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The European Dimension of Germany’s Energy Transition pp 433–451Cite as

Cross-Border Electricity Interconnectors in the EU: The Status Quo

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Abstract

An important goal of the European Commission is the promotion of the internal energy market (here specifically electricity), which requires sufficient and adequate cross-border interconnector capacity. However, cross-border interconnector capacity is scarce and, more importantly, the progress of interconnector capacity expansion is too slow. As a result, the Commission has proposed several policy measures to accelerate interconnector investment. This paper provides an overview of the policy debate on interconnector expansion and studies two particular points. First, the effects of network regulation on interconnector investment and the policy proposals to improve the investment incentives, and more specifically, how to deal with risks. Second, we study the policies and effects of capacity remuneration mechanisms (CRMs) on the use of and need for cross-border interconnector capacity.

This work includes results from the research grant “Modellbasierte Szenarienuntersuchung der Entwicklungen im deutschen Stromsystem unter Berücksichtigung des europäischen Kontexts bis 2050”, funded by BMWi (Germany) under number 03ET4031B.

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Notes

  1. 1.

    This concerns electricity and gas. However, as this paper focusses solely on electricity, we will ignore gas interconnectors here.

  2. 2.

    AC refers to alternating current, DC to direct current.

  3. 3.

    To be precise, in the numbers presented by the European Commission for the net economic benefits, the investment costs are already subtracted.

  4. 4.

    See Sect. 4 of this paper for more detail.

  5. 5.

    To be precise, there is a third line of measures. Investors can request regulatory exemptions, especially on third party access. This leads to the option of merchant investments. As this is not the focus of this paper we will further ignore this.

  6. 6.

    Note that “priority premiums” are also known as “rate-of-return adders” or “top-ups”.

  7. 7.

    To be precise, TYNDP projects are projects of pan-European significance; these can be national projects, with cross-border effects. Consequently, non-TYNDP projects are national projects without any significant cross-border effects (cf. ENTSO-E 2014).

  8. 8.

    CAPM stands for Capital Asset Pricing Model and is a standard method to determine the rate of return of a company or an industry. For an explanation, see e.g. Brealey et al. (2016).

  9. 9.

    For a general analysis concerning the control of prices vs. quantities, see the seminal paper of Weitzman (1974)

  10. 10.

    In its State aid inquiry, the Commission already defined requirements which should be fulfilled when implementing a CRM (EC 2014a). Above all, clear evidence must be provided that the establishment of a CRM is at all necessary to ensure capacity adequacy.

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Authors and Affiliations

  1. Jacobs University Bremen, Bremen, Germany

    Gert Brunekreeft & Roland Meyer

Authors
  1. Gert Brunekreeft
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  2. Roland Meyer
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Correspondence to Gert Brunekreeft .

Editor information

Editors and Affiliations

  1. Department of Economics, Helmholtz Centre for Environmental Research – UFZ, Leipzig, Germany

    Erik Gawel

  2. Department of Economics, Helmholtz Centre for Environmental Research – UFZ, Leipzig, Germany

    Sebastian Strunz

  3. Department of Economics, Helmholtz Centre for Environmental Research – UFZ, Leipzig, Germany

    Paul Lehmann

  4. Department of Economics, Helmholtz Centre for Environmental Research – UFZ, Leipzig, Germany

    Alexandra Purkus

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Brunekreeft, G., Meyer, R. (2019). Cross-Border Electricity Interconnectors in the EU: The Status Quo. In: Gawel, E., Strunz, S., Lehmann, P., Purkus, A. (eds) The European Dimension of Germany’s Energy Transition. Springer, Cham. https://doi.org/10.1007/978-3-030-03374-3_24

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  • DOI: https://doi.org/10.1007/978-3-030-03374-3_24

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-03373-6

  • Online ISBN: 978-3-030-03374-3

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