This paper assesses whether the European Union’s target of achieving 15% cross-border electricity interconnection by 2030 can ease the mitigation of CO2 emissions. Using the open-source Python for Power System Analysis (PyPSA)-Eur modeling framework, we develop a large scale linear optimization model of power systems of France, Germany, Belgium, the Netherlands, and Luxembourg. The model endogenously optimizes generation, storage, and transmission capacities under technical constraints, while incorporating policy constraints in the form of both a minimum interconnection requirement and alternative CO2 emission caps. Our results show that implementing the interconnection target alone yields only marginal carbon reductions relative to the baseline. Although 15% is not cost-optimal for each country, significant changes in electricity generation and decreases in Greenhouse Gas (GHG) emissions are obtained with enhanced cross-border interconnections. Grid development significantly facilitates deeper decarbonization by enabling higher renewable penetration, reducing flexible fossil-based generation, and reshaping cross-border electricity flows.
Mot(s) clé(s)
Market coupling, cross-border interconnection, CO₂ mitigation, power system optimization, Renewable Energy Sources (RES) integration
2025-41
European electricity wholesale price convergence: Investigating Flow-Based Market Coupling efficiency
This paper investigates the impact of extending Flow-Based Market Coupling (FBMC) on electricity price convergence in Europe. Market coupling mechanisms, particularly FBMC, play a crucial role in harmonizing electricity prices between bidding zones by optimizing cross-border capacity allocation. We analyze the transition from the Available Transfer Capacity (ATC) approach to FBMC, highlighting its advantages for improving price con- vergence. Using daily day-ahead electricity prices from 12 member countries of the Core Capacity Calculation Region (CCR), we construct a price dispersion indicator. Our results show a temporary reduction in price spreads in the region Core Europe following the market coupling reform. The short-term effect is significant but transitory, whereas structural deter- minants such as gas prices remain dominant. Comparing countries that adopted Flow-Based (FB) mechanism in 2015 with those that joined in 2022, we find evidence of a permanent and significant reduction in price spreads for the late adopters.
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