The Black Sea Green Energy Corridor: A Mega-Project Defined by Its Legal Architecture

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A 1,100-kilometre subsea cable will carry Caspian renewable power into the EU grid. Whether it is ever built depends less on the engineering than on the legal framework holding four jurisdictions, the EU internal market and several billion euros of blended finance together.

By Kai Scholz, LL.B., Partner / Rechtsanwalt – Energy, Banking & Finance, International • 2 June 2026

Few infrastructure projects capture Europe’s post-2022 energy strategy as precisely as the Caspian–Black Sea–Europe Green Energy Corridor. Its centrepiece is the Black Sea Submarine Cable: a high-voltage direct-current link of roughly 1,100 kilometres running across the floor of the Black Sea from Georgia to Romania, carrying wind and solar power generated in Azerbaijan and, ultimately, Central Asia into the EU’s internal electricity market. With an estimated cost in the order of EUR 3.8 billion – for which European institutions have indicated potential support of up to approximately EUR 2.3 billion, subject to applicable funding procedures and approvals – and a target for commissioning towards the end of the decade, it is among the most ambitious interconnectors ever attempted.

The timing makes this the moment to understand it. The feasibility studies – covering market, transmission, route and financial modelling – were due to complete in early 2026; the project has entered the ENTSO-E Ten-Year Network Development Plan (TYNDP 2026) assessment process, whose cost-benefit results are expected in late 2026; and it has been included in the latest EU PCI/PMI framework and received Project of Mutual Interest (PMI) status, significantly improving its eligibility for EU support mechanisms. In other words, the corridor is moving from political declaration to investment decision. And that transition is, fundamentally, a legal one.

1. From treaty to project company: the public-law foundation

A cross-border interconnector touching four sovereign states cannot rest on commercial contracts alone; it needs a treaty-level basis. That foundation was laid on 17 December 2022 in Bucharest, when Azerbaijan, Georgia, Romania and Hungary signed the Agreement on Strategic Partnership in the Development and Transmission of Green Energy – the single instrument that established the quadrilateral framework, signed at head-of-government level and witnessed by the Presidents of Romania and the European Commission. It does the work that no private contract can: it allocates sovereign commitments, underpins the legal status of the cable across territorial waters and exclusive economic zones, and creates the political guarantees that lenders require before committing capital to assets sitting on the seabed between jurisdictions.

On top of that treaty layer sits a corporate vehicle. The four states have moved to a holding structure, with the Green Energy Corridor Energy Company (GECO) established to implement the project. A parallel structure now extends the corridor eastward across the Caspian: in July 2025 Azerbaijan, Kazakhstan and Uzbekistan – through their grid operators Azerenerji, KEGOC and the national grid of Uzbekistan – established the “Green Corridor Union” joint venture to build the Caspian leg. The legal task here is far from trivial: aligning shareholder agreements, governance, capital calls and exit rights across companies incorporated under different national laws, while preserving the intergovernmental commitments above them. Inconsistency between the treaty layer and the corporate layer is the classic failure mode of multi-state infrastructure – and the first thing experienced counsel stress-tests.

2. Plugging a non-EU power source into the EU internal market

The corridor’s defining legal challenge is that generation sits outside the Union while the offtake market sits inside it. Azerbaijani electrons must enter an internal electricity market governed by EU energy law – the Electricity Regulation and Directive, the TEN-E Regulation, network codes, and the oversight of ENTSO-E and ACER. Several questions follow that have no off-the-shelf answer:

Market integration. How does power generated under a third-country regulatory regime acquire the legal characteristics – including guarantees of origin and “green” attributes – needed to be sold as renewable energy inside the EU and to count toward Member States’ targets?
Cross-border cost allocation. TEN-E and the PMI/PCI framework allow EU support, but the allocation of costs and congestion revenues across an EU/non-EU border is legally intricate and politically sensitive. Who bears the interconnector’s cost, and who captures its revenue?
Grid access and dispatch. Connection at the Romanian landing point must comply with EU grid codes; the Georgian and Azerbaijani ends operate under their own systems. Harmonising dispatch, balancing responsibility and curtailment rules across that seam is a contractual and regulatory exercise in equal measure.

PMI status is the legal hook that makes EU co-financing possible, but it is a gateway, not a guarantee. It triggers obligations – cost-benefit assessment, permitting timelines, transparency – as much as it confers benefits. Securing and keeping it requires sustained regulatory engagement on both sides of the border.

3. The financing architecture and the gap that defines it

On the headline numbers, potential European support of up to approximately EUR 2.3 billion – subject to the applicable funding procedures, principally the Connecting Europe Facility, and to approval – against an estimated EUR 3.8 billion cost would still leave a financing gap of roughly EUR 1.5 billion. Closing it is where the project’s legal and commercial reality is decided. The likely answer is blended finance: EU grants alongside development-bank lending, export credit and private capital. The World Bank is already engaged, having committed around USD 35 million for preparatory activities under its ESPIRE programme – itself part of a financing envelope of up to USD 500 million aimed at building Georgia’s institutional and transmission capacity. The EIB and EBRD are natural further participants.

Blended structures of this kind are document-heavy and intercreditor-sensitive. The bankability questions are concrete and, as yet, unresolved: What is the revenue model? A merchant interconnector exposed to market spreads carries a very different risk profile from one underpinned by long-term contracted revenue – power purchase agreements, contracts for difference, or a regulated transmission tariff with congestion-income rights. Lenders financing a subsea asset with a multi-decade payback will demand contracted, hard-currency revenue and a clear allocation of construction, completion and operating risk. The EPC arrangements for the cable itself – marine survey, manufacture, lay and protection – sit at the centre of that risk allocation, as do the offshore permitting and marine-spatial consents required under four different legal systems.

4. Risk allocation across four jurisdictions

The corridor multiplies every ordinary infrastructure risk by the number of legal orders it crosses. Four issues deserve particular attention:

Governing law and dispute resolution. With sponsors, lenders and assets spread across EU and non-EU jurisdictions, a coherent choice-of-law and international-arbitration framework is essential. The investment-protection backdrop – including the position of the parties under the Energy Charter Treaty as it is reformed and as states withdraw – must be mapped deliberately, not assumed. The practical availability and scope of treaty protection will depend on the nationality of investors, investment structuring and the evolving status of the ECT among participating states.
Political and regulatory risk. A change in feed-in support, grid tariff or export regime in any one of the four states can impair the whole revenue chain. Stabilisation undertakings, political-risk insurance and step-in rights are the standard mitigants – and the subject of hard negotiation.
Route, environment and security. The cable crosses a strategically sensitive maritime environment affected by heightened regional security risks. Marine permitting, environmental-impact regimes and the physical security of subsea infrastructure – an issue Europe now treats with heightened seriousness – all require legal structuring, from survey rights to force-majeure and insurance terms.
Single-source dependency. The corridor is designed to reduce Europe’s reliance on Russian energy, but it concentrates a new dependency on a single corridor and a small group of supplier states. The contractual architecture should anticipate the security-of-supply and diversification questions that EU institutions will inevitably raise.

5. Why this matters now – and for whom

For European utilities, infrastructure funds, equipment suppliers and the lenders behind them, the corridor is approaching the point of no return in the best sense: feasibility complete, the TYNDP assessment due in late 2026, PMI status obtained, and a final investment decision on the horizon. Positions taken now – in the shareholder and intercreditor documents, the offtake structure, the EPC and permitting strategy, and the cross-border regulatory engagement – will define who carries which risk for the life of the asset. For the German and wider European industrial base in particular, this is both a supply opportunity and a financing opportunity that rewards early, well-advised entry.

The Black Sea Green Energy Corridor is often described in the language of geopolitics and gigawatts. But its fate will be settled in the language of law: a treaty that holds, a corporate structure that aligns with it, a regulatory pathway into the EU market, a financing package that closes the gap, and a risk allocation robust enough to survive four jurisdictions and a decade of operation. That is precisely the work that turns a declaration into a built asset – and the moment to do it is now.

Sources (selection): Agreement on Strategic Partnership in the Development and Transmission of Green Energy between Azerbaijan, Georgia, Romania and Hungary (Bucharest, 17 December 2022); ENTSO-E TYNDP 2026; European Commission PCI/PMI framework / TEN-E Regulation and Connecting Europe Facility; World Bank ESPIRE programme; Ministry of Energy of Azerbaijan; reporting by IEEE Spectrum, Eurasianet, Caspian News, Report.az and the Belfer Center. Figures are project estimates and subject to ongoing feasibility and cost-benefit analysis.

This article is for general information only and does not constitute legal advice in any individual case. For tailored guidance on cross-border energy and project-finance matters, contact Oracle Law Global.