several  distinct  objectives.  Apart  from  its  revenue  raising  objective, 
electricity  taxation  also  adds  to  the  price  signal  and  thereby  influences  individual  and 
business consumption choices. 

This initiative presents a legislative proposal designed to address price determinants that 
are most affected by existing EU legislation such as the Energy Taxation Directive in order 
to incentivise greater electrification of end uses.  

5.1.2.  Current and proposed fiscal framework for energy  

Figures 1 and 2 show the contribution of taxes and levies (including VAT, excise and other 
national taxes and levies) on the consumer  prices of household electricity in the second 
half of 2025. According to Eurostat, during the second half of 2025, the relative share of 
taxes (including VAT, excise and national taxes and levies) in household electricity price 
was highest in Denmark (49.1% of the total price, and lowest in Luxembourg and in the 
Netherlands, where the net impact was negative (-6.3% and -5.2%, respectively). The latter 
reflects  that  the  subsidies  provided  to  the  consumers  where  larger  than  the  levied 
taxes (204).  

(204) Electricity price statistics - Statistics Explained - Eurostat 

55 

 
 
 
 
Figure 1: Electricity prices for household consumers, second half 2025 (EUR per kWh) 
consumption from 2 500 kWh to 4 999 kWh – band DC 

Figure 2: Share of taxes and levies paid by household consumers for electricity, second 
half 2025 (%) consumption from 2 500 kWh to 4 999 kWh – band DC 

For non-household electricity prices, the share of taxes also varies significantly across the 
EU. In the second half of 2025, the share of non-recoverable taxes and levies was highest 
in Poland and Cyprus, where taxes made up 36% and 29.9%, respectively, of the total price 
of electricity.  At the other end of the spectrum, Lithuania and Luxembourg applied the 
lowest tax, with 0.2% and 0.5%, of final electricity price, respectively.  

56 

 
 
 
 
 
 
Figure 3: Share of taxes and levies paid by non-household consumers for electricity, second 
half 2025 (%) consumption from 500 MWh to 1 999 MWh – band IC.  

The  Energy  Taxation  Directive  sets  out  minimum  tax  rates  for  electricity  and  energy 
products (in Article 10 and Annex 1, Table C) for users within the scope of the Directive.  
Article 2 of the Directive excludes from the scope of the Directive electricity and energy 
products  used  principally  for  chemical  reduction  and  in  electrolytic  and  metallurgical 
processes, and energy products and electricity used for mineralogical processes.  

The Directive sets minimum rates for electricity at 0.5 EUR/MWh for business use within 
the scope of the Directive and 1 EUR/MWh for non-business use. Similarly, the Directive 
sets out minimum rates for natural gas for heating purposes  (in Article 9 and Annex 1, 
Table C). These minimum rates are 0.15 EUR/GJ for business use and 0.3 EUR/GJ for 
non-business use.  Article 15(1)(h) of the  Directive provides  for optional  total  or partial 
exemptions  from  or  reductions  in  taxation  for  electricity  and  natural  gas  used  by 
households.  For  business  use,  Member  States  have  multiple  options  for  sectoral  or  use 
exemptions or reductions for electricity and natural gas.  

The  Directive  allows  tax  reductions  to  be  applied  on  electricity  for  energy-intensive 
businesses,  provided  the  minimum  levels  of  taxation  prescribed  in  the  Directive  are 
respected  on  average  for  each  business.  An  ‘energy-intensive  business’,  as  defined  in 
Article 17 of the Directive, means a business entity where either the purchases of energy 
products and electricity amount to at least 3.0 % of the production value or the national 
energy tax payable amounts to at least 0.5 % of the added value. Within this definition, 
Member States  may apply  more restrictive concepts,  including  sales value, process  and 
sectoral definitions. 

Additionally, Article 17 of the Directive permits excise rates below the minimum including 
a  zero  rate  for  both  electricity  and  natural  gas  used  by  energy-intensive  businesses. 
However, these rates are subject to the conditions detailed in Article 17(4). This condition 
consists of the requirement for businesses that benefit from the possibility of a reduced 
level  of  taxation  down  to  zero  to  enter  into  agreements,  tradable  permit  schemes  or 
equivalent arrangements. These agreements, schemes or arrangements must then lead to 
the  achievement  of  environmental  objectives  or  increased  energy  efficiency  broadly 
equivalent  to  what  would  have  been  achieved  if  the  standard  minimum  rates  had  been 
observed. 

57 

 
 
In  2021  the  Commission  proposed  a  recast  of  the  Directive. (205)  It  remains  under 
discussion  in  the  Council.  In  its  Clean  Industrial  Deal  and  Action  Plan  for  Affordable 
Energy  (APAE),  the  Commission  called  upon  the  Council  to  urgently  conclude  its 
negotiations on this critical piece of legislation. (206)  

A  crucial  part  of  the  proposal  for  a  recast  of  the  Directive  concerned  switching  from 
volume to energy content-based taxation, eliminating relative incentives for fossil fuel use 
and  introducing  a  ranking  of  rates  according  to  their  environmental  performance. 
Moreover, the current tax structure would be simplified by categorising energy products 
(used  as  motor  or  heating  fuels)  and  electricity  and  ranking  them  according  to  their 
environmental performance. The ‘Environmental performance’ was defined in relation to 
other EU policies under the European Green Deal and in particular to the other proposals 
in the  ‘Fit for 55’  package. According to this ranking, conventional fossil fuels, such as 
gas oil and petrol would be taxed at the highest rate. This would constitute the ‘reference 
rate’. The next category of rates would apply to fuels that are fossil-based but less harmful 
and still have some potential to contribute to decarbonisation in the short and medium term. 
Two-thirds  of  the  reference  rate  would  apply,  for  example,  to  natural  gas,  LPG  and 
hydrogen of fossil origin for a transitional period of 10 years. Thereafter, this rate would 
increase  to  the  full  reference  rate.  The  next  category  consisted  of  sustainable  but  not 
advanced biofuels. To reflect their contribution to decarbonisation, half of the reference 
rate would apply. The lowest rate would apply to electricity, regardless of its use, advanced 
biofuels, bioliquids, biogases and hydrogen of renewable origin. The rate applicable to this 
group is set significantly below the reference rate for fossil fuels as electricity and these 
fuels can drive the EU’s clean energy transition towards achieving the objectives of the 
European Green Deal and ultimately climate neutrality by 2050.  

The  taxation  principles  in  this  Regulation  align  both  with  the  current  framework 
established by the Directive and with the principle described in the previous paragraph as 
set out in the Commission proposal to amend the Directive. 

This  proposal  builds  on  policies  announced  in  the  Commission  Communication  on  the 
Citizens Energy Package. (207) The Package pursues electrification which will over time 
bring  lower  and  more  stable  prices  decreasing  European  dependence,  while  improving 
sustainability and competitiveness. Member States have a role to play by setting the right 
incentives – for instance, making the use of electricity relatively more attractive through 
tax incentives. The energy bills households and businesses pay are influenced by network 
charges, national taxes and levies, the wholesale energy price and the level of individual 
consumption.  On average, electricity taxes and levies account, on average, for 25% of the 
price for households and 15% of the price for businesses.  

This  proposal  is  consistent  with  and  complements  the  proposal  for  the  Industrial 
Accelerator  Act  (IAA208).  The  IAA  proposal  aims  to  strengthen  the  EU’s  long-term 
economic  resilience,  prosperity  and  strategic  autonomy  by  supporting  industrial 
production and accelerating decarbonisation. It has the following objectives: first, it seeks 
to leverage access to the single market and exploit its scale of the Single Market to boost 

(205)  COM(2021) 563 final. 
(206)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee 

and the Committee of the Regions: Action Plan for affordable energy, Brussels 26 February 2025, COM(2025) 79 final. 

(207)  Communication from the Commission to the European Parliament and the Council on the Citizens Energy Package, Strasbourg 

10 March 2026, COM(2026) 115 final. 

(208)  COM(2026) 100 final, Proposal for a Regulation of the European Parliament and of the Council establishing a framework of 
measures  for  the  acceleration  of  industrial  capacity  and  decarbonisation  in  strategic  sectors  and  amending  Regulations  (EU) 
2018/1724, (EU) 2024/1735 and (EU) 2024/3110. 

58 

 
 
demand for European low-carbon industrial products and net-zero technologies. Second, 
it aims to maximise the quality of foreign investment in the EU  and its benefits for the 
Single Market in the most strategic sectors. Third and finally, it will deploy manufacturing 
projects at scale by speeding up and simplifying permitting and by helping create industrial 
clusters in industrial manufacturing acceleration areas (‘acceleration areas’).  

Some Member States are already putting in place measures in line with the principles set 
out in the proposal. Germany and France have lowered, or are in the process of lowering, 
the electricity tax rate for energy- intensive industries, while Belgium is reducing excise 
on electricity while progressively increasing excise on gas, among other fossil fuels (209). 

5.2.  Objectives of the proposal 

The provisions on taxation are ancillary to the measures on network charges, supporting 
the  primary  objective  of  the  amendment  to  the  Electricity  Regulation,  as  explained  in 
Section 2.  

In practice, the proposal can be summarised as follows: 

-  Measure  1:  a  general  principle  to  be  followed  by  Member  States  when 
setting the excise rates for electricity and gas, where the rate should not be 
higher than the rate for gas: 

-  Measure  2:  a  clarification  that  the  conditions  on  meeting  environmental 
requirements will be deemed to have been met in all cases where reduction 
in  or  exemption  from  excise  duties  is  applied  to  electricity  supplied  to 
energy-intensive businesses s, given the positive impact of the expansion of 
electrification on decarbonisation and on achieving the EU climate targets. 

As  such,  the  measures  aim  to  reduce  the  price  disparity  between  electricity  and  gas  by 
introducing  a  more  favourable  tax  framework  for  electricity  relative  to  gas,  as  the 
framework currently favours gas in several Member States (detailed in section 2.3). This 
adjustment seeks to mitigate that price advantage of gas by promoting a relatively lower 
rate on electricity. The proposal thereby incentivises electrification in line with it being a 
cleaner  and  more  efficient  energy  source.  By  enhancing  the  cost-competitiveness  of 
electricity,  the  initiative  supports  the  transition  towards  a  more  electrified  and  energy 
independent EU. 

Measure 1 requires Member States to set national excise duty rates under Council Directive 
2003/96/EC in such a way that electricity is not taxed more heavily than gas. This measure 
aims to contribute to aligning taxation structures to support the use of electricity over gas 
by households and businesses. 

For measure 2, it requires Member States to consider the condition contained in Article 
17(4)  of Council Directive 2003/96/EC, i.e. the achievement of environmental objectives 
or increased energy efficiency broadly equivalent to what would have been achieved if the 
standard  Community  minimum  rates  had  been  observed,  to  have  been  met  in  all 
circumstances where reduced or zero rates of taxation  are set for supplying electricity to  
energy-intensive  businesses.  Such  conditionality  is  deemed  to  be  fulfilled  owing  to  the 

(209)  https://www.bundesregierung.de/breg-en/federal-government/reduction-in-energy-prices-2358994; 

https://www.dekamer.be/FLWB/PDF/56/1378/56K1378001.pdf.  

59 

 
 
intrinsically positive environmental and climate impact of the uptake of electricity and its 
role in achieving the EU’s net-zero targets.  

This proposed measure to facilitate reduced electricity taxation offers distinct advantages 
for energy-intensive industries with high electricity consumption that fall within the scope 
of the Directive, such as certain manufacturing and heavy industries. The measure could 
help  mitigate  energy  cost  pressures,  particularly  in  sectors  facing  intense  global 
competition and high exposure to volatile energy markets. 

Key benefits include: 

-  Lower  energy  costs  and  enhanced  competitiveness:  by  reducing  the  tax 
burden  on  electricity,  energy-intensive  business  would  face  lower 
operational costs, improving their competitiveness . 

-  Accelerated  electrification  and  decarbonisation:  A  more  favourable  tax 
regime for electricity would incentivise industries to transition from fossil 
fuels (mainly gas) to cleaner electric alternatives. This supports the EU’s 
climate  objectives,  helping  industries  meet  decarbonisation  targets  and 
comply with regulatory requirements. 

-  Stimulating  investment  in  clean  technologies:  reduced  electricity  costs 
would  make  electrification  more  economically  viable,  encouraging 
industries to adopt electric machinery, heat pumps, and other low-carbon 
technologies. This aligns with the EU’s industrial strategy and promotes a 
circular economy by fostering sustainable production methods. 

-  Enhanced  energy  security  and  resilience:  by  reducing  reliance  on  gas 
imports,  industries  would  contribute  to  greater  energy  security  and 
resilience.  A  more  stable  and  predictable  energy  cost  structure  would 
improve long-term planning for industrial investments, reducing exposure 
to  geopolitical  risks  and  price  fluctuations,  and  minimising  exposure  to 
external  supply  shocks,  such  as  the  2022  energy  crisis  and  the  current 
Middle East crisis (210). 

Together,  these  provisions  will  result  in  a  more  favourable  taxation  landscape  for 
electricity relative to gas.  

5.3.  Expected benefits and impacts 

Taxation of electricity and gas at Member State level includes not only excise rates under 
Directive  2003/96/EC  but  also  other  national  taxes  and  VAT.  However,  the  proposal 
relates exclusively to excise duties under Directive 2003/96/EC, and not to other taxes or 
levies imposed at Member State level or VAT. As such, the analysis of the impacts of the 
proposal will focus on that Directive. 

Under  the  current  framework,  most  Member  States  tax  systems  already  set  electricity 
excise rates at a lower rate than natural gas or at least an equal rate than natural gas. The 
analysis as shown below indicates that eight Member States will be impacted and will need 
to adjust the national excise rates applicable to electricity and/or national gas (211). 

(210) A tale of two energy crises – initial conditions matter. 

(211) Assessment based on the Taxes in Europe Database, which relies on input provided by Member States. 

60 

 
 
Figures 4 and 5 show the different statutory or nominal rates for taxation of electricity and 
natural gas for both business and non-business use. 

Figure 4: 2026 tax rates for electricity and natural gas for business use 

Source: Taxes in Europe database (2026) 

Figure 4 shows nominal tax rates for natural gas and electricity for business use as as per 
1  January  2026.  Where  Member  States  have  different  rates  based  on  consumption,  the 
highest consumption band has been selected to better reflect energy-intensive users.  FR 
(55 and 7 EUR/GJ for natural gas and electricity respectively) does not fit on the chart due 
to its high nominal taxation levels.  

Figure 5: 2026 tax rates for electricity and natural gas for non-business use 

Source: Taxes in Europe database (2026) 

Figure 5 shows nominal tax rates for natural gas and electricity for non-business use at 1 
January 2026. FR (55 and 8 EUR/GJ) and NL (17 and 25 EUR/GJ) do not fit on the chart 
due to their high nominal taxation levels. 

61 

 
 
 
For BE, IT, EL, ES, DE, AT, NL, FI and PL, differentials were found in nominal tax rates 
on electricity compared to the same rates for gas for non-businesses use (Figure 5). For IT, 
EL, ES, AT and PL, negative differentials were found in nominal tax rates on electricity 
compared  to  those  for  gas  for  businesses  (Figure  4).  These  Member  States  potentially 
would have to reduce their electricity taxation to comply with the new Regulation. BE and 
NL are currently already in a tax shift from taxing electricity to taxing gas. (212)  

For these Member States, compliance with measure 1 can be achieved by lowering the 
rate for electricity, raising the rate for gas, or a combination of both. For instance, 
Belgium  plans  to  support  electrification  by  lowering  excise  tax  on  electricity  and 
increasing tax on gas, resulting in an estimated net revenue increase of EUR 95 million 
EUR by 2029 (213). 

Given  the  current  market  conditions  resulting  from  geopolitical  events,  we  expect  the 
Member States concerned to prioritise reductions in electricity excise over increases in gas 
excise. However, the decisions they take will be influenced by prevailing conditions at the 
time the legislation enters into force (214) as well as ensuring compliance with EU fiscal 
rules (215). 

Impact on energy bills 

There is a significant variation in the potential effect of the measure requiring Member 
States not to tax electricity higher than gas in the energy bills of households and businesses 
(measure 1) in the Member States concerned. When looking at the effect on each consumer, 
a representative consumption band is considered.  

The  following  analysis  considers  business  consumers  those  whose  annual  consumption 
falls in the range 2.000-20.000 MWh. This consumption band is identified by Eurostat as 
the  most  representative  consumption  band  for  business  use  in  most  Member  States.  In 
relation to non-business consumers, annual consumption is considered to falls in the range 
2 500 - 5 000 kWh. This consumption band is defined identified by Eurostat as the most 
representative consumption band in 23 out of 28 Member States. Itis also used by Eurostat 
as the reference in its analysis. (216)  

Assuming  none  of  their  consumption  is  currently  exempted  from  taxation  or  subject  to 
reduced rates  and full  cost  pass-through  applies  for the reduction in  electricity taxation 
resulting  from  this  proposal,  Table  2  shows  the  potential  impact  on  energy  bills  in  a 
scenario where compliance with this principle is achieved exclusively through reduction 
in electricity taxation  

(212) Link to Belgian and Netherlands’ legislation or governemnt websites: 
https://www.dekamer.be/FLWB/PDF/56/1378/56K1378001.pdf and 
https://www.rijksfinancien.nl/sites/default/files/bestanden/belastingplan-2023/02-Wetsvoorstel-Belastingplan-2023-MvT.pdf. 

(213) Stroomfactuur daalt gemiddeld met 34 euro, aardgasfactuur stijgt met 75 euro | De Standaard. 
(214) According to the “One Europe, One Market Roadmap”, the objective is to reach an agreement by Q2/2027. 
(215)  Regulation  (EU) 2024/1263 of  the  European  Parliament  and of  the Council  of 29  April 2024 on  the effective coordination of 

economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97. 

(216)  Energy  prices  and  costs  in  Europe  30/11/2016,  COM(2016)  769,  https://eur-lex.europa.eu/resource.html?uri=cellar:69cbbdb1-

b708-11e6-9e3c-01aa75ed71a1.0001.02/DOC_8&format=PDF. 

62 

 
 
 
 
Table  2:  Potential  annual  impact  on  electricity  bills  of  different  consumer  profiles  in 
affected Member States (in EUR)  

Non-business  use  annual 
savings 
consumption 
of 2 500 kWh 

consumption 
of 5 000 kWh 

BE 

IT 

EL 

ES 

DE 

AT 

NL 

FI 

PL 

EUR 

52 

46 

10 

18 

37 

22 

75 

4 

0.05 

EUR 

104 

92 

20 

36 

75 

45 

151 

7 

0.09 

Business use annual savings 

consumption 
of 2 000 MWh 

consumption 
of 
20 
MWh 

000 

EUR 

EUR 

7 192 

1 840 

71 920 

18 400 

12 000 

120 000 

18 048 

180 480 

36 

360 

Source: Taxes in Europe database (2026) 

For  energy-intensive  businesses,  the  impact  of  the  measure  allowing  Member  States  to 
apply  a  reduction  or  a  zero  rate  for  electricity  taxation  follows  the  same  analytical 
framework.  This  assessment  considers  the  potential  energy  cost  savings  for  the  highest 
tiers of electricity consumption in Member States. Table 3 gives the potential savings in 
EUR per MWh by taking the weighted price information from Eurostat by Member State, 
capturing  businesses  with  electricity  consumption  of  over  20  GWh,  as  a  proxy  for  an 
energy-intensive business. 

In practice, all Member States can already implement targeted reductions or exemptions 
for this group of consumers, with some already having in place legal frameworks allowing 
for  such  reductions  or  exemptions.  The  proposal    simply  makes  it  easier  to  fulfil  the 
condition allowing Member States to permit such reductions or exemptions.  

Given the many different reductions that can be applied by Member States, the impact of 
the measure will be estimated by assuming that: (i) no Member State has such reductions 
or exemptions for energy-intensive businesses in place; (ii) all Member States will decide 
to  apply  this  option;  (iii)  all  businesses  in  those  consumption  brackets  would  meet  the 
definition  of  energy-intensive    businesses  set  out  in  the  Directive;  and  (iv)  all  Member 
States would fully exempt the electricity supplied to those businesses from excise taxation.  

63 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
Given  these  assumptions,  the  estimated  impact  in  this  analysis  will  be  considerably 
higher  than  the  measure’s  anticipated  real-world  effects.  Additionally,  there  is  no 
available  data  isolating  the  excise  duties  on  electricity  supplied  to  energy  intensive 
businesses.  Eurostat  data,  comprising  all  environmental  taxes,  fees,  levies  or  charges 
imposed at national level, is therefore used to quantify the potential effects. 

Table 3: Weighted average of environmental taxes, fees, levies or charges relating to air 
quality and other environmental purposes, and taxes on emissions of CO2 or other 
greenhouse gases and weighted average total electricity price of businesses with a 
consumption of over 20 GWh per Member State 

Member 
State 

Environmental tax component of 
the electricity price (EUR/MWh) 

Total electricity price (EUR/MWh) 

AT 

BE 

BG 

CY 

CZ 

DE 

DK 

EE 

EL 

ES 

FI 

FR 

HR 

HU 

IE 

IT 

LT 

LU 

LV 

MT 

13.8 

3.4 

1.0 

57.9 

12.9 

20.5 

1.1 

1.6 

0.8 

2.2 

0.5 

2.5 

0.5 

1.0 

0.3 

0.7 

0.0 

0.0 

0.0 

1.5 

64 

148.4 

108.7 

114.4 

223.6 

202.1 

155.5 

115.4 

97.9 

126.4 

99.7 

47.5 

75.1 

132.1 

165.2 

184.6 

140.9 

114.7 

115.1 

102.9 

101.2 

 
Member 
State 

Environmental tax component of 
the electricity price (EUR/MWh) 

Total electricity price (EUR/MWh) 

NL 

PL 

PT 

RO 

SE 

SI 

SK 

7.0 

45.1 

0.5 

0.4 

0.5 

0.9 

1.3 

112.0 

162.4 

99.2 

140.4 

64.4 

128.4 

157.3 

Source:  Eurostat  Electricity  prices  components  for  non-household  consumers  -  annual 
data (2025 data (Eurostat nrg_pc_205_c )). 

Impact on Member State budgets 

As  the  Member  States  concerned  have  different  options  to  comply  with  measure  1, 
different  revenue  scenarios  are  possible.  This  document  therefore  presents  a  forecasted 
range, from compliance exclusively through reductions in electricity excise (scenario 1) to 
compliance  exclusively  through  increases  in  gas  excise  (scenario  2).  In  reality,  the 
expected revenue impact lies somewhere between these two scenarios.  

In addition, the forecasted revenue impacts are based on total electricity excise revenue 
and  nominal  rates  in  each  Member  State,  and  do  not  reflect  the  fact  that  some  of  the 
consumption already benefits from reduced rates or exemptions. For example, in at least 
one  Member  State  affected  by  the  proposal  (Belgium),  the  rail  sector  is  exempt  from 
electricity excise duties (217) while energy-intensive industries benefit from exemptions or 
reductions detailed in the above sections (218). As a result, the revenue implications detailed 
in  Table  4  are  unlikely  to  be  realised  because  much  of  the  electricity  consumption  in 
question  either  falls  outside  the  scope  of  the  Directive  or  already  complies  with  this 
proposal through exemptions or reduced rates. 

The estimated forecast ranges between a revenue loss of EUR 5 199 million to a revenue 
increase of EUR  16 599 million (-0.03% - 0.11% of EU GDP in 2024).  

Total  revenue  reported by all Member States  for  2024 from  Energy  Taxation  Directive 
electricity taxation was EUR 18.023 million EUR (0.1% of EU GDP) (219).   

(217) The landscape of carbon and energy pricing and taxation in Belgium (2024). 
(218) The competitiveness and decarbonisation challenges facing energy-intensive industries. 
(219) Measured against 2024 EU GDP of 1.7 trillion EUR National accounts and GDP - Statistics Explained - Eurostat. 

65 

 
 
 
 
Table 4: Potential electricity tax revenue loss due to reducing electricity tax rates to the 
level of natural gas tax rates (scenario 1) and the potential natural gas tax revenue gain due 
to  raising  natural  gas  tax  rates  to  the  level  of  electricity  taxation  (scenario  2)  (in  EUR 
million) (220) 

Scenario  1:  potential  loss  due  to 
electricity tax reduction 

Scenario 2: potential gain due to natural gas 
tax increase 

MS 

EUR (Mil) 

% of Member 
State GDP 

EUR (Mil) 

% of Member 
State GDP 

AT 

BE 

DE 

EL 

ES 

FI 

IT 

PL 

EU 

-557 

-445 

-1884 

-102 

-155 

-30 

-2.024 

-2 

-5.199 

-0.12 

-0.8 

-0.05 

-0.03 

-0.01 

-0.01 

-0.09 

->0.01 

-0.03% 

1397 

1340 

2804 

79 

1214 

4 

9761 

1 

16.599315 

 0.31 

 0.24 

 0.07 

 0.02 

 0.06 

>0.01 

 0.4 

->0.01 

0.11% 

Source: in-house estimates based on TEDB and Eurostat data. 

Estimating the fiscal impact of measure 2 is more challenging for a number of reasons. 
Firstly, the proposal is limited to taxes within the scope of the Directive, whereas data on 
the taxation of energy-intensive businesses covers a much wider range of taxes and levies 
(Table 3). Secondly, the measure facilitates a reduction in these taxes through automatic 
recognition of the condition but does not require Member States to reduce such taxes.  

Table  3  provides  a  useful  assessment  of  the  overall  level  of  environmental  taxation 
(including energy taxation) which energy-intensive businesses are subject to. The exact 
fiscal  impact  on  Member  States  is  difficult  to  determine  but,  owing  to  the  measure 
facilitating  rather  than  requiring  changes  to  national  taxation  regimes,  scope  exists  for 
Member  States  to  carry  out  such  fiscal  assessments  as  they  deem  appropriate  before 
deciding whether to use the flexibility available under this measure. 

(220)  Even though the Netherlands, report a difference in nominal tax rates on electricity compared to the same rates for gas for non-
business use, could not be included in this analysis, due to a reported negative electricity revenue. This is due to its application of 
a lump-sum tax credit for each connection to the grid. 

66 

 
 
 
6.  GRID CONNECTION MEASURES 

6.1.  Policy context 

6.1.1.  Problem definition 

Timely electricity network access is crucial for the competitiveness and decarbonisation of 
the  European  industry,  including  automotive  and  transport  sectors,  energy  intensive 
industry,  digitalisation  of  economy  related  to  establishment  of  data  centres.  It  is  also 
essential for fulfilling the goals of the Clean Industrial Deal, Accelerate EU and achieving 
climate  neutrality  by  2050,  as  well  as  for  addressing  housing  needs  and  related  basic 
societal needs. Delays in grid connections slow down the clean transition and European 
economic growth. 

There are multiple root causes leading to situations in which grid users must wait several 
months  or  even  years  to  get  a  grid  connection,  ranging  from  process-related  and 
organisational constraints, to regulatory, supply chains and technical difficulties. They can 
be summarised as follows: 

a)  Grid connection queues due to inadequate grid planning and delayed grid 
development,  not  accounting  for  different  lead  times  in  development  of 
network  infrastructure  (8-10  years  on  higher-voltage  levels)  and  project 
development (3-5 years on average), 

b)  Grid connection queues due to incorrect placement of the request, due to 
lack of locational signals and lack of transparency on available and planned 
network capacity, 

c)  Grid connection queues due to inefficient grid connection procedures. 

Given that letter a) has been addressed by the European Grids Package (221), and letter b) 
is being addressed by the Article 18 and Article 18a of this legal proposal, the following 
assessment  only  focuses  on  letter  c),  on  inefficiencies  related  to  grid  connection 
procedures. 

Grid connection queues are present in at least 16 Member States based on the evidence 
collected in 2025. (222) Some countries are rarely affected due to slower electrification or 
uptake of renewable energy sources, while others are experiencing severe grid congestion. 
Analysis done on 2024 data (223) noted some queues were 30 times the amount of the peak 
load,  pointing  to  high  presence  of  speculative  and  immature  requests  in  the  queue.  For 
instance,  in  Slovakia,  estimates  show  some  50%  of  the  reserved  capacity  in  the  grid 
connection queue remains unused(224). 

The existence of speculative and immature requests hindering timely grid access as one of 
the major hurdles to electrification and decarbonisation was also confirmed by a targeted 

(221)  https://ec.europa.eu/commission/presscorner/detail/en/ip_25_2945.  

(222)  Fraunhofer ISI, Fraunhofer IEG, Guidehouse, REKK, Study on network development planning, tariff structures and connection 
requests  for  electricity  distribution  grids,  September  2025,  https://op.europa.eu/en/publication-detail/-/publication/08843617-
9cf8-11f0-97c8-01aa75ed71a1. 

(223)  Boston Consulting Group centre for energy impact: Mind the queue, Connection reform for the electricity grid, 2025. https://web-
assets.bcg.com/f5/79/77645d12463793d174af9ae00d4a/mind-the-queue-connection-reform-for-the-electricity-grid-r2.pdf. 

(224)  Gridlock to grid growth: tackling connection queues for a smoother energy transition – Eurelectric, 2025. 

67 

 
 
stakeholder consultation under the European Grids package, running between 25 June and 
25  July  2025.  Among  the  respondents  which  represented  system  operators,  regulatory 
authorities, Member States, energy market stakeholders as well as representatives of civil 
society, 66 % agreed that there is a problem with speculative and immature requests in 
their geography and in the EU, and 56 % agreed that grid capacity is locked due to non-
maturing requests. Moreover, 82 % of respondents agreed or partly agreed that measures 
contributing to relieving congestion in the grid as part of the grid connection procedures 
could  be helpful. Slightly lower number of respondents  (71 %)  agreed or partly  agreed 
with  added  value  of  measures  considering  contribution  of  connection  requests  to  clean 
transition, services of general interest or based on other criteria. 

6.1.2.  Existing EU legislative framework 

Requirements  on  network  access  and  grid  connections  are  specified  in  the  Electricity 
Directive  and the Electricity Regulation. The Electricity Directive requires that regulatory 
authorities  ensure  that  access  to  grids  is  applied  objectively  and  without  discrimination 
between system users (Article 6). Importantly, the option of refusing access to the network 
is only possible under clearly defined conditions, namely if the grid lacks the necessary 
capacity, or, as specified by the Renewable Energy Directive (225), on justified grounds of 
safety concerns or technical incompatibility of the system components. Such a refusal must 
be  based  on  objective  and  technically  and  economically  justified  criteria.  In  this  case, 
information on the measures necessary to reinforce the network need to be provided by 
system operators. 

The Electricity Directive hence provides a general obligation on DSOs and TSOs to ensure 
non-discriminatory  third-party  access  to  their  networks  while  leaving  flexibility  to 
regulatory authorities to design details of their connection procedure to reflect specificities 
of their respective systems. 

Building on existing legal framework, the Commission put forward a Guidance on efficient 
and timely grid connections (226) (“Guidance”) as part of the European Grids package. The 
Guidance provided concrete recommendations for coordinated network planning involving 
society and industry, more efficient utilisation of existing grids, including through design 
of  network  tariffs,  connection  charges  or  flexibility,  and  finally,  transparency  of  grid 
hosting capacity and connection procedures. Concerning the grid connection procedures, 
the Guidance stresses the need to  move away from  first-come first-served allocation of 
network capacity towards a system considering maturity and progress of grid connection 
requests,  as  well  as  their  impacts  on  congestion,  or  environmental,  social  or  economic 
benefits. 

6.2.  Objectives of the proposal 

While  the  long-term  solution  to  the  challenge  of  insufficient  network  capacity  is  the 
accelerated build out of grids in a forward-looking manner, more short-term solutions can 
be advanced in parallel to ensure timely grid connection of clean energy generation and 
electrified  loads.  As  explained  in  section  6.1.1,  grid  connection  measures  adopted  in 
situation of grid congestion, based on a specific situation in respective Member States, are 
part of the solution to more efficient and timely network access. 

(225)  Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of 

energy from renewable sources. 

(226)  Commission Notice, ‘Guidance on efficient and timely grid connections’ (C/2025/6703). 

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In this relation, objective of the proposal is to complement the provisions of the Guidance 
related  to  efficient  and  non-discriminatory  grid  connection  procedures  in  case  of 
congestion  in  the  EU  legal  framework  and  further  specify  the  existing  rules  under  the 
Article  6  of  the  Directive  (EU)  2019/944  by  making  explicit  mention  of  the  option  to 
prioritise  sectors,  network  users  within  a  sector,  or  impacts  on  network  congestion, 
economic, social or environmental considerations, as long as these are based on transparent 
and  non-discriminatory  criteria.  At  the  same  time,  proposal  leaves  space  to  consider 
national conditions by leaving full discretion over selection of respective measures to the 
national regulatory authority. They must however ensure that other measures addressing 
grid  congestion,  implementing  the  existing  EU  legal  framework,  like  cross-sectorial 
network  planning  involving  stakeholders,  flexible  connection  agreement  or  use  of  non-
wire and digital solutions to ensure network efficiency, are in place. By this requirement, 
the proposal reinforces the existing EU legal framework. 

6.3.  Expected benefits and impacts 

6.3.1.  Benefits to network users and economic impacts 

Setting clear entry criteria for grid connection requests to ensure projects that are ready-
to-build are not disadvantaged (first-ready first-served principle) has a positive impact on 
network users in terms of more efficient and timely processing of applicants that are ready 
to  be  connected  in  near  future  and  deterring  speculative  and  immature  applicants  from 
submitting a connection request. 

Establishing  clear  milestones  allowing  for  filtering  the  queue  in  case  of  future  need 
(milestone-based approach), also has positive impact on overall length of the connection 
procedure by regular cleaning of the grid connection queue and hence enabling reallocation 
of available grid capacity. 

Regular cleaning of the connection queue and measures targeting speculative applications 
would also have positive impacts on more accurate network planning and development, 
enabling system  operators to  focus on most needed projects  based on more mature and 
stable grid connection requests. This would also have positive impact on overall cost of 
system operation, as part of the administrative work related to prolonged administration of 
connection requests staying in the queue for longer time periods would not be necessary 
anymore, and the related human resources could be reallocated to other tasks of the system 
operators, increasing the overall efficiency. 

There is also an indirect positive impact on network tariffs as criteria deterring speculative 
or  immature  connection  requests  could  in  turn  lead  to  potential  decrease  in  network 
development  needs.  Impacts  of  new  grid  costs  on  individual  customers  depend  on 
projections for the future energy demand since redistribution of total costs over a larger 
customer base will reduce network tariffs per unit, as illustrated in the figure 1. On the left-
hand side, standard recovery is linked to the situation where assumptions on future grid 
usage (i.e. volume of loads connected) materialise, this would reflect the situation in which 
there are concrete measures deterring speculative or immature requests adopted. On the 
right-hand side, weak demand means the expected demand (as assumed in the incoming 
grid connection requests) does not materialise, offtake from electricity grid is lower, and 
hence fixed CAPEX cost must be spread across a smaller consumer base. 

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Figure 1: Average grid tariffs for different consumer base (227) 

Provisions enabling prioritisation of sectors based on economic, environmental and social 
criteria in accordance with specific national situations and preferences in case grid hosting 
capacity  is  insufficient,    allow  for  earlier  connection  of  most  critical  uses  as  deemed 
necessary by the Member State, hence bringing positive effects in terms of social, climate 
or  economic  impacts.  Likewise,  prioritisation  of  individual  users  based  on  their 
contribution to reducing congestion can contribute to overall efficiency.  

6.3.2.  Administrative costs 

Proposed provisions on grid connection measures in case of congestion fully builds on the 
existing legal framework, notably on the Article 6 the Electricity Directive. Hence, these 
provisions do not bring any additional administrative costs to Union or national authorities, 
as the Article provides a clarification on the existing responsibility of regulatory authorities 
to  set  conditions  for  non-discriminatory  and  transparent  third-party  grid  access  while 
further enhancing legal clarity how these principles can be reconciled with prioritisation. 
Related provisions on other measures ensuring efficient use and planning of grids are fully 
based on existing legal provisions. 

If  provisions  on  consideration  of  maturity  and  progress  in  grid  connection  queues  are 
implemented on national level, they can lead to some administrative impacts for applicants 
for the grid connection, as they would need to prove their projects are sufficiently mature 
and would need to report on achieving the milestones as set in the grid connection process. 
However, if compared with total benefits in terms of earlier grid access and taking into 
consideration that related documentation like zonal permits, installation-specific permit, 
land rights  or  financial feasibility  would need to  be submitted at later stage of the grid 
connection process in any case to prove the project exists and is ready to be connected, 
these impacts are considered negligible.  

6.3.3.  Environmental impact 

Provisions on consideration of maturity and progress of grid connection requests, as well 
as considering environmental criteria or project’s impact on grid congestion may lead to 
earlier connection of clean energy sources to the grid and to more efficient use of existing 
grid  capacities,  hence  reducing  need  for  production  of  electricity  from  fossil  sources. 
Analysis  points  to  the  fact  that  enabling  timelier  grid  access  could  unlock  as  much  as 
120 GW of mature  renewable projects  waiting  in the connection queue  (as of  February 
2026). (228)  Better  planning  and  faster  permitting  of  electricity  grids  may  help  avoid 

(227)  Bruegel Heussaff, C., Zachmann, G.  (2025): Upgrading Europe's electricity grid is about more than just money. 

(228) https://ember-energy.org/latest-insights/crossed-wires-grid-capacity-could-block-eu-energy-security/. 

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approximately  EUR  37  billion  in  annual  redispatching  costs  in  2040,  and  efficient  grid 
connection  procedures  are  supposed  to  contribute  to  these  avoided  system  costs. (229) 
Likewise, faster connection of new electrified loads will help the related consumer groups 
to  switch  faster  from  the  use  of  fossil  fuels  and  hence  reduce  their  carbon  and 
environmental footprint. 

7.  SUMMARY OF THE COSTS AND BENEFITS 

This proposal combines targeted measures on network charges, smart grids and innovation, 
smart metering and taxation  and grid connections with the common objective of reducing 
overall electricity system costs, improving the efficient use of existing infrastructure and 
supporting a more affordable, secure and decarbonised electricity system. As reflected in 
the preceding sections, the expected impacts differ across the individual measures in terms 
of timing, affected  actors and degree of quantifiability. Some measures are expected to 
generate direct economic benefits, while others primarily create enabling conditions for 
more efficient system operation, stronger flexibility, better market functioning and lower 
long-term investment needs. The proposal also entails certain administrative, compliance 
and implementation costs, in particular for NRAs, system operators and, where relevant, 
Member States. However, these costs are generally expected to remain proportionate to 
the objectives pursued and, in most cases, to be outweighed over time by broader system 
benefits and avoided costs. 

With regard to network charges, the proposal is expected to generate significant benefits 
to the network and system users. More specifically, designing network charges to reduce 
peak load through capacity charges can play a crucial role in reducing the overall need 
for grid reinforcements. In the Netherlands alone, this could lead to reductions of EUR 
22.5 billion. Adding a dynamic time-of-use element to the charges for system users is a 
significant tool to drive more grid-friendly behaviour and ultimately result in cost savings. 
A study carried out by Agora Energiewende in 2023 focusing on the potential for flexibility 
at household level in Germany found that households with dynamic tariffs could save 
EUR 600 per year in the long term. These significant financial savings also imply lower 
electricity costs for all consumers if dynamic time-of-use tariffs are widely used. In relation 
to  locational  charges,  increased  decentralised  generation  from  renewable  and  other 
sources has implications for overall system costs especially at distribution level. Over time, 
this  helps  to  reduce  costly  network  congestion,  reduce  overall  investment  needs  and 
minimise network costs for all system users. This is particularly relevant for Member 
States which suffer from significant internal network congestion. The flexibility solutions 
which  the  proposed  measures  are  expected  to  incentivise  should  also  bring  significant 
savings  for  the  power  system  in  general.  The  French  NRA  estimated  savings  of  nearly 
EUR  7  billion  over  15  years  for  the  TSO  alone.  The  proposed  measures  on  network 
charges  are  unlikely  to  generate  significant  administrative  costs  to  NRAs  and  system 
operators. 

With  regard  to  smart  grids  and  innovation,  smarter  and  more  digitalised  grids  can 
generate  significant  system  benefits  by  improving  grid  observability,  flexibility  and 
operational efficiency.  

(229)  European Commission, Joint Research Centre, Thomassen, G., Fuhrmanek, A., Cadenovic, R., Pozo Camara, D. and Vitiello, 

Redispatch and Congestion Management (2024). 

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Based on a study from the Commission in 2022, digital and data-driven flexibility solutions 
could unlock around 230 GW by 2030 and an additional 600 GW by 2050 (230); by 2030, 
up  to  60  GW  of  peak  supply  needs  could  be  met  by  flexible  demand  instead  of  new 
generation,  with  estimated  savings  of  around  EUR  2.7  billion  per  year  in  generation 
capacity  investments  and  EUR  11.1–29.1  billion  per  year  in  reduced  grid  investment 
needs (231); full demand-flexibility deployment could also avoid about 37.5 Mt of CO₂ in 
2030.  In  addition,  AI-based  grid  operation  can  improve  forecasting,  congestion 
management  and  maintenance,  with  indicative  evidence  pointing  to  25–30%  lower 
maintenance costs, around 70% fewer breakdowns, roughly 40% less downtime, and 
faster network analysis and optimisation. Increased efficiency in network operation due 
to the use of digital technologies, including AI-based solutions, can limit the increase 
in  costs  for  system  operators  and  thus  the  increase  in  network  tariffs  paid  by 
consumers. The main costs are more limited but real: the measures entail low to moderate 
administrative and implementation costs for regulators, TSOs, DSOs, ENTSO-E and 
the  EU  DSO  Entity,  including  reporting,  governance,  testing  and  data-sharing 
arrangements; some smaller DSOs may be disproportionately affected; participation in the 
voluntary secondary-use framework would also create compliance costs for participating 
actors, and where AI-based tools qualify as high-risk, compliance costs can be significant, 
but only if put on the market. There are also cybersecurity and digital-infrastructure costs 
and risks, which the proposal seeks to mitigate through governance, safety and security 
requirements.  

With  regard  to  smart  meters,  the  proposal  is  expected  to  generate  significant  system, 
market and consumer benefits by enabling demand-side flexibility, improving system 
efficiency and supporting renewable integration. More specifically, by providing accurate 
and  granular  consumption  data  and  enabling  dynamic  pricing,  smart  meters  allow 
consumers and SMEs to adjust their consumption in response to price signals, leading to 
electricity savings of around 5–8% and more predictable energy bills. At system level, 
smart  meters  enable  demand  response,  more  efficient  network  planning  and  peak 
demand reduction, thereby improving the use of existing infrastructure and contributing 
to  lower  balancing  and  redispatch  costs.  In  this  context,  the  Commission’s  Affordable 
Energy Action Plan indicates that improved system operation and flexibility could avoid 
grid  management  costs  of  up  to  EUR 26  billion  per  year  by  2030  and  reduce  grid 
investment needs by up to 35%, to which smart  metering contributes as a key enabling 
component. These effects also support renewable integration by reducing curtailment and 
improving the alignment of consumption with generation, while enabling dynamic retail 
offers,  aggregation  and  data-driven  energy  services.  The  main  costs  relate  to  the 
deployment of metering systems and supporting ICT infrastructure, typically borne 
by DSOs and recovered through network tariffs. Available evidence indicates positive net 
benefits,  with  average  benefits  of  around  EUR 253  per  metering  point  compared  to 
costs of approximately EUR 172, likely understating the full range of system and market 
benefits.  Potential  risks  include  cost  pass-through  to  consumers,  cybersecurity  and 
interoperability challenges, and the risk that benefits may not fully materialise without 
appropriate market frameworks. These risks are mitigated through the phased deployment 

(230)  European Commission: Directorate-General for Energy, McKinsey & Company, Guidehouse, Fraunhofer Institute for Systems 
and Innovation Research ISI, Trinomics, Utrecht University, TNO, Antretter, M., Klobasa, M., Kühnbach, M., Singh, M., Knorr, 
K.,  Schütt,  J.,  Boer,  J.  d.,  Rolser,  O.,  Hernandez  Diaz,  D.,  Fitzschen,  F.,  Garcerán,  A.,  Reina,  R.,  Stemmer,  S.,  Steinbach, 
J.Popovski, 
European  Union, 
2022, https://data.europa.eu/doi/10.2833/113770, p. 15. 

Publications  Office 

E., Digitalisation 

flexibility, 

energy 

the 

of 

of 

(231)  European Commission: Directorate-General for Energy, Arrowsmith, G., Cozzini, M., Di Costanzo, B., Haack, J. et al., Support 
for the preparations of a strategic roadmap for digitalisation and AI in the energy sector, Publications Office of the European 
Union, 2026, p 15 https://data.europa.eu/doi/10.2833/3572353. 

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approach and existing EU requirements. Overall, the measure is expected to deliver net 
positive impacts over time. 

With  regard  to  taxation,  the  proposal  is  expected  to  result  in  a  more  favourable  fiscal 
regime for electricity relative to gas in the Member States where this is not currently the 
case.  This  includes  a  specific  provision  for  energy-intensive  businesses.  This  will 
contribute to  a more  consistent  price signal  in  favour of the electrification of end uses. 
Such  price  signals  will  influence  consumer  and  business  choices  and  contribute  to  the 
achievement of the EU’s climate and energy objectives.  

With  regard  to  grid  connection  measures,  the  proposal  is  expected  to  lead  to  faster 
adoption  of  grid  access  frameworks  considering  maturity  of  incoming  grid  connection 
requests,  their  progress  in  the  connection  queue  as  well  as  their  impact  on  network 
congestion. This should lead to faster connection of mature projects and to reallocation of 
available grid capacity to mature projects waiting in the queue, hence to quicker connection 
of electrified loads and clean electricity generation, thus to significant economic benefits 
stemming from earlier project implementation, as well as to environmental benefits. As 
the  proposal  builds  on  existing  legal  framework,  expected  administrative  costs  are 
expected to be minimal, and costs for grid connection applicants are considered appropriate 
vis-à-vis the achieved wider economy, environmental and social benefits. 

Taken together, the measures in this proposal are consistent with the European Climate 
Law (232).  They  support  the  transition  towards  climate  neutrality  by  improving  the 
efficiency and flexibility of the electricity system, facilitating the integration of renewable 
energy,  supporting  electrification  and  reducing  structural  reliance  on  fossil  fuels.  More 
specifically,  the  measures  on  network  charges,  smart  grids,  data  exchange  and  smart 
metering  help  enable  demand-side  flexibility,  better  use  of  existing  infrastructure  and 
reduced  curtailment  of  renewable  electricity  which  should  result  in  lower  emission  of 
greenhouse gasses. The taxation measures support a more coherent fiscal framework for 
electrification  by  helping  ensure  that  electricity  is  not  placed  at  a  relative  disadvantage 
compared with more carbon-intensive energy carriers. While some measures may entail 
additional deployment of digital infrastructure and related energy use, the overall effect of 
the proposal is to support a more decarbonised, resilient and efficient energy system, in 
line with the Union’s climate-neutrality objective for 2050 and the intermediate target of 
reducing net greenhouse gas emissions by at least 55% by 2030. 

(232)  Regulation  (EU)  2021/1119  of  the  European  Parliament  and  of  the  Council  of  30  June  2021  establishing  the  framework  for 
achieving  climate  neutrality  and  amending  Regulations  (EC)  No  401/2009  and  (EU)  2018/1999  (‘European  Climate  Law’), 
ELI: http://data.europa.eu/eli/reg/2021/1119/oj. 

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