Access to EU funding is the main driver for electricity and gas cross-border cost allocation decisions

Today, ACER publishes its fifth report on cross-border cost allocation (CBCA) decisions for electricity and gas infrastructure projects.

Covering 50 decisions made between 2014 and 2024, the report provides insights into how these decisions, issued by national regulators, determine the cost distribution of major cross-border projects and support project development.

How cross-border cost allocation works

Cross-border cost allocation is a mechanism designed to fairly distribute the investment costs of projects of common interest (PCIs) and projects of mutual interest (PMIs) among the countries involved. It aims to support project implementation, especially in cases where some countries would otherwise bear significantly higher costs than the benefits the project provides.

Project promoters submit investment requests to national regulatory authorities, who review them and issue CBCA decisions to determine how project costs should be shared among involved countries. This cost-sharing arrangement is required for projects to receive financial support through the Connecting Europe Facility (CEF), a major funding programme that supports the development of strategic infrastructure across Europe. 

ACER monitors all submitted investment requests and decisions taken by national regulators and regularly reports on emerging trends.  

What trends did ACER monitoring find? 

ACER’s report shows:

• Fewer decisions overall: The number of CBCA decisions fell by around 65% in the second half of the monitoring period (2019-2024). This reflects a drop in the number of PCIs included in the EU project lists, partly due to completion of major energy infrastructure projects, but also the phase-out of natural gas and Brexit, which made several projects ineligible for inclusion in the PCI lists.
• Costs stay national in most cases: Member States usually agree to cover their own costs, as each one benefits sufficiently from the project.
• Connecting Europe Facility (CEF) is the key driver: Access to grants, not the need to share costs, is the main reason project promoters submit investment requests. 
• No CBCA decisions yet for hydrogen: The sector is still in an early stage of development, but with hydrogen projects becoming eligible for inclusion in the PCI and PMI lists since 2023, CBCA decisions are expected in the coming years.