Regulated cross-border transmission investments in Europe

In a liberalized market, generation and transmission investment decisions are decoupled, so that more grid is necessary. The European transmission grid is the backbone of the Internal Electricity Market that besides serving the market has to ensure security of supply and to allow connecting renewables. Transmission grid investments are clearly needed, especially to increase the scarcely available cross-border transfer capacities. The regulatory framework in which these investments are to take place is discussed in this paper. The authors evaluate whether the regulation that is already in place will deliver the investments crucial for the success of the liberalization process in Europe.