European funding, national decisions, and electricity grid investments

This paper examines the contribution of three major European Union's funding instruments (the Modernisation Fund, the Recovery and Resilience Facility, and the European Structural and Investment Funds) to electricity grid investments across the 27 member states. This paper constructs a novel dataset to estimate the volume of EU funding earmarked for electricity grid investments and to assess whether national allocations align with objective investment needs and grid preparedness. The results indicate that EU funding covers only around 3.4% of estimated electricity grid investment needs by 2030. Moreover, the linear regression analyses did not find any statistically significant relationship between EU funding allocations for electricity grids and the indepenendent variables considered, including investment needs, grid preparedness, and alternative indicators such as forecasted renewable capacity expansion and income levels. These findings point to a limited consistency between the national earmarking of EU funds and the objective needs of electricity grids, highlighting the limits of nationally driven allocation processes for infrastructure with strong cross-border relevance.