The EU Innovation and Networks Executive Agency (INEA) announced on 25 January 2018 the approval of €873 million of funding for 17 European infrastructure projects in the electricity and gas sectors. The funding will be provided under the Connecting Europe Facility (CEF), a €30 billion EU initiative commenced in 2013 to improve and integrate infrastructure at a European level. We consider below how this funding has been allocated and the implications this may have for the industry.

Background

The EU has earmarked €5.35 billion for CEF funding for energy projects in the 2014-2020 period. The financial support, largely in the form of grants towards the costs of pre-construction studies and construction works, is awarded exclusively to projects identified as European “Projects of Common Interest” (PCIs) on the basis of a competitive annual application process. Proposals are assessed by the European Commission and INEA, along with external technical advisers, by reference to a broad range of criteria; the project criteria set out in the 2017 Energy Call for Proposals include developmental stage and feasibility, extent of the benefit to European competitiveness and security of supply, cross-border aspect and unavailability of funding from the open market.

The projects awarded CEF funding

The total funding awarded is €73 million in excess of the €800 million budget for the 2017 call for proposals, representing around half of the total funding applied for. By contrast, while the budget for the 2016 energy calls was also €800 million, the total funding announced last year was €707 million. A full list of the projects to which funding has been awarded this year is available here.

The vast majority of this year’s funding has been allocated to electricity interconnectors: in particular, €578.5 million was awarded in respect of construction costs for the Biscay Gulf interconnector project between Aquitaine in France and the Basque country in Spain. The project, targeting a commissioning date in 2025, seeks in particular to integrate the Iberian Peninsula, which is currently relatively isolated with its low interconnection ratio, more effectively into the European electricity network. A further €2.8 million will be made available to the Viking Link interconnector between the UK and Denmark, expected to be the longest in the world, in respect of unexploded ordnance surveys.

Other projects allocated funding include internal lines in Germany (€70 million for the “SüdOstLink”), Romania and the Czech Republic and gas interconnectors such as the EastMed Pipeline between Cyprus and Greece.

Next steps

INEA expects to release information in relation to the 2018 call for proposals by March 2018. The call will be open to projects included on the European Commission’s 2017 PCI list.