The Energy Management Institute (EMI), in its capacity as the national member of Eurelectric for Bulgaria, has addressed the Bulgarian Minister of Energy and the national members of the European Parliament regarding the upcoming revision of the Regulation on Trans-European Energy Networks (TEN-E) in the context of the Electricity Grids Package. The aim of the intervention is to highlight the need for targeted amendments to the regulation that would ensure effective access for distribution system operators (DSOs) to the status of projects of common interest (PCI) and to funding under the Connecting Europe Facility – Energy (CEF-E) and to seek support for these positions during the upcoming discussions in the Council.

Although some Member States do not share the idea of financing distribution infrastructure through the Community instruments for PGI and PCI, it is important to emphasize and defend the argument that the distribution networks of CEE countries, including Bulgaria, have a different architecture and legacy issues, underfunding, and consequently investment needs that are incomparable to those in countries where liberalization and decentralization processes are several decades ahead.

Investment Needs of Distribution Networks

In the explanatory memorandum to the proposal for revision, the European Commission explicitly acknowledges that the investment needs of distribution networks through 2040 amount to €730 billion. This estimate reflects a fundamental shift in the understanding of the role of distribution infrastructure. In the modern energy system, distribution networks can no longer be treated as “purely local infrastructure,” left solely to the responsibility of local and national authorities. About 70% of new renewable energy generation capacity is connected to medium- and low-voltage grids, and smart grids and flexibility management at the distribution level have a direct impact on cross-border flows and the stability of the entire European market.

Despite this systemic role, only about 5% of CEF-E funding is currently allocated to DSO projects. This mismatch between the recognized importance of distribution networks and their actual access to European funding threatens the achievement of the EU’s goals for decarbonization, electrification, and energy security.

The Specific Context of Bulgaria

The problem of insufficient funding is particularly acute in Bulgaria. The country’s distribution network infrastructure is significantly depreciated and requires large-scale modernization to accommodate the growing share of RES, distributed generation, and new forms of consumption—electric mobility, heat pumps, and charging infrastructure. Without strengthening the low- and medium-voltage grids, the widespread adoption of these technologies will be technically impossible.

The funds allocated by regulators for the maintenance and development of distribution networks have been structurally insufficient for years—they do not even cover the minimum investments required to maintain system reliability, let alone the large-scale expansion and digitalization that the energy transition demands. Under these conditions, access to European funding is of critical importance: investments made through CEF-E and other European instruments will not be fully included in national network tariffs, which directly alleviates the pressure on end prices for consumers. This also gives the issue a clear social dimension.

It is worth emphasizing that projects for digitization and load management at the distribution level, even when implemented entirely within a single Member State, have a proven functional cross-border effect. For example, if a Bulgarian TSO implements a large-scale demand response system or software for dynamic capacity calculation, this frees up capacity in ESO’s transmission network, which automatically becomes available for export to Romania or Greece. This functional cross-border effect should be explicitly recognized in the regulation.

Identified gaps in the current proposal

We welcome the strategic ambition of the Electricity Networks Package. However, the current draft regulation reveals a significant mismatch between the stated goal of large-scale investments and the legal instruments proposed to achieve it. Specifically:

• The eligibility criteria for Projects of Common Interest (PCI) and Projects of Mutual Interest (PMI) remain focused primarily on transmission infrastructure, which effectively excludes key investments by DSOs;
• The requirements for the cross-border effect of smart grids in Annex IV are excessively restrictive—the current text requires the physical participation of operators from at least two Member States, which excludes national TSO projects with a proven regional functional effect;
• The definition of smart grids in Annex II covers only high- and medium-voltage grids, excluding low-voltage grids—precisely where new decentralized forms of generation and consumption are integrated;
• The “priority public interest” regime under Chapter III often does not extend to the associated distribution infrastructure, leading to situations where a transmission line is completed but its commissioning is delayed for years due to administrative obstacles to the construction of substations at the distribution level;
• Network planning under Chapter IV adopts a highly centralized approach through the Commission’s “central scenario,” without a mandatory mechanism for “bottom-up” input from TSOs, which creates a risk of underestimating specific local and regional needs.

Proposed Amendments

In the attached opinion, we present detailed proposals for amendments aimed at addressing the identified shortcomings. The main areas include:

• Expanding the project selection criteria (Article 4) – including joint projects between transmission and distribution system operators within the scope of the criteria for security of supply and network security;
• Updating the definition of smart grids (Annex II) – explicitly including low-voltage grids alongside medium- and high-voltage grids;
• Revision of cross-border impact indicators (Annex IV) – introduction of the concept of functional cross-border impact, whereby TSO projects demonstrating optimization of flows in the transmission network, facilitating the cross-border integration of RES, or implementing “non-grid solutions” as a more efficient alternative to new transmission construction, meet the criteria for projects of common interest;
• Expanding the scope of projects of mutual interest (Article 2 and Annex IV) – including smart grids and network security within the scope of cooperation with third countries;
• Ensuring consistent priority status (Chapter III) – the priority of public interest should cover all functionally necessary components of a given PGI, including distribution infrastructure;
• Integrated network planning (Chapter IV, Article 12) – introduction of a mandatory mechanism for input from TSOs and/or their European associations into the Ten-Year Network Development Plans (TYNDPs);
• Cross-border cost allocation (Article 16) – clarification of the provisions so that distribution companies receive compensation payments when their investments in smart grids yield proven benefits for the stability of neighboring Member States.

For Bulgaria, these changes would have a direct and tangible impact and would open access to European funding for critically needed investments in distribution infrastructure, reduce pressure on end-user prices, and create conditions for the actual implementation of the goals for RES integration and electrification.

The proposed texts can be viewed in more detail at this link.