Electricity Infrastructure & Security of Supply: Should EU Governments Invest in Transmission Capacity?

The electricity transmission systems of Europe are the legacy of decades of investment by monopoly utilities directed by central planners and paid for by regulated tariffs. They were never built to support liberalised electricity markets nor deliver the sheer volume of trans-continental flows of bulk power that arbitrage trading activity has created. As a result, transmission systems have become increasingly congested, especially on cross-border routes. The European Commission, in the form of the Directorate General for Transport and Energy (DG TREN), believe that this has been caused by inadequate investment in new transmission capacity since electricity market liberalisation began . Furthermore, if transmission congestion is not relieved by new investment they fear integration of regional wholesale markets will be prevented, competition inhibited, and system security threatened. This perception has been strongly, but mistakenly, reinforced by the blackouts that occurred in Europe and North America during summer 2003.

By: J. Bower

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