Diagnostic Toolkit for Reducing Regulatory Barriers to Solar, Wind and Pumped Hydro Storage in the European Union

12. Introduction

12.1. Multilevel governance and the role of subnational authorities

Article 194 TFEU establishes energy as a field of shared competence between the European Union and its Member States. As in other shared areas, EU measures in the energy sector must comply with the principles of conferral, subsidiarity, and proportionality – meaning action at Union level is only justified where objectives cannot be effectively achieved at national or subnational levels (see for example (Huhta, 2021[1])). This is particularly relevant given the multilevel governance structure of energy policy, where responsibilities are often distributed across national, regional, and local authorities. Consequently, EU legislation is designed to respect the regulatory autonomy of these various levels while ensuring coherent implementation of energy objectives across jurisdictions. As a result, while EU energy policy aims to ensure market integration, security of supply and sustainability, its implementation must navigate diverse regulatory preferences and institutional arrangements across Member States and their respective regional and local administrations. (Huhta, 2021[1])

Legal and institutional structures across EU Member States reflect diverse governance traditions, resulting in varying distributions of authority across national, regional, and local levels. In more centralised systems, most legal and administrative powers remain with the national government. In contrast, decentralised regimes grant subnational authorities significant autonomy, often through formal legislative powers (OECD, 2019[2]). Member States such as Austria, Belgium, Finland, Germany, Italy, Portugal, and Spain allocate substantial legislative and administrative responsibilities to regional or local governments.1 Even in countries without formal subnational legislative authority, local and regional authorities often play a key role in implementing national policy, especially in land-use and infrastructure decisions.

Competences on the governance of energy policy are frequently allocated to sub-national authorities. While national authorities typically define overarching energy policy, subnational governments often hold responsibilities for implementing spatial planning, issuing permits, or managing energy infrastructure within their jurisdiction. Understanding the structure of competences is essential for identifying regulatory gaps and aligning national energy goals with local rules and practices. Even within federal or quasi-federal systems, the allocation of responsibilities can vary significantly, underscoring the need to adapt to the specific institutional context of each Member State.2 These variations illustrate that there is no one-size-fits-all model for regulatory governance in the energy sector, whilst underscoring the need to undertake regulatory analysis at all the relevant levels of governance in a particular country.

Levels of Government Involved in Energy Governance. The governance of energy policy and infrastructure involves several levels of public authority, each with distinct legal competences and institutional roles. Understanding these levels is essential for analysing how responsibilities for spatial planning, permitting, and implementation are distributed across national systems.

• Central government: This includes national decision-making bodies such as central parliaments, executive branches (cabinets), and relevant line ministries (e.g. energy, environment, economy). Central governments typically set national energy strategies, regulatory frameworks, and transposition of EU legislation.

• Regional or State Government: Where applicable, subnational entities such as Länder, provinces, autonomous communities, or cantons hold legislative or administrative powers. Governance structures vary considerably across the EU (see 12.1). In some Member States, regions are “planning or statistical regions” without legal personality, nor their own administration or budget. In others, they possess their own administrations, budgets, or legislative competences, either through decentralised regional structures or full regional governments (OECD, 2022[3]).

• Local Government: Municipalities and other local authorities (counties, councils, inter-municipal organisations) play a central role in land-use decisions, permitting, and energy distribution. In highly decentralised systems, local governments have considerable autonomy to design and implement energy-related projects (OECD, 2019[4]). In moderately decentralised contexts, they typically oversee spatial planning and local energy distribution within limits set by higher-level authorities. In more centralised systems, local authorities perform administrative functions with limited policy discretion. The degree of decentralisation directly affects their scope of responsibilities, underscoring the need for clearly defined competences and intergovernmental coordination to ensure policy coherence and efficiency (OECD, 2019[5]).

• Regulatory agencies: In addition to formal government bodies, independent regulatory agencies or public-purpose entities may hold responsibilities in areas such as market oversight, licensing, and implementation of energy transition policies.

Figure 12.1. Different regional governance models

Note: The examples of the four models outlines in the figure represent a snapshot taken at a moment in time, as regional arrangements are not static and are constantly evolving.

Source: (OECD, 2022[3])

Decentralisation trends show an increase in subnational governance through municipal governance and the strengthening of regions. Regions and cities play an expanding role in key policies, including energy, and particularly in areas like renewable energy, energy efficiency, and local energy infrastructure. This is revealing a convergence between unitary and federal countries in the trend toward greater differentiated governance at the subnational level. However, energy still is a shared responsibility as energy-related competences often involve overlapping responsibilities across national, regional, and local levels due to its strategic importance and externalities (OECD, 2019[2]).

Strong decentralisation presents both opportunities and challenges for renewable energy deployment. On one hand, it enables decision-making to reflect local needs, conditions, and priorities, which can improve project acceptance and facilitate more context-sensitive siting. On the other hand, decentralised governance may result in overlapping or unclear competences, regulatory fragmentation, and varying procedural requirements across jurisdictions. This can create legal uncertainty and increase administrative burdens for developers operating across multiple regions or municipalities. The toolkit provides a framework for policymakers at the different levels of government, depending on the national circumstances, to identify and address regulatory frameworks systematically.

12.2. Applying the Diagnostic Tool at sub-national levels in practice: Insights from Apulia and Algarve regions

To demonstrate and test the practical application of the Diagnostic Tool, a detailed analysis was conducted in two European regions working within two different national frameworks – one in a more decentralised system (Apulia, Italy) and another in a more centralised system (Algarve, Portugal). These specific regions were selected for their contrasting regulatory frameworks and significant renewable energy potential. While Apulia has (regional) legislative powers over energy matters – e.g. in 2019 it was one of the first Italian regions to adopt a law on renewable energy communities – the Algarve is more (although not fully) dependent on national rules.

The experiences in Apulia and the Algarve underscore the critical importance of understanding local permitting dynamics, spatial planning rules, and institutional roles when assessing regulatory barriers to renewable energy deployment. While both regions operate within national frameworks, sub-national discretion – whether through provincial permitting in Apulia or municipal land-use control in the Algarve – introduces significant variability, legal uncertainty, and delays.

The findings of the case studies allowed for the refinement of the diagnostic questionnaires for wind and solar technologies to better capture on-the-ground realities, especially at local level – including inter-institutional coordination, land classification practices, and the sequencing of environmental and grid approvals.

12.3. Key takeaways from the Apulia and Algarve Case Studies

Spatial planning alignment and modernisation is essential for accelerating renewables. Both case studies reveal that often there are fragmented, outdated, or inconsistent spatial planning frameworks and that these have a significant impact on efficient site selection and permitting procedures. Harmonising the identification of “suitable areas” (not just designating RAAs) and regularly updating regional and municipal plans – while clearly integrating renewable energy and grid development priorities – are critical steps. This reduces uncertainty for developers who have clear ways to understand how permitting will proceed and where to focus siting attention. It also reduces burdens on permitting authorities at local levels that have clear strategic steer and do not need to do case by case analysis every time.

Standardised guidance and capacity support are needed at local and regional levels. Municipalities often lack the resources and/or expertise to manage complex, multi-jurisdictional permitting. Regional or national authorities should provide standardised guidance, land-use criteria, and procedural templates to support local implementation. This enhances consistency, speeds up decision-making, reduces resource demands, and ensures quality assessments. Both case studies also highlighted the need for clear guidance on permitting innovative solutions such as agrivoltaics and floating PV.

Transparency and procedural clarity reduce delays and disputes. In both cases there is a lack of transparency in permitting and spatial planning – whether in project registries, application timelines, or the roles of different authorities. In both instances this leads to unpredictable outcomes, overlapping claims and disputes. Publishing guidelines, procedural requirements, and timelines, and establishing central registries, strengthens legal certainty and improves investor confidence.

Integrated and streamlined permitting regimes are critical. Streamlining permitting processes by consolidating multiple tracks into single, integrated frameworks with clear criteria is beneficial for both regions. This includes transparent sizing rule thresholds, particularly for staggered projects by the same owner in neighbouring areas. Integrating environmental and landscape assessments into a single permitting procedure, or closely coordinating them with local authorities, can also accelerate procedures and improve outcome certainty.

Stable regulatory frameworks and strategic coordination with grid planning are foundational. Frequent legislative changes and a lack of transitional clarity create uncertainty and deter investment. Stable, coherent regulatory frameworks – backed by timely guidance during transitions – are necessary. Furthermore, aligning permitting timelines and spatial planning with proactive grid capacity mapping and investment strategies ensures that renewables deployment and infrastructure upgrades proceed in tandem.

References

[1] Huhta, K. (2021), “THE SCOPE OF STATE SOVEREIGNTY UNDER ARTICLE 194(2) TFEU AND THE EVOLUTION OF EU COMPETENCES IN THE ENERGY SECTOR”, International and Comparative Law Quarterly, Vol. 70/4, pp. 991-1010, https://doi.org/10.1017/S0020589321000269.

[3] OECD (2022), Regional Governance in OECD Countries: Trends, Typology and Tools, OECD Multi-level Governance Studies, https://doi.org/10.1787/4d7c6483-en.

[5] OECD (2019), Making Decentralisation Work: A Handbook for Policy-Makers, OECD Multi-level, https://doi.org/10.1787/g2g9faa7-en.

[2] OECD (2019), Making Decentralisation Work: A Handbook for Policy-Makers, OECD Multi-level, https://doi.org/10.1787/g2g9faa7-en.

[4] OECD (2019), Making Decentralisation Work: A Handbook for Policy-Makers, OECD Multi-level Governance Studies.

Notes

← 1.  See the portal on division of powers prepared for the European Committee of Regions by The London School of Economics and Political Science (LSE) and CASE – Center for Social and Economic Research, https://portal.cor.europa.eu/divisionpowers/Pages/default.aspx.

← 2.  In Germany, for example, responsibilities are explicitly shared between the federal and state (Länder) governments, with Länder holding exclusive competences in areas such as environmental protection and municipalities governed by Länder legislation. In Belgium, regional authorities manage most aspects of renewable energy policy, while offshore energy development remains a federal responsibility.