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 typically 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
Keywords
electrical grid; interconnector; externality; regulation; regional; cooperation;
JEL codes
- H77: Intergovernmental Relations • Federalism • Secession
- K23: Regulated Industries and Administrative Law
- L51: Economics of Regulation
- L94: Electric Utilities
Replaces
Claude Crampes, and Nils-Henrik Von Der Fehr, “Decentralised Cross-Border Interconnection”, TSE Working Paper, n. 22-1315, March 2022.
Reference
Claude Crampes, and Nils-Henrik Von Der Fehr, “Decentralised Cross-Border Interconnection”, The Energy Journal, vol. 44, n. 4, 2023, revised June 10, 2026, pp. 147–169.
See also
Published in
The Energy Journal, vol. 44, n. 4, 2023, revised June 10, 2026, pp. 147–169