The world is already shifting towards a greener and more sustainable environment where RES play an essential role in the transition. However, RES present a high variability in their generation capabilities, as, for example, wind and solar are heavily weather-dependent, which poses substantial risk in its generation and management. The variability of RES generation in each geographical area may be smoothed with the construction and aggregation of more generation units3, enlarging the geographical area covered by them. However, it may be expensive, inefficient, and difficult due to limitations in the grid, permitting issues and geographical unsuitability and even unsustainable. A greater availability of grid connection and capacity to transport energy from one area to another would allow wind and solar generation units to be concentrated in the geographical areas in which RES are most efficiently generated, where they are easier to install and less often curtailed.  

It becomes clear that the role played by energy transport is crucial in the dismission of conventional fossil fuel generation. The increase in variable, discontinuous and non-programmable RES generation is bringing complexity in a system based on the modulation of the available conventional resources according to the forecasted level of consumption. To accelerate the dismission of fossil fuel, TSOs and DSOs will have to anticipate network needs by introducing advanced forecasting and nowcasting tools and new procedures to manage the variability of RES availability with the help of digitalization, technological evolution of system operation assets and capital-light investments on the grid. Capital-intensive investments will also be necessary to increase the transmission and distribution capacity of existing sections and allow effective RES connection to the grid and reduce curtailment procedures and non-distributed energy. 

As the number of requests from medium and large renewable plants for grid connection raises4, the inadequacy of transport capacity on long-distance may also become a limit to effective energy transition. To overcome this issue, already available technical solutions and new technologies under investigation will enable to achieve technical and economic efficiency:  the replacement of cables may allow greater current transits, but it is costly5; the use of digital tools to monitor the operating conditions of the grid may allow greater level of performance, pushing the grid to its limit without compromising the safety of transport and security of supply (i.e. the use of IoT technology monitoring, dynamic thermal rating technology to increase the capacity of transmission based on the dynamic measurement of cable temperature, use of wide area measurement systems (WAMS)…).  The energy storage systems applied to energy transportation may act as “digital grid”, storing surplus renewable energy during peaks in production and feed the stored energy back into the power grid as soon as it is needed6. The “supergrid” technology, consisting of very high voltage transportation on long distance, will enable high volumes of renewable electricity to be moved with very low power loss over long distances. Supergrids technology enables to imagine intercontinental connection with a reduction of costs and best integration of RES, even if on a techno-economic perspective the advantages may be modest7 . Together with the widespread deployment of RES, such technology would concur to the development of new energy scenarios for all geographical areas rich in renewable resources that are currently not exploiting their potential.  

Exchanges through efficient and reliable interconnection will be necessary as long as security of supply, sustainability and competitiveness will remain the core values of any energy system. Connected networks enable the excess energy capacity to be transported from where the surplus is generated to where the available capacity is low or even nonexistent. It ensures solidarity between the interconnected areas to provide mutual assistance when internal adequacy is not met8, it reinforces grid stability in a context of increased share of renewable electricity and lower levels of inertia, and it helps to mitigate the effects of extreme weather conditions. Interconnection is not just a matter of technical solidarity: it also brings more competitiveness to integrated energy markets. It contributes to lower the prices and avoid generation costs. Energy prices fluctuations are driven by demand and supply, each variable being affected by a numerous of factors, such as: 

Weather, directly impacting energy consumption and supply, following the seasonal cycle as well as depending on both predictable and unexpected extreme weather events (e.g., floods, hurricanes);  

Outages, scheduled (e.g., for maintenance of power plants) or unexpected (e.g., due to weather conditions); 

Economics, e.g., the increased economic activity necessary for the recovery after Covid-19 or development of industries that represents an increase in energy demand; 

Sources fuels market costs, due to their interdependency with energy generation; 

Government Regulations, as changes can trigger a market response; in the last years, mainly those regulatory changes needed to achieve environmental goals and impacting fuel industries; 

Geopolitical events, such political unrest, war, and hostage crises; a very recent example is the record levels reached in electricity prices following Russia’s invasion of Ukraine; Nonetheless, there are positive effects on prices when trade agreements are made that open a new stream of fuel supply; 

The interconnectivity amongst grids, with cross-border infrastructure that integrates different markets, contributes against price and supply fluctuations by providing a broader energy source capable of being transported where demand requires it. Moreover, the greater availability of energy supply from different producers located in different markets allows for a boosting in competition, fostering the development of new business models and innovations to be able to produce at a lower cost, also including the investment in the production and management of renewables. 

Therefore, the impacts of market interconnectivity are non negligeable, as they do not only consider the reduction of price differences between markets and their volatility, but also supports transition to a greener world encouraging the boosting and connection of renewable energy sources over a broader area, which combined will be ultimately translated into an appeasement in energy prices for consumers, and thus their welfare. 

Finally, in times of high geopolitical tensions, interconnections also play a major role in reducing energy dependence on third-party communities. The availability of nonrenewable sources is still high and consequently the cost is relatively low. However, growing energy consumption gives rise to concerns about future availability of fossil energy and the latter may be subject to fluctuations in purchase prices for supply due to geopolitical tensions between different countries, as the largest non-renewable energy reserves known to date are located only in certain geographical regions of the planet, under the jurisdiction of nations. The situation that occurred since the conflict between Russia and Ukraine began has triggered several repercussions, including raises in gas prices, which was reflected on the prices of all other commodities as well as on the cost of electricity generated from renewable and nonrenewable sources. Increased energy production from renewable sources along with grid upgrades could result in a clean break from fossil-bound energy dynamics, as they could provide a truly inexhaustible, affordable, and less polluting alternative, reducing energy dependence on other countries and giving to new players to enter the club of the most energy efficient and powerful countries in the world.