EU countries scale back plan to fund power grids, document shows

By Kate Abnett

BRUSSELS, June 17 (Reuters) - Governments have cut back the European Union's proposal to spend national funds on the bloc's energy infrastructure after Sweden threatened to restrict power exports over the plan, an internal negotiating document seen by Reuters showed.

The spat concerns a proposed EU law to raise funds for large cross-country energy infrastructure projects, like interconnectors, which are needed to integrate more renewable energy into the network and meet rising power demand from data centres and other sources.

The European Commission proposed in December that 25% of unused congestion revenues collected by power grid operators would be earmarked to fund EU-backed projects.

EU countries negotiating the legal proposal have cut that back, so that national operators would not have to hand over any congestion revenues collected from power trade within their country, their latest compromise proposal showed.

The draft proposal would also cut the share of cross-border congestion income earmarked for EU-backed projects to 10%, which would rise gradually to 25% by 2030.

The plans would scale back the available funding, which raises questions about where cash for new cross-border power projects will be found. Some of Europe's biggest planned power interconnector projects have stalled in recent years due to lack of funds and other concerns.

The EU estimates that €1.2 trillion ($1.4 trillion) in power grid investments are needed by 2040.

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Congestion revenues arise when grid constraints prevent electricity from flowing to ‌high-demand areas—both within a country and across borders—⁠resulting in substantial earnings for network operators.

Sweden, a vocal opponent of the EU plans, collected ⁠30.5 billion Swedish crowns ($3.3 billion) in congestion revenues in 2025.

Stockholm threatened earlier this year to restrict electricity exports to ‌neighbouring countries if the EU proposal went ahead. Sweden exports excess power via cables to countries including Germany, Denmark and ⁠Finland.

EU countries' ministers aim to approve their position on the proposal at a meeting on June 26, after which they will negotiate the final law with the European Parliament.

A spokesperson for Cyprus' EU presidency, which drafted the compromise, said the draft already had "broad support" among countries, but Cyprus would propose "minor tweaks" to ensure it was approved by a large majority next week.

A Swedish official told Reuters the government would continue working with Cyprus to find a solution on the congestion revenue issue.

($1 = 0.8621 euros)

(Reporting by Kate Abnett, editing by Milla Nissi-Prussak)