As the European Commission prepares to unveil the European Grids Package on 10 December 2025, Europe’s structural grid bottleneck moves to the center of the energy transition agenda. With annual network investment needs exceeding 100 billion euros, the European Investment Bank is now pushing beyond traditional lending models, calling for a fundamental shift in how Europe finances its power grids.
Announced earlier this year under the Competitiveness Compass for the EU and the Clean Industrial Deal, the Grids Package builds on the Action Plan for Affordable Energy, which already called for faster permitting for grids, storage and renewables through streamlined environmental assessments and shorter authorization timelines. In parallel, the European Investment Bank is reshaping the way grid investments are financed, pushing beyond traditional lending models and opening the door to new capital sources for Europe’s transmission system operators (TSOs) and distribution system operators (DSOs).
The scale of the challenge is unprecedented. Europe’s power grids are now widely seen as the Achilles’ heel of the energy transition, said Elina Roine, Deputy Director-General at the European Investment Bank, in a conversation in Brussels. Transmission and distribution networks are under strain from the rapid expansion of renewables, rising electrification of transport and industry, and the growing need for cross-border interconnectivity. At the same time, Europe is dealing with the legacy of ageing infrastructure: on average, distribution grids are more than 40 years old. And “without transmission there is no transition”, she said. The investment need is therefore dual — renewal and expansion — and it is compounded by the necessity to digitalize networks into smart grids capable of managing flexibility, stability and efficiency. Some calculations show annual grid investments in Europe should exceed 100 billion to stay on track with climate and energy targets. Current levels fall well short of this benchmark. “We are falling behind and we need to accelerate”, Elina Roine said.
Against this background, the EIB has emerged as a central financial pillar of Europe’s grid build-out. In 2024 alone, the Bank provided 8.5 billion euros in financing for grids, helping to mobilize total investments of around 29 billion euros — roughly 40% of all grid investment across the European Union that year. This leverage effect illustrates the catalytic role the EIB already plays. But “the banking sector alone may not be able to bridge the financing gap that we are facing”, the EIB’s official explained; which is why the Bank now explicitly calls for new sources of financing for TSOs and DSOs.
Project finance for grid assets
Elina Roine exposed the balance-sheet capacity of the grid operators as a structural problem. “Very often the debt capacity of these companies, their balance sheets, are not necessarily strong enough to actually carry the debt burden that would be associated to these investments”, she added. Operators face massive anticipatory investments, driven by future renewable integration rather than immediate revenues. This weakens their ability to take on additional debt. In response, the EIB is exploring alternatives to the classic corporate loan. One such direction is the use of project finance structures for grid assets, allowing investments to be carried off balance sheet. With deep expertise in project finance, the EIB sees this as a viable way to unlock new capacity for large-scale transmission projects.
Long-term equity as a new pillar
Equity is the second major frontier. Many grid operators are structurally undercapitalized, limiting their capacity to absorb further debt even when financing is available. “They need to boost their equity base in order to strengthen their capacity to invest and carry further debt on their balance sheets”, Elina Roine explained. To address this, the EIB has started early-stage discussions with the European Investment Fund and the broader fund industry on how to attract long-term equity investors — such as pension funds and insurance companies — into regulated grid assets. The objective is to strengthen operators’ equity bases, enabling them to support much higher levels of investment downstream. While still at a conceptual stage, this marks a significant shift in how grid financing could evolve in Europe.
Capital markets and new investors
Capital markets are the third lever. Europe remains heavily dependent on bank financing, with roughly 70% of corporate debt coming from banks, compared to a capital-markets-led model in the United States. For grids, this concentration of funding sources is increasingly seen as a vulnerability. Some large TSOs are already active in bond markets, but the EIB argues that “in order to mobilize the volumes that we need, the capital markets must be crowded in”. Such new blood will diversify risk, broaden the investor base and mobilize volumes that the banking system alone cannot provide. This shift also aligns with the broader EU ambition of building a genuine Savings and Investments Union. First launched in 2015 as the Capital Markets Union under the Juncker Commission and formally relaunched as the Savings and Investments Union in March 2025, the project aims to redirect long-term private savings toward strategic infrastructure investment.
Beyond pure financing volumes, the EIB is also working to de-risk the grid value chain itself. One structural bottleneck today is not just access to money, but access to technology and equipment. Supply chains for critical grid components are tight and increasingly exposed to geopolitical risk. To address this, the Bank has launched a dedicated grid supply-chain support package of 1.5 billion euros in counter-guarantees for banks, aimed at strengthening European manufacturers of grid technologies. This mirrors a similar 6.5 billion euros guarantee envelope for wind technology suppliers and reflects a wider strategy to reinforce Europe’s industrial base along the entire energy value chain.
Despite encouraging market-based moves such as the €500 million green bond issued by Electrica in mid-2025 — the first of its kind in Romania, aimed at financing renewables, storage and grid investments — most grid modernization still relies on public funding. The backbone remains the Recovery and Resilience Facility, implemented through Romania’s revised National Recovery and Resilience Plan (PNNR), alongside the Modernization Fund, where Romania is one of the main beneficiaries. Select cross-border projects may also access grants under the Connecting Europe Facility, but at a more limited scale.
This combination underlines the structural reality: even as the private sector begins to dip a toe into capital markets, public-backed European instruments remain by far the main enablers of grid investments in Romania today. The shift proposed by the EIB — from project finance to equity mobilization and capital-market funding — points to a structurally different investment model for networks, one that blends regulated stability with market-scale capital.
