EU Energy Ministers Water Down Grids Package: What Happened at the 26 June Energy Council

Member states pushed back hard. The European Network of Transmission System Operators (ENTSO-E) warned that shifting roles from the national to the European level "will increase uncertainty in decision-making outcomes" and won't solve barriers to timely infrastructure implementation . The compromise text ultimately gave national capitals greater control, reflecting strong sovereignty concerns.

Congestion Revenue Reallocation: The Most Contentious Issue

The single most divisive element was the Commission's proposal to require transmission system operators (TSOs) to set aside 25% of congestion income—revenue from bottlenecks on cross-border power lines—for cross-border grid investment . The proposal faced "mounting backlash" and "growing resistance" from several member states and grid operators, who warned it could weaken national control over networks . Sweden explicitly warned that the plan could limit its power exports, leading to a scaling back of the initiative . A May 2026 Council document showed some member states were "concerned" that revised text restricting the 25% to only the countries where PCI projects are located "dilutes considerably the spirit of the initial proposal" .

The compromise: Under the member-state text, the requirement for earmarking congestion revenues would lapse after 8 years . The ministers adopted a "more cautious approach" than the Commission had originally proposed, significantly weakening the cross-border financing mechanism . A Council presidency questionnaire from May 2026 had already signaled the sensitivity by asking: "To what extent are Member States prepared to evolve their financial and planning frameworks – including the use of congestion revenues and broader cost-sharing?" .

Sovereignty Concerns Drive Resistance

National sovereignty concerns were the driving force behind the resistance. Multiple member states objected to giving the EU Commission authority over national grid planning and the allocation of congestion revenues collected within their borders . Sweden's threat to limit power exports exemplified the tensions: countries with surplus renewable capacity feared that EU-level revenue pooling would effectively transfer wealth from domestic consumers and grid operators to other member states without equivalent national benefit .

Climate Groups Warn Against Weakening the Package

Climate Action Network (CAN) Europe, representing over 200 member organizations, sent a letter to ministers ahead of the 26 June Energy Council urging them not to weaken the package . Their demands were to build one common cross-border infrastructure scenario led by the EU Commission, harness spare congestion revenues for grid development, and commit to phasing out fossil fuel infrastructure.

CAN Europe had earlier described the package as "a much needed step towards accelerating Europe's transition to a fully renewable and resilient grid" but warned that acceleration "must go hand in hand with robust environmental protection" . The European Environmental Bureau (EEB) also sent recommendations urging ministers to keep the package ambitious .

Broader Context: Energy Security, Prices, and Demand

The grids package was formulated against a backdrop of acute pressures:

• Energy security crisis: A June 2026 Greenpeace report criticized the EU's response to the energy crisis triggered by the war on Iran as a "fossil bail-out" rife with "deep structural incoherence" .
• High electricity prices and grid bottlenecks: A June 2026 Euronews report found that Europe faced a "€100 billion queue" of grid connection requests, with clean energy projects waiting years for interconnection, warning that without intervention Europe risked "deepening" its reliance on volatile fossil fuels .
• Rising demand from data centers and industrial electrification: The Commission's explanatory memorandum on the Grids Package noted that grid planning and rollout must comply with EU targets for electrification, digitalization, and competitiveness .
• Ireland's incoming Presidency: Ireland, which took over the Council Presidency on 1 July 2026, announced it would seek to accelerate work on the grids package and the EU ETS revision .

What Happened in Parallel: Tripartite Agreement on Energy Storage

On the margins of the Council, the first-ever EU tripartite agreement on energy storage was signed by representatives from public authorities, the storage sector, and industrial energy consumers .

The Path Forward

The general approach agreed by the Council paves the way for trilogue negotiations with the European Parliament later in 2026. The key battle lines—centralised vs. national planning and cross-border financing—are now drawn, and the Parliament may seek to restore some of the Commission's original ambition.