Electricity Interconnectors: A Serious Challenge for EC Competition Law

K. Talus and T. Wälde

Competition and Regulation in Network Industries, 2006, vol. 7, issue 3, 355-391

Abstract: Interconnectors pose a challenge to EC competition law. Finding investment for capital-intensive infrastructure investment such as interconnectors means that the requirements of financiers and project sponsors for long-term predictability of cash flow is assured. T at usually involves long-term contractual commitment with at least temporary preferences for the sponsors to make it economically viable. This long-term tie-up of interconnector access by long-term contracts or significant project sponsor preferences does not seem to be aligned with the overall EC competition policy to create more competitive markets This essential dilemma of much of heavy, and in particularly cross-border, energy infrastructure investment is well exemplified by the situation of electricity interconnectors. These interconnectors thus illustrate the challenges increasingly and acutely posed by the tension between long-term infrastructure investment in the interest of energy security, and the “normal†application of competition law. The issue became highly topical when the Commission declared the access to interconnectors as one of its immediate priorities. This article will examine the application of EC competition law in interconnectors contributes towards a better appreciation of the dilemma between energy security investments on one hand and the objective of competitive, integrated EU energy markets on the other hand. It is also an essay about the difference between competition theory and the realities of the energy markets.

Date: 2006
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