Phil Hewitt

Costs for interconnector capacity to Britain are the most expensive in Europe

June 2021

The Nemo Link that connects Belgium and Great Britain was the most expensive interconnector in May 2021.


Looking at the monthly auctions for May 2021, which are hosted via JAO’s trading platform for cross-border transmission capacity, our latest research shows that the price for capacity on the interconnector to export energy from Belgium to Great Britain was the most expensive in Europe at 19.42€/MW/H.


The second highest auction price can be attributed to IFA1 connecting France and Great Britain. It cost 18.53€/MW/H for capacity to flow electricity from France to Great Britain – making Britain the most expensive country to export energy to.


The high export prices could be explained by regulatory differences between the GB electricity market and its EU neighbours.


The carbon price support in the GB market is £18/tce which then creates an uplift on the energy price. This, along with power plants contributing more to National Grid’s costs of managing the system than their European counterparts, means that there is a systemic price difference between the two markets. The merit order determines which fuel source will deliver power to the grid and is ranked by the price and amount of electricity generated.


Solar and wind are often at the top of the merit order due to no fuel cost for generation, followed by nuclear generation. Fossil fuels such as gas are often at the end of the merit order. The fuel mix in Britain is still influenced by a high amount of gas generation and in May, 48% of the energy demand was covered by gas. As gas is the marginal plant in GB and operators of gas plants are spending around £8 to £9 more on carbon than their counterparts in the EU alongside an average of £4 to £5 for balancing costs, this means that the price for interconnector capacity can be explained by the interconnectors capturing the regulatory divergence price between the two markets.


Both Belgium and France have a large nuclear fleet which generates a large amount of power at low marginal fuel costs and zero carbon cost and can therefore offer cheap energy for Britain. This drives the demand for cross-border transmission capacity between GB and Belgium/France up and therefore its prices rise too.

Italy is the second most expensive country to export energy to with auction prices ranging from 5.01€/MWH to 9.11€/MWH for all connected markets, namely Austria, Switzerland, France and Slovenia except for Greece (3.11€/MWH). Italy has a large contribution from gas generation but high gas costs and poor efficiency means there is a fundamental price advantage to flow power across the interconnectors.

In comparison, the average price for the monthly auction in May 2021 across the whole of Europe was around 2€/MW/H. Around half of auctions concluded with a price under 1€/MW/H.

Energy traders can profit from the price differences across markets through several trading strategies. One example can be seen within the day-ahead market. For instance, on the 9th May at 2pm the day-ahead price in France was -66.18€/MWh. By purchasing power in France via the day-ahead auction and buying cross-border transmission capacity in the monthly JAO auction for France to GB for 18.53€/MW/H, energy traders could have made a profit by selling the energy in the GB day-ahead market. If the energy had been sold via the EPEX GB auction, a profit of 130.66€/MWh could have been realized.

JAO (Joint Allocation Office) is the central interconnector auction platform owned by 25 of Europe’s TSOs. See

If there has been more than one monthly auction for the same interconnector flow for May 2021, the more expensive auction price has been taken into account.

Capacity on interconnectors is priced as € per MW of capacity per hour so a monthly contract for April is 24 x 30 x price.



If you are interested in JAO data or you would like to explore how you could benefit from interconnector trading, please get in contact.