Economics of Interconnection: the Case of the Northwest European Electricity Market

Machiel Mulder, Paul Giesbertz



In order to create an internal European market for electricity, interconnection lines between several European countries are being developed. The Dutch market, now only directly connected to the German and Belgian market, will be linked to the Scandinavian and British market in 2008 and 2010, respectively. Economically, these investment projects raise several fascinating questions. As the costs of the investments amount to hundreds of millions of euros, while the benefits are fairly uncertain, the profitability is a key issue to be dealt with. This regards the efficiency on both business level and general level.
In this paper, we deal with these issues by discussing the economics of the investments projects which will link the Dutch market to the Scandinavian market (NorNed-cable) and to the British market (BritNed-cable). Regarding the NorNed-cable, we go into the overall welfare effects, while the institutional aspects is discussed referring to the BritNed-cable which is a (commercial) merchant cable.
Originele taal-2English
TijdschriftIAEE Newsletter
Nummer van het tijdschriftSecond Quarter
StatusPublished - 1-jun-2008
Extern gepubliceerdJa

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