Abstract
The EU and its Member States are building out interconnectors to improve security of supply and affordability of electricity through the physical and economic linking of national energy markets into a single, synchronised European market. But each interconnector is expensive, complex and therefore risky. They can span long distances or natural obstacles such as mountains or seas. Significant network planning and adaptation is needed to account for the additional capacity when different markets are connected. Jean-Baptiste Vaujour at the Emlyon Business School reviews the landscape, and surveys the different ways interconnectors are being financed. The usual revenues, mostly congestion charges, are particularly risky: they are exposed to market developments on both sides of any border and to changes in price volatility as the penetration of renewables rises. Vaujour looks at the incentives and policies that have been deployed to reassure and attract investors, both public and private.