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Decentralised Cross-Border Interconnection

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  • Claude Crampes and Nils-Henrik M. von der Fehr

Abstract

Reaping the full benefits from cross-border interconnection typically requires reinforcement of national networks. When the relevant parts of the networks are complements, a lack of coordination between national transmission system operators results in investment below optimal levels in both interconnectors and national infrastructure. A subsidy to financially sustain interconnector building is not sufficient to restore optimality; indeed, even when possible, such subsidisation may have to be restrained so as not to encourage cross-border capacities that will not be fully utilised due to lack of investment in national systems.

Suggested Citation

  • Claude Crampes and Nils-Henrik M. von der Fehr, 2023. "Decentralised Cross-Border Interconnection," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    • Handle: RePEc:aen:journl:ej44-4-fehr
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    Cited by:

    1. Pollitt, Michael G. & von der Fehr, Nils-Henrik M. & Willems, Bert & Banet, Catherine & Le Coq, Chloé & Chyong, Chi Kong, 2024. "Recommendations for a future-proof electricity market design in Europe in light of the 2021-23 energy crisis," Energy Policy, Elsevier, vol. 188(C).

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    JEL classification:

    • F0 - International Economics - - General

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