The draft European Parliament resolution on grids (European Parliament own-initiative report – INI) was adopted by a large majority in ITRE (Committee on Industry, Research and Energy) on 12 May 2025. Its final adoption by the EP will be put to a vote at the next plenary session in Strasbourg on 16-19 June.

Europe is on an ambitious path towards decarbonisation, with the goal of reducing greenhouse gas (GHG) emissions by 55% by 2030 compared to 1990 levels, with over 1,200 gigawatts (GW) of new renewable energy sources (RES) and at least 32.5% electrification of final energy consumption. However, to achieve this, a system for delivering this electricity needs to be put in place and electricity grid operators, particularly in the distribution sector, need to respond to growing demand. Electricity grids have been at the forefront of the political agenda over the past year, starting with the grids Action Plan and now with the European Commission’s promises for the fourth quarter of this year and the European grids Package, which is already under public consultation. Against this backdrop, the European Parliament’s Committee on Industry, External Trade, Energy, Research, Science and Technology (ITRE) has prepared the resolution in question.

From the very beginning of the process, Eurelectric has supported the members of the ITRE Committee in addressing the needs of electricity distribution system operators (DSOs) in the report with the following key messages:

• DSOs must have easier access to financing in order to keep tariffs affordable for all their customers
• Permit granting procedures must be streamlined and simplified
• An effective public procurement framework is key to ensuring access to critical grid assets
• Grid operators must be supported in strengthening physical and cyber resilience, recognizing the regulatory costs involved
• A skilled workforce for grids must be ensured at European level

These messages were taken into account and reflected in the compromise proposal that was put to the vote in the Committee on Industry, Energy, Transport and Tourism on 12 May and adopted by a large majority.

In several follow-up publications, the EMI will analyze the main highlights and how it could support the development of the grids in the coming years.

A €2.6 trillion challenge: financing the transformation of Europe’s energy grid to achieve climate neutrality

Analysis of the European Parliament resolution on the electricity grid and its impact on energy infrastructure investment

The scale of the challenge

The European Parliament’s draft resolution on electricity grids has laid bare one of the most significant infrastructure challenges of our time: the investment needed in Europe’s electricity grids by 2050 is estimated at between €1.950 billion and €2.600 billion. To put this into perspective, this represents approximately 15–20% of the EU’s current annual GDP spread over 25 years — a commitment that, in relative economic terms, dwarfs even the Marshall Plan.

This massive investment requirement is not merely about replacing ageing infrastructure – though with over 40% of distribution grids exceeding 40 years old, replacement needs are substantial. Rather, it represents a fundamental rethinking of Europe’s electricity system in order to accommodate a 60% increase in electricity demand by 2030, integrate huge amounts of variable energy from renewable sources, and enable the electrification necessary for climate neutrality by 2050.

The cost of inaction

The resolution’s emphasis on investment urgency is underscored by the alarming current costs associated with the electricity transmission grid inadequacy. In 2023 alone, transmission grid congestions cost €4.2 billion, and this figure continues to rise every year. More critically, nearly 30 TWh of renewable electricity was curtailed due to insufficient transmission grid capacity, representing both wasted clean energy and stranded investments in renewable production.

The market signals are equally concerning. Annual hours with negative electricity prices have increased from 154 in 2018 to 1,031 in September 2024, largely driven by grid congestion at the borders and insufficient flexibility resources. This dramatic increase illustrates how grid bottlenecks are creating market distortions that ultimately increase costs for consumers while undermining the economic viability of renewable energy investments.

Benefits and return on investment

However, the draft resolution also highlights the significant return on investment in the electricity grid. Cross-border electricity infrastructure, which will require €13 billion per year until 2050, would deliver €23 billion in annual system cost savings — an impressive 77% return on investment. Similarly, improved cross-border interconnections could reduce generation costs by €9 billion annually trough 2040, while requiring only €6 billion in annual infrastructure and storage investments.

Completing energy market integration could save up to €40 billion per year, with a 50% increase in cross-border electricity trade potentially boosting the EU’s annual GDP by 0.1%. These figures show that the electricity grid investments are not merely costs, but productivity-enhancing infrastructure that generates economy-wide benefits.

Financing framework challenges

The draft resolution identifies several critical gaps in the current financing mechanisms.

• Insufficient public funding: The Connecting Europe Facility for Energy (CEF-E) budget of €5.84 billion for the period 2021-2027 is woefully inadequate for the scale of investment required. The document calls for a significant increase in CEF-E allocation and better utilisation of regional funds, which have been underutilized for electricity transmission grid projects and not used at all for distribution system operators’ projects, despite their eligibility.
• Barriers to private investment: Although private capital could play a significant role, current regulatory frameworks often fail to provide adequate returns or security for investments. The resolution highlights the need for cost-reflective tariffs, appropriate rates of return, and risk-reduction instruments to attract private investment.
• Cross-border cost allocation: Existing mechanisms for allocating the costs of cross-border infrastructure are limited and difficult to implement, which hinders investments that benefit multiple Member States. The resolution calls for a comprehensive, holistic review and improvement of these mechanisms.

Innovation of financing mechanisms

The resolution proposes several innovative financing approaches:

• European ETS revenues utilisation: A dedicated funding instrument based on revenues from the EU Emissions Trading System could support decentralized and innovative electricity grid projects by creating a direct link between carbon pricing and investments in clean infrastructure.
• Frameworks for front-of-the-curve (anticipatory) investments: The resolution calls for harmonized approaches to anticipatory investments—infrastructure built before the demand emerges—to prevent future bottlenecks. This requires sophisticated regulatory frameworks that balance the risk of stranded assets against the costs of delayed investments.
• Long-term framework agreements: The transition from one-off “power grid projects” to sustainable “power grid programs” with predictable long-term planning could reduce costs for manufacturers and operators while providing greater investment certainty.

Regional and sectoral priorities

The resolution identifies particular investment priorities:

• Distribution Grid Modernization: With €375-425 billion needed by 2030 for distribution grids alone, this is the largest single investment category. These investments are essential for integrating distributed renewable generation and enabling demand-side flexibility.
• Offshore electricity grids development: In the North Sea alone, meshed offshore electricity grids are needed to support 300 GW of offshore wind energy by 2050. Hybrid interconnections combining transmission and generation assets offer efficiency gains but require new regulatory frameworks.
• Cross-border interconnections: With 32 GW of the required cross-border capacity still unresolved, the resolution calls for binding interconnection targets beyond 2030 to maintain investment momentum.

Implications for the supply chain and manufacturing

The investment scale has profound implications for Europe’s manufacturing capacity. Delivery times for critical components have doubled since 2021, with cables requiring 2-3 years and large transformers up to 4 years for procurement. The call in the resolution for €1.5 billion in EIB counter-guarantees for grid component manufacturers is a recognition that supply chain capacity must scale alongside investment.

Critical raw materials demand adds another dimension, with aluminum and copper needs set to increase by 33% and 35% respectively by 2050. The resolution’s emphasis on recycling, strategic partnerships, and supply chain diversification reflects awareness that material constraints could bottleneck the entire electricity grid investment program.

Policy recommendations and implementation

The financing recommendations in the resolution form a comprehensive framework:

1. Immediate action: Significantly increase CEF-E budget allocation and percentage dedicated to electricity infrastructure in the next Multiannual Financial Framework.
2. Regulatory reform: Implement harmonized anticipatory investment frameworks and improve cross-border cost allocation mechanisms.
3. Support for innovation: Establish dedicated EU ETS-based funding for innovative electricity grid projects and strengthen European manufacturing through targeted financial instruments.
4. Market integration: Ensuring that tariff methodologies provide equal consideration to capital and operational expenditure, while enabling fair remuneration for system operators.

Conclusion: A historic infrastructure commitment

The €2.6 trillion grid investment challenge represents perhaps the largest coordinated infrastructure program in European history. Its success will determine whether Europe can achieve climate neutrality while maintaining its energy security and economic comptetitiveness, the document concludes.

The Parliament’s draft resolution provides a roadmap, but implementation will require unprecedented coordination between EU institutions, Member States, regulators, and private investors. The alternative – continuing grid bottlenecks, renewable curtailment, and delaying decarbonization – is far more costly than the investments required.

As the resolution points out, electricity grids are not just infrastructure – they are the backbone of Europe’s clean energy future. The €2.6 trillion question is not whether Europe can afford these investments, but whether it can afford not to make them.