The current scope for network competition in electricity and gas distribution can be summarised as ‘competition in extensions’, whereby additional networks are competitively constructed, connected to the grid and possibly owned by third parties. In addition to reducing construction costs and improving connection services, this could facilitate the implementation of distributed generation, smart grids and integrated energy networks. However, EU legislation does not harmonise third-party construction and ownership, which could create obstacles for the proper functioning of the internal energy market. Indeed, in Great Britain competition in extensions seems to be quite developed while electricity legislation in the Netherlands significantly limits third-party construction and ownership. No major overhaul of the EU legal framework is necessary in order to accommodate competition in extensions, although the creation of a level playing field might entail further regulatory support.