Embracing Merchant Transmission Investment

The proposed AQUIND high voltage electricity interconnector between France and Great Britain is a case study of the challenges of developing rules and regulations for efficient electricity transmission investment that provide the needed balance between cost-of-service regulated investments and merchant investments facing market risks and returns.

Alongside regulated public investments, market-based, or merchant, transmission investments support the development of electricity transmission infrastructure needed for the integrated Internal Energy Market in Europe. Drawing on the expertise of our UK and US energy teams, this paper illustrates the challenges faced by investors in merchant interconnectors by examining the case of the proposed Aquind Interconnector between England and France, whose requested exemptions have recently been rejected by the Agency for the Cooperation of Energy Regulators.