As of 2008, 52% of the total European mainline network has been electrified with the top-five economies namely France, Germany, Italy, Spain and the UK holding 53.3% of all electrified lines. These nations have been the primary targets for rail electrification projects in Europe and they still possess large opportunities for further electrification. With over 90% of electrified main lines, Switzerland, Sweden and Belgium are the most saturated markets.
According to forecast, Western Europe is expected to remain the most active region for further mainline electrification projects with projected growth of over 4% between 2008 and 2015. The United Kingdom initiated a programme for the electrification of its mainline worth GBP 1.1 Billion in 2009-2017. Most of the projects will be carried out between 2015 and 2020, 4,000 km being scheduled for electrification.
About 2,570 kilometres of high-speed lines are under construction today and another 7,000 kilometres are under planning. Most of these sections require upgrading or renewal of current electrified infrastructure to high speed standards and the rest requires completely new electrified infrastructure. The leader in this area is Spain which plans to build 8,400 km of railways by 2020 and where funds from the state budget amount to EUR 108 Billion between 2005 and 2020.
France, Germany, Italy and Portugal are the other Western European countries investing heavily in high speed infrastructure that is to drive the electrification market.
Eastern European countries such as Turkey, Poland, Bulgaria, Romania and Hungary have also stipulated plans of building a total of 1600 kilometres of high speed lines in this region which shall require installation of new electrification infrastructure.
The latest data on traffic volume and network length show that expenditure across Member States has not kept up with the growth in demand in recent years. In addition, investments have tended to favour new construction over maintenance, resulting in chronic maintenance backlogs in many countries. Road traffic has grown much faster than road capacity in many countries, resulting in congestion and increased costs in terms of travel time and delays.
The governments of member states should review their strategy on the electrification of the railway transport sector to a larger scale. They could turn to the private sector.
With the pressures on public sector budget resources set to continue, unlocking the potential of private finances has become even more urgent. New financial instruments that can increase the leverage of the public sector budget support should be developed. The project bonds initiative, which can support the financing of Private Public Partnerships (PPP) on a bigger scale, is an example of the type of financial instrument that addresses this issue.
Furthermore, the EIB and the Commission have jointly launched two dedicated facilities: –
First, the Loan Guarantee Instrument for TEN-T Projects (LGTT), which is a EUR 1 Billion instrument supporting PPP projects in cases of traffic revenue shortfalls. To date, the LGTT has been used in 4 PPP arrangement and 17 projects are in the pipeline.
Secondly, in 2010, the Commission took a stake in the Marguerite Fund, which makes equity investments in transport and energy infrastructure projects. The Fund will operate under market conditions and has a target size of EUR 1.5 Billion. About a third of its equity and quasi-equity investments are expected to be invested in companies that own or operate transport infrastructure.
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