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
Replaced by
Claude Crampes, and Nils-Henrik Von Der Fehr, “Decentralised Cross-Border Interconnection”, The Energy Journal, vol. 44, n. 4, 2023, pp. 147–169.
Reference
Claude Crampes, and Nils-Henrik Von Der Fehr, “Decentralised Cross-Border Interconnection”, TSE Working Paper, n. 22-1315, March 2022.
See also
Published in
TSE Working Paper, n. 22-1315, March 2022