The effect of renewable electricity generation on the value of cross-border interconnection

Connecting two electrical grids allows power to be traded between the areas, which can improve reliability and lower electricity prices. Over the coming years, electrical networks will have to adapt to larger amounts of intermittent renewable generation. Here we use hourly data from 155 world-wide geographic regions to investigate how the value of connecting electrical grids changes as renewable generation is incorporated. We show across five continents that significantly more interconnections are cost effective in a 100% renewables scenario, and that the investment savings they result in can be 100 times higher. Furthermore, we show that many interconnections that are profitable with dispatchable generation are not profitable in a renewable generation scenario. Finally, we show that in many cases the interconnection only reduces the investments costs of one of the two regions - with the larger electricity market, in general, seeing a greater cost reduction.