Interconnectors play a key role in flowing power across Europe’s complex network of integrated power markets. As renewable penetration increases, the ability to balance output swings via cross border flows is an important component of system security of supply. Policy makers across Europe recognise the importance of interconnectors and have implemented a range of investment support schemes. However, the build out of more interconnectors over time tends to erode the structural cross border price differentials that drive intrinsic value of interconnector capacity. To put it simply, new interconnectors cannibalise the ... (full story)