## 3 Regulatory Barriers to Implementing an EU-Wide Grid Digital Twin
### Legacy Regulations and Fragmented Responsibilities  
The implementation of a pan-European grid digital twin faces fundamental challenges due to legacy regulatory structures and fragmented responsibilities. The existing legal and institutional frameworks that govern Europe's electricity sector, including the Clean Energy Package such as the Electricity Regulation (EU) 2019/943 and Directive (EU) 2019/944, along with national network codes, were developed in a context that did not anticipate the emergence of integrated, data-driven platforms like digital twins [32]. As a result, these frameworks do not provide an explicit mandate for such systems and fail to clearly define roles, responsibilities, or cost recovery mechanisms for the actors involved in their development and operation [4]. Traditionally, TSOs and DSOs have operated within strictly defined roles, organized along national boundaries, and focused on managing physical grid assets [23]. However, a digital twin that spans voltage levels and crosses borders requires close operational coordination between TSOs and DSOs, as well as the ability to act on shared insights generated through predictive analytics [4]. This introduces new regulatory questions: Who is permitted or obligated to build and maintain the digital twin? Who holds liability for actions taken based on its recommendations? And how are costs allocated or recovered under existing tariff schemes? Current regulations do not provide satisfactory answers to these questions, leading to legal and operational uncertainty [4]. Furthermore, the governance structure for the digital twin remains undefined. Whether such a platform is to be centrally managed by an EU institution, led by a consortium of TSOs and DSOs, or overseen by a third-party entity, each model carries distinct regulatory implications [4]. Industry-led initiatives such as the joint ENTSO-E and EU DSO Entity Task Force have begun to sketch a roadmap and define use cases, but voluntary cooperation alone may not suffice [4]. Without formal legal mandates and regulatory oversight from bodies like ACER or national regulatory authorities, coordination risks becoming fragmented and inconsistent [23]. Cross-border alignment presents another significant barrier. National differences in regulations, including data privacy requirements, IT service classifications, and cost allocation rules, can create conflicting obligations and hinder the seamless integration needed for a pan-European digital twin [24]. For example, some countries enforce strict data localization laws that prohibit the cross-border sharing of operational grid data, while others adopt technical standards that are incompatible with those of neighboring countries [25]. These inconsistencies make it difficult to establish a unified digital infrastructure and may discourage stakeholder participation [4]. The regulatory gap becomes even more pronounced when the digital twin extends into cross-sectoral domains such as gas, weather, or environmental planning. In these cases, sector-specific regulations and digital laws, including those related to data sharing, cybersecurity, or AI-based decision-making, may overlap or conflict, leading to legal ambiguity [33]. The absence of regulatory coherence across these domains can result in contradictory requirements and increased administrative burdens, which ultimately slow the deployment of the digital twin [4]. The current regulatory paradigm also tends to prioritize investments in physical infrastructure over digital solutions. This bias is embedded in many grid codes and licensing requirements, which recognize physical reinforcements but often overlook or undervalue virtual tools such as digital twins [16]. Updating regulatory frameworks to explicitly incorporate digital solutions, for instance, through revised grid codes or the inclusion of Smart Grid Indicators (SGIs) in performance assessments, will be essential to legitimize and incentivize the adoption of these technologies [34]. Furthermore, the issue of accountability must be addressed.