/ Publications / Merchant interconnectors in Europe : merits and value drivers
Energy | Policy Brief
Merchant interconnectors in Europe : merits and value drivers
17 February 2020
Interconnectors can help the European Union (EU) resolve the energy trilemma, increasing security of supply, supporting the transition to a low carbon economy and favouring price convergence. The EU should rely more on merchant interconnectors, which are financed by private funds on a non-regulated basis. As interconnectors are replicable assets, they could avoid being regulated. Compared to the regulated model, the merchant model provides appropriate incentives to invest, to manage costs, to build on time and to make the asset available. However, there are only few merchant interconnectors in the EU. The ElecLink project between France and Great Britain is expected to be the next to be commissioned, in 2020. The main source of revenue for a merchant interconnector is the congestion rent, which has three main drivers: it increases with the average price differential (structural value) and the volatility of prices (volatility value) and decreases with the correlation between prices. The expanding share of renewable energy, from various sources and locations, increases the volatility of prices and creates value for interconnectors.
The present report is chronologically the first output of the project LIFE DICET – Deepening International Cooperation on Emissions Trading (lifedicetproject.eui.eu). LIFE DICET supports EU and Member State policymakers in [...]
Improving Air Traffic Management (ATM) performance is the main goal of the Single European Sky (SES) initiative. The EU’s SES legislation has introduced a performance scheme, which defines performance targets [...]
Join our community
To meet, discuss and learn in the channel that suits you best.