Electrical interconnectors: Market opportunities, regulatory issues, technology considerations and implications for the GB energy sector

Abstract

The linking of different jurisdictions or markets via electrical interconnection is a long established means of offering enhanced security of supply to the wider electrical system. In recent years, new incentives around exploiting market price differentials and facilitating the growth of renewable energy have represented the primary motivation for new interconnector projects. This paper provides a comprehensive overview of the technical options for delivering interconnectors, examines historical trends and discusses the ownership models, regulatory frameworks and market structures within which the investment case for new interconnectors must be made. Drawing on both technical and market considerations, the paper sets out the potential impact that interconnectors can have on the energy market and interested actors within connected markets before discussing in more detail the policy implications of the proposed roll out of new interconnector projects to the GB energy sector and suggests a number of factors beyond the current focus on consumer welfare could be given more prominence in the policy making around interconnector investment. The ways in which the UK's withdrawal from the European Union might impact on future and existing interconnectors in Britain is also discussed.