Breaking borders: The future of Europe’s electricity is in interconnectors

Expanded grid connections between countries will be a critical building block of a low-cost decarbonised power system.

Europe’s electricity transition is accelerating. But the energy transition is not just about building more solar panels and wind turbines. Built in the right way, grid infrastructure and how it is managed will determine whether and how Europe reaches its power sector targets, and how cost-efficient that process is. 

Interconnectors — cross border, high voltage cables linking national power grids — and shared market rules together create the integrated European electricity market. This allows electricity to flow freely across the continent, according to patterns of supply and demand, and in response to price signals.

Europe’s electricity system is the world’s largest interconnected grid, with more than 400 interconnectors linking nearly 600 million citizens. It is operated, developed and planned by Europe’s Transmission System Operators (TSOs). ENTSO-E (The European Network of Transmission System Operators for Electricity) brings together Europe’s 39 TSOs to coordinate the functioning and development of the interconnected power system.

The role of interconnectors

The importance of interconnectors for capturing benefits on security of electricity supply, keeping costs down and supporting the cost-effective delivery of a clean power system, is supported by numerous studies and models. Some of these include the Paris Agreement Compatible (PAC) scenario (PAC), developed by the Climate Action Network (CAN-E) and the European Environmental Bureau (EEB), Ember’s New Generation study on least-cost power system decarbonisation, and ENTSO-E’s own System Needs Study.

Renewables integration and optimisation

By allowing electricity to move across borders in a matter of minutes, interconnection creates a more flexible system that can balance geographic variations in wind and solar generation, minimising output fluctuations and curtailment. This will be essential to integrate the variable output of wind and solar in a cost-effective way. By offering more opportunities for this electricity to be used, cross-border exchange can halve the curtailment of cheap, clean power.

A better connected Europe also allows wind and solar to exploit optimal locations, unlocking greater renewable potentials and increasing their generation efficiency. This reduces the costs and capacities required for decarbonisation. 

Interconnection can also stimulate more ambitious renewables deployment by giving investors the confidence to build more units, in the knowledge that they will be able to sell their generation to both national and foreign markets.

System efficiency

In creating a European electricity market, interconnection optimises the use of existing assets across the continent, lowering the cost of electricity supply and reducing price volatility on the electricity market. It also boosts price competitiveness as consumers have access to cheaper, cleaner electricity from neighbouring countries. 

By more effectively using clean electricity generation, suitable investment in the grid enables emission reductions. A study by ENTSO-E estimated this could save 14 Mt of CO2 annually between 2025-2030 (equivalent to Lithuania’s annual emissions in 2021) and 31 Mt CO2 annually between 2030-2040 (equivalent to Slovakia’s annual emissions in 2021).

Reliability without gas

Exchanging cheaper, renewable electricity across borders helps offer an alternative source of flexibility, currently fulfilled in many countries with gas generation. This will enable gas phasedown without affecting electricity reliability, and reduce Europe’s vulnerability to volatile gas prices and geopolitical risks.

Cross-border flows will contribute to ensuring reliability of supply in a future clean power system dominated by renewables, keeping the lights on when the wind is not blowing or the sun is not shining. It is exceedingly rare for meteorological events to affect the entirety of Europe simultaneously, indicating the importance of interconnections in alleviating regional or national demand peaks through electricity imports from neighbouring countries whose wind and solar output is then unaffected by the weather conditions.

Security, resilience and solidarity

The integrated European electricity system facilitates coordination and cooperation among Member States. Electricity exchange is also a key element in maintaining security of electricity supply in Europe, ensuring system balance when there is a geographical mismatch between supply and demand. It also allows countries to assist each other during critical situations. For instance, electricity imports proved crucial for France during 2022, a year of record low nuclear and hydropower output.

Europe will need a lot more interconnectors in the future, but with long project timelines, the time to start planning is now.

Europe must double its current interconnection capacity over the next ten to fifteen years to deliver on its energy targets and the climate neutrality objective. But current interconnection expansion plans fall short of this, leaving a gap compared to the anticipated power system needs for interconnection expected in 2030 and 2040.

What interconnection capacity is expected?

ENTSO-E provides an outlook on expected interconnection developments every two years, as part of the Ten-Year Network Development Plan (TYNDP) cycle. All interconnection projects are assessed according to their probability of being implemented by their stipulated commissioning dates. Those considered to have a strong probability are included in the ENTSO-E “reference grid” or “reference network” which provides a picture of the grid as it can be expected in certain timesteps, between now and 2040.  

According to the latest report from ENTSO-E, about 23 GW of new cross-border reinforcements are expected to be built between 2022 and 2025, additional to the already existing 93 GW. About 12 GW is expected to be added after that, bringing the total capacity of cross-border grid connections to 136 GW by 2030. By 2040, the expected exchange capacity based on the reference grid will reach 155 GW.

Expected capacity falls short

Given long lead times for transmission projects (an average of nine years in Europe), power system planners must anticipate future system needs in order to judge whether the expected development of interconnection capacity can be considered sufficient. Here, energy scenarios play an important role in enabling planners to forecast and locate the “system needs” for interconnection of a future electricity system. 

System needs are defined as where new solutions are needed to contribute to reaching European decarbonisation targets, and keeping security of electricity supply and costs under control. Comparing the reference grid against system needs (as revealed by modelling of energy scenarios) allows the identification of those borders well served by current plans and those in need of further investment. 

The range of system needs presented here is based on three electricity transition pathways which were selected to provide different outlooks on the possible evolution of Europe’s power system. 

The capacity and location of system needs vary slightly between energy scenarios. For instance, the cross-border capacity between Poland and Germany emerges as a more significant link in Clean Europe and Green Europe, compared to NECP+, as both countries (particularly Poland) make stronger progress towards phasing out coal in favour of renewables in the former two scenarios.

Expected gaps

Two notable messages emerge clearly and consistently across the scenarios. The first is the need to double Europe’s current interconnection capacity over the next ten to fifteen years, for the EU to deliver on its energy targets and the climate neutrality objective. 

The second is that existing interconnection expansion plans fall short of the range of system needs across the three scenarios in 2030 and 2040, creating a gap between what is expected to be delivered and what will be required.

In 2030, the expected cross-border exchange capacity is 136 GW in the reference grid, while the range of system needs is between 148-187 GW. This gap has improved since the previous assessment carried out by ENTSO-E in 2021 for the 2020 TYNDP, demonstrating that TSOs and other project promoters are working to close the investment gap. However, in still falling short, further efforts are required.

There is also an additional 22 GW of interconnectors planned for 2030 which were not included in the reference network, as they were judged to have a lower probability of being successfully implemented by their given date. If completed, these projects could begin to breach the range of identified system needs in 2030, although remaining towards the lower end of the range.

The gap between the reference grid and system needs is even larger in 2040. 155 GW interconnection capacity is currently expected, compared to the system needs range of 225-274 GW. Given the longer time horizon, it is less urgently concerning that there are fewer infrastructure projects under development that are being designed for commissioning by 2040. That being said, infrastructure solutions can take more than a decade to become available. To avoid becoming a blocker to the energy transition, this investment opportunity should start to be seriously addressed in the near term.

Priorities through 2030

The effects of insufficient cross-border exchange capacity are already being felt in Europe. For instance, the German TSO Amprion reported that 10% of its electricity trade in 2022 was limited by restricted interconnection capacity.

With 2030 just seven years away, interventions should focus on key borders which require a prioritised political support. A lack of action to address this gap risks interconnectivity becoming a bottleneck to the expected boom in new wind and solar. It also risks slowing the pace of decarbonisation as more fossil fuels will need to be used to compensate for lower grid flexibility. 

Certain borders are consistently identified as critical across the three energy scenarios, but remain chronically unaddressed. In particular, these include the following corridors:

• The triangle between Austria, Hungary and Slovenia
• The line from Spain to France to Germany
• Links between Western Balkan countries, and with their neighbours; for example, between Greece and North Macedonia
• Links between the UK and France, and the UK and Ireland

A more detailed look at where interconnection investment is needed in Europe through 2030 and 2040 is available through Ember’s Interactive Map.

Europe’s energy transition is rapidly progressing, but depending on decisions taken now, it could take different routes.

As their critical role becomes more apparent, the topic of power grids and interconnection has, perhaps for the first time, found a spotlight in the media and political discourses. Steps have been recently taken to accelerate the development of this infrastructure: power grids were included in the revised EU emergency permitting rules, key stakeholders are urging stronger support, and Greece proposed centralising existing EU funds under a special European Grid Facility.

There are additional ways to address the gap between current projects and anticipated power system needs, particularly those just seven years away. This section briefly lays out three options, which are not mutually exclusive, for addressing the investment gap between current projects and the anticipated system needs of the 2030 power system. Delivering on the European Green Deal objectives will require exploring all possible solutions to bridge the gap. The present moment is a crucial opportunity to plan for how Europe’s energy transition plays out over the next decade.

Option A: Political support to accelerate existing interconnection projects

The most efficient and cost-effective option is to deliver the additional 22 GW of interconnection which is already in the pipeline. This 22 GW could be brought online by the end of the decade, going a long way to close the gap. Accelerating such infrastructure solutions requires political support, particularly where slow progress or gaps reflect wider issues such as the need for parallel development of internal grids. 

Looking beyond 2030, the most critical corridors requiring additional capacity should be identified and prioritised for development in the coming years (given long lead times). Needs-oriented forward planning is critical for interconnection.

Option B: Strengthen investment in non-wire solutions

While interconnection offers the optimal solution to meet certain system needs, other non-infrastructural solutions can also provide system benefits. To maximise existing interconnection capacities and relieve stress on the power grid, national power system planners should explore further investment in flexible technologies. These include storage and peaking units, demand response and energy efficiency. 

However, it should be noted that it is not a direct trade off between these other technology options. They do not necessarily cover needs best addressed by interconnection (and vice-versa). Furthermore, there may be other issues to consider. System needs for cross-border capacity tend to be lower in a scenario with a large share of distributed energy resources, but this can only be achieved if the latter are sufficiently catered for through local grid reinforcements. 

Either way, forward planning remains essential, as even non-infrastructure solutions require time to deliver results.

Option C: Increase domestic renewable capacities

To meet growing electricity demand while also phasing out fossil fuels with inadequate support from interconnection, countries would likely have to increase investment in domestic clean power generation at greater cost. This may require exploiting lower quality domestic renewable resources, at greater cost. Additionally, given that the speed and scale of renewables deployment required to achieve European energy goals will already require enormous political determination and push planning processes to the limit, increasing the scale of renewable capacity needed could make this the most challenging option to deliver.

Conclusion

Europe’s plans for decarbonising the power system need to be matched by development plans for supporting cross-border infrastructure. Depending on forward planning decisions taken now, this could mean expanding cost effective interconnection that would come with multiple co-benefits, while strengthening European unity in the face of geopolitical uncertainty and energy insecurity. 

But with current plans for grid development falling short, Europe needs to act swiftly to close the gap or risk choosing riskier and more expensive pathways that rely more heavily on storage and flexibility technology or much higher volumes of renewables deployment.