Towards a more investment friendly economic incentive regime for offshore infrastructure projects

Abstract

Offshore infrastructure projects will play a key role in enabling the EU to meet its renewable energy goals. Therefore, effective economic incentives must be in place to ensure adequate investments. Since the liberalisation of the power sector, the use of ‘incentive regulation’ has become a standard practice among European regulators. This TSO incentive regulation is done in a ‘portfolio’ fashion. In the countries analysed, different riskremuneration profiles are set according to the general regulatory regimes. These riskremuneration profiles have not changed significantly since the previous study conducted by Glachant et al. (2013). 1 Nevertheless, in recent years, regulators are also providing dedicated incentives for specific strategically important or necessary investments, including offshore projects. We observe that the trend of providing dedicated incentives appears to modify the riskremuneration characteristics, leading to a more ‘investment friendly’ environment for TSOs, at least for certain types of assets, such as offshore transmission infrastructures.