All quiet on the western front? Transmission capacity development in the Nordic electricity market

Mari Makkonen, Mats Nilsson and Satu Viljainen

Economics of Energy & Environmental Policy, 2015, vol. Volume 4, issue Number 2

Abstract: Infrastructure plays an obvious and crucial role in electricity markets. Physical infrastructure must exist for the supply to meet demand in real time. In addition, it accommodates the efficient exchange of cost-efficient production across borders, and can bean important part ofsharingresourcesforreliabilitypurposes.However, in the historically successful Nordic electricity market, the cross-border transmission grid investments are lagging behind the original schedule agreed between the Nordic TSOs. Moreover, in early 2013, the Norwegian and Swedish Transmission System Operators (TSOs) cancelled the planned, by many considered critical, Hasle (Westlink) transmission capacity increase. This paper addresses several issues concerning the cross-border transmission planning and its role for successful integration of the electricity markets. We aim at evaluating the impact of different institutional requirements for key entities as well as the changing governance structure to highlight how the infrastructure development paths are dependent on these. The evaluation of the governance structure presented in this paper is based on the historical experiences of the Nordic electricity market. Our findings suggest that the national goals in transmission development contradict the Nordic capacity development targets.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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