Lithuania halves grid guarantees as Europe's gas shock forces market redesign

Lithuania moves first with permitting and guarantee overhaul

The Seimas adopted amendments to the Law on Energy, the Law on Electricity and the Law on Energy from Renewable Sources, the Ministry of Energy said. Developers holding valid permits can extend project timelines by up to 48 months and change the nature of their investment, switching between generation, storage and consumption projects. The performance guarantee falls from €50/kW to €25/kW.

That is a straight halving of the upfront cash a developer must post.

Renewable energy communities building installations of up to 100 kW no longer need permits to develop generation capacity or produce electricity, from 1 November 2026. Electricity and gas transmission and distribution operators must keep reserves of critical equipment needed to restore supply after accidents, technical failures or deliberate physical interference. The package answers a significant slowdown in new renewable projects.

The flexibility is time-limited. Developers get one year to decide, and those who postpone or modify a project must provide an additional bank guarantee.

Gas shock tests EU fiscal rules

EU gas storage was 75 per cent full on 27 October, according to the Centre for European Reform. That compares with 83 per cent a year earlier and 91 per cent in October 2022. The EU is entering winter with less gas in reserve than usual, in its second major price shock in four years.

ACER puts a number on the refill. The EU agency for energy regulators estimates that filling storage to 80 per cent ahead of winter 2026-27 could add €10-15 billion to refilling costs. Those costs can reach consumers' gas bills, while compensation and strategic purchases strain public budgets. The European Commission sees no immediate risk to security of supply, but says diversification has not sheltered the EU from global gas prices.

Brussels has opened the door to extra fiscal room. Member states can request permission to exceed agreed spending limits by up to 0.3 per cent of GDP a year, capped at 0.6 per cent over 2026-28. That flexibility is explicitly for measures that reduce dependence on fossil fuels, not short-term relief from high prices. Since 2022, EU rules have required member states to fill storage to 90 per cent ahead of winter, with some flexibility when market conditions are unfavourable. Governments can oblige suppliers to store gas, compensate them or buy strategic reserves themselves.

UK Steel puts a number on the industrial gap

UK producers pay 49 per cent more for electricity than French competitors. That adds GBP 66 million in costs this year, according to UK Steel. The association said the government's latest budget offered no measures to address steelmakers' high electricity costs.

UK Steel proposes a wholesale electricity price rebalancing mechanism. Baringa modelled it independently, at an estimated average annual net cost of GBP 50 million during 2026-2030.

It also warned that continued instability in the Middle East had pushed wholesale energy prices to around three times their February levels. Steelmaking is getting more electric. The bill lands as the industry moves to electric arc furnaces, which need more electricity than the plants they replace. UK Steel says the money could otherwise go on new equipment, skilled jobs and decarbonisation.

ETS review: investment engine or missed opportunity?

The EU Emissions Trading System review proposal was published in July 2026, with the stated ambition of turning the ETS into an engine for innovation and investment. Aviation and maritime are major contributors to ETS revenue. Transport & Environment argues the proposed framework is not fit for purpose to support clean fuel investment in those sectors.

The group wants 50 per cent of national ETS revenues earmarked for decarbonisation in priority sectors, including production and uptake of aviation and maritime e-fuels. It also proposes an e-fuels funding pool by 2028 and double-sided auctions to clear the way for pending final investment decisions. It would fold aviation and maritime into the ETS Investment Booster, the Industrial Decarbonisation Bank and the Modernisation Fund.

The fight is over where that revenue lands.

Hydrogen market still needs paying customers

Germany's approved hydrogen core network covers 9,040 kilometres, with expected investment costs of €18.9 billion. Approval is not the same as demand.

The planning numbers are getting softer. ENTSOG's October 2026 draft assessment cut its 2030 hydrogen demand assumption from 620 TWh to 335 TWh, a 46 per cent reduction from its 2024 assessment. Its 2040 assumption fell 33 per cent, from 1,929 TWh to 1,296 TWh.

RWE has a 15-year agreement to supply about 30,000 tonnes of renewable hydrogen a year to the TotalEnergies Leuna refinery from 2030. The price is undisclosed. Hydrogen from Lingen reached Marl Chemical Park in August 2026. The announcement did not disclose the quantity received, the price paid or which existing production was displaced. Marl has used hydrogen for decades, so existing demand does not automatically become demand for a more expensive feedstock.

What happens next

Lithuanian developers have one year to decide whether to postpone or modify their projects under the new rules. Those who do must post an additional bank guarantee.