An integrated European power market through interconnection
The EU aims to be carbon-free by 2050 by phasing out fossil fuels. However, yields from renewable sources are often extremely variable: wind turbines won’t work when there’s no wind and solar panels don’t produce power at night, for example. An interconnected European power market allows states to buy other countries excess energy capacity when needed and sell their own surpluses.
A recent Stanford University study modelled grids fully powered by wind, water and sunlight across Western Europe. The costs of ‘fully interconnected’ versus ‘completely isolated’ grids, were compared for interconnection scenarios in Belgium, Denmark, France, Germany, Gibraltar, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK. Climate forecasts, grid integration data, and energy demand profiles were also taken into account.
In all modelled scenarios, increased interconnection between countries improved grid stability and reduce energy costs, compared to ‘isolated’ grids. This would also provide protection against supply loss, for example due to extreme weather. According to the study “interconnecting countries can (…) serve as an additional benefit to grid stability and cost reduction in a 100 % clean, renewable energy world.” Interconnection can drive down cost by supporting market integration which is an important aspect of price formation.
A report from Connect Energy Economics, commissioned by the German Environment Agency (Umweltbundesamt, UBA), states that an affordable largely CO2-free German and European power supply is feasible, if a sufficiently interconnected power market is in place. For all of the ten assessed scenarios with ambitious CO2 targets comprehensive use a European internal electricity market was considered an important.
International grid interconnections are also essential to enabling energy independence by increasing the number of renewable sources in the energy mix, thus enabling countries to meet their own energy demands - or even export more power than they import. This allows nations to become less dependent on fossil fuel imports and increase their energy stability. Growing uptake of renewables makes it vital to further accelerate implementation of interconnection projects. A high level of interconnection will enable countries to exchange clean energy in a way that balances surpluses and shortages and improves efficiency, cost and reliability.
