Cross-Border Cost Allocation for Electricity Transmission Networks
(2025) , 64 pages
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- Abstract
- Cross-border energy infrastructure plays a fundamental role in a well-integrated European internal energy market. It is a prerequisite for making full use of renewable energy production and for achieving Europe’s decarbonisation targets in the most cost-efficient way. Cross-border grid infrastructure, however, raises important questions around the allocation of risks, costs, and benefits across countries. Besides investment risks for grid operators, there are uneven costs and benefits – such as higher resilience and security of supply – that cannot easily be covered by cost-sharing mechanisms. Moreover, offshore wind infrastructure, which is often hybrid, combining generation and transmission, poses problems due to its sheer complexity and the need for coordination among several EU member states and their non-EU neighbours. Summary and Key Findings This multidisciplinary study examines the existing regulatory framework and its challenges, such as its short-term focus and lack of cross-sectoral coordination and harmonisation. It provides an economic analysis of the winners and losers of cross-border infrastructure, and discusses different mechanisms for cost-sharing, including congestion income handling, bidding zone design, cross-border capacity targets, inter-transmission system operator compensation (ITC), as well as network tariff structures – from full socialisation to different types of cost-splitting approaches. These models are illustrated by case studies from the Nordics, Germany, France, and Great Britain.
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Citations
Willems, B., Brandstätt, C., Nieuwenhout, C., Le Coq, C., & Serrien, F. (2025). Cross-Border Cost Allocation for Electricity Transmission Networks. https://hdl.handle.net/2078.5/255985