How much electric interconnection capacities are needed within Western Europe?

Using a global cost-benefit analysis, this paper investigates the electric interconnection capacities necessary in 2025 for ten countries in Western Europe. In line with the European Climate and Energy Package, a high penetration of wind generation and a strong demand management are considered in this study. This paper shows that a 7-GW reinforcement in comparison to the business-as-usual interconnection scenario brings around 600 M€/year of net benefits. In fact, the increased transmission investment costs are largely offset by reduced investments in generating units and lower variable generation costs. This study also shows that the revenues from congestions in Western Europe are reduced by 1 G€/year following the interconnection upgrade, which highlights the issue of appropriate incentives to develop the necessary cross-border transmission lines in Europe.