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Factors that influence the Targets and Criteria for Electricity Interconnector Investments

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  • Matti Supponen

Abstract

This paper analysis various factors that influence electricity interconnector investments. It shows that several features linked to zonal market design, in particular the possibility to favour market participants in the own country compared to those in the neighbouring countries, distort the investment signals for interconnectors. Uncertainties on investments in both transmission and generation have a big influence in interconnector investment decisions. The paper proposes that flaws in market design, capacity calculation and capacity allocation need to be addressed to provide efficient signals for interconnector investments. It proposes to reduce price zone flaws by forming more natural price zones for Europe. Regarding asymmetry in cost and benefits of interconnector investments this paper proposes a two tier mechanism to rebalance the costs and benefits for the involved parties.

Suggested Citation

  • Matti Supponen, 2012. "Factors that influence the Targets and Criteria for Electricity Interconnector Investments," RSCAS Working Papers 2012/54, European University Institute.
    • Handle: RePEc:rsc:rsceui:2012/54
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    References listed on IDEAS

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    1. Torstein Bye & Einar Hope, 2005. "Deregulation of electricity markets : The Norwegian experience," Discussion Papers 433, Statistics Norway, Research Department.
    2. Georg Zachmann, 2010. "Power to the people of Europe," Policy Briefs 409, Bruegel.
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    Cited by:

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    2. Philip Mayer & Christopher Stephen Ball & Stefan Vögele & Wilhelm Kuckshinrichs & Dirk Rübbelke, 2019. "Analyzing Brexit: Implications for the Electricity System of Great Britain," Energies, MDPI, vol. 12(17), pages 1-27, August.

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