EU adopts budget-flexibility guidelines for photovoltaics, heat pumps, and BESS

The European Commission has adopted a communication providing Member States with guidance on the possibility of extending the scope of the national escape clause (NEC) for defence to also include energy security measures during the 2026–2028 period.

In short, the EU executive is opening the door for Member States to use part of the budgetary flexibility provided under the national escape clause to finance new measures aimed at strengthening energy security and supporting the transition away from fossil fuels. However, the new guidance, published in Communication C/2026/4514, links access to this flexibility to criteria of additionality, effectiveness and the sustainability of public finances.

“The notice sets out the procedure for requesting budgetary flexibility, its treatment under the EU fiscal surveillance framework and the monitoring of its use,” the European Commission stated, recalling that the possibility of extending the NEC to cover energy security measures was announced on 3 June 2026 as part of the European Semester Spring Package and follows the “ongoing conflict in the Middle East”.

Only fiscal measures decided after 28 February 2026 will be eligible under the programme, which, as noted, is intended to increase the structural resilience of the European energy system.

“The notice includes an illustrative and non-exhaustive list of potentially eligible measures. The Commission will therefore assess the eligibility of measures on a case-by-case basis,” the document reads.

The current overall ceiling of 1.5% of gross domestic product (GDP) for the deviation permitted from the recommended net expenditure path under the NEC will remain in place. Dedicated ceilings for energy security measures are set at 0.3% of GDP per year and 0.6% of GDP cumulatively, within the overall 1.5% of GDP ceiling.

Expenditure exceeding the applicable ceilings will remain subject to the standard compliance assessments under the EU fiscal framework.

The notice was published in the Official Journal of the EU. The official publication identifies five eligible measures to strengthen energy security for households, two for the public sector, three for businesses, three for transport infrastructure and nine for the energy sector. The latter category includes investments in renewable energy projects, battery and energy storage technologies, and nuclear power plants.

Potentially eligible measures also include incentives for heat pumps, electric vehicle charging infrastructure and the energy renovation of buildings.

In their requests, Member States are required to provide an initial list of the planned energy security measures for which they would like to benefit from the flexibility, together with their estimated budgetary cost.

“After assessing a request in accordance with the requirements of Article 26 of Regulation (EU) 2024/1263, the Commission may recommend that the Council approve it,” the European Commission said in a document published this week.