ENERGY LAW AND CROSS-BORDER GRID INTERCONNECTION GOVERNANCE

1. Introduction

Cross-border grid interconnection governance concerns the legal, regulatory and institutional rules governing electricity transmission links between national power systems. Interconnectors enable electricity to move across borders, support regional energy security, integrate renewable generation and improve competition by allowing electricity to be traded between separate national markets. Because an interconnector physically links different legal jurisdictions, its governance requires coordinated rules on ownership, licensing, capacity allocation, congestion management, tariffs, system security and regulatory supervision.

In the European Union, Regulation (EU) 2019/943 on the internal market for electricity provides a central framework for cross-border electricity exchanges. It regulates network access, congestion management, capacity allocation and certain exemptions for new interconnectors.

2. Institutional Governance

Cross-border interconnection requires cooperation among national regulatory authorities, Transmission System Operators (TSOs), the European Network of Transmission System Operators for Electricity and the Agency for the Cooperation of Energy Regulators (ACER).

National regulators retain major responsibilities, but ACER performs an important coordinating role where issues affect more than one Member State. Under Regulation 2019/942, ACER also monitors progress in creating new interconnector capacity and the implementation of Union-wide network-development plans.

This institutional structure seeks to prevent national regulatory decisions from undermining the operation of an integrated regional electricity system.

3. Access and Capacity Governance

Interconnector capacity is limited and therefore must be allocated transparently and without unjustified discrimination. Cross-border governance consequently includes rules governing capacity calculation, bidding zones, day-ahead and intraday allocation and congestion management.

Articles 14–16 of Regulation 2019/943 establish substantive requirements governing bidding zones and cross-border capacity allocation. EU courts have confirmed that these provisions shape the methodologies regulators and TSOs must apply when determining available capacity for electricity trading.

The objective is to ensure that domestic network constraints are not improperly used to restrict international electricity trade.

4. New Interconnectors and Regulatory Exemptions

Large interconnector projects often require substantial private investment. Article 63 of Regulation 2019/943 therefore permits certain new direct-current interconnectors to receive temporary exemptions from specified regulatory obligations where statutory conditions are satisfied.

Among other requirements, the investment must enhance competition and involve a level of risk such that the project would not proceed without the exemption. Regulatory authorities must also establish capacity-management and allocation arrangements, including rules requiring unused capacity to be offered to the market.

This model balances infrastructure investment incentives with open-network principles.

5. System Security and Coordination

Because electricity flows do not stop at political borders, interconnector operation must be coordinated with national transmission systems. Operational-security standards address frequency control, system balancing, emergency assistance, outage coordination and restoration.

Governance rules must also allocate responsibility where disturbances in one system affect another. Effective cross-border regulation therefore combines commercial market rules with technical reliability obligations.

6. Case Laws

Case Name/Citation: BNetzA v ACER, Case T-631/19, EU:T:2022:509

Facts: National regulatory authorities within the Core Capacity Calculation Region were unable to agree fully on proposed methodologies for calculating day-ahead and intraday cross-border electricity capacity. ACER subsequently adopted decisions governing those methodologies.

Legal Issue: Whether ACER had authority to determine the methodology beyond only the specific points on which national regulators disagreed.

Judgment: The General Court held that ACER could decide the regional methodology as a whole once the matter properly fell within its competence after national regulators failed to reach agreement.

Legal Principle/Ratio: Effective cross-border electricity regulation may require supranational regulatory authority where fragmented national decision-making prevents agreement.

Significance: The case demonstrates how regional institutions can resolve regulatory deadlock affecting interconnected electricity systems.

Case Name/Citation: Aquind Ltd v ACER, Case C-46/21 P

Facts: Aquind proposed an electricity interconnector between France and the United Kingdom and sought an exemption from ordinary regulatory requirements applicable to new interconnectors.

Legal Issue: Whether ACER’s Board of Appeal had properly reviewed ACER’s refusal of the exemption.

Judgment: The Court confirmed that the Board of Appeal must undertake a sufficiently complete review of ACER decisions, including complex technical and economic assessments, rather than limiting itself merely to manifest errors.

Legal Principle/Ratio: Regulatory decisions concerning major cross-border infrastructure are subject to meaningful administrative review.

Significance: The judgment reinforces procedural accountability in interconnector regulation.

Case Name/Citation: Aquind and Others v ACER, Case T-492/21

Facts: Following Brexit, the proposed France–UK interconnector connected an EU Member State with a third country.

Legal Issue: Whether ACER retained jurisdiction under EU interconnector rules after the United Kingdom ceased to be an EU Member State.

Judgment: The General Court held that the relevant EU rules empowered ACER regarding interconnectors between Member States, but not an interconnector between a Member State and a third country.

Legal Principle/Ratio: Regulatory jurisdiction over interconnectors depends upon the territorial and statutory scope of the governing legal framework.

Significance: The case illustrates how geopolitical and jurisdictional changes can directly alter cross-border electricity governance.

7. Conclusion

Cross-border grid interconnection governance combines infrastructure regulation, market integration, technical coordination and supranational oversight. Its central goals are secure electricity flows, non-discriminatory access, efficient congestion management and appropriate investment incentives. Strong coordination between TSOs, national regulators and regional institutions is essential because interconnected electricity networks operate physically as integrated systems even when they cross separate legal jurisdictions.