As part of its ambitious energy policy, the European Union mandated that transmission system operators (TSOs) make at least 70% of their interconnection capacity available for cross-border electricity trading by the end of 2025. Adopted in January 2020, this so-called ‘70% requirement’ directive aims to enhance the efficiency of the European grid, lower electricity prices for consumers, and facilitate the transition to a more integrated and decarbonised energy market.
However, progress has been slow, with congestion and inefficiencies threatening to derail this ambitious plan. With the deadline now less than a year away, the obligation for TSOs to meet this ‘70% requirement’ has been the subject of numerous articles and reports. While some countries have already exceeded the target on interconnections, many others are lagging behind. This delay jeopardises system efficiency and raises the risk of penalties, as the EU Electricity Regulation mandates that Member States impose effective, proportionate, and dissuasive penalties for infringements.
So, what can transmission owners do to move closer to reaching 70% available capacity between countries? Fortunately, targeted grid developments and solutions, such as advanced power flow control (APFC), can enhance capacity on the existing grid while also accelerating progress to meet the target on time.
The state of the EU grid
The European grid is currently facing significant congestion due to inadequate cross-border capacity. As highlighted in the European Union Agency for the Cooperation of Energy Regulators (ACER) 2024 Market Monitoring Report, this congestion resulted in €4.2 billion in costs across EU nations in 2023, with Germany alone shouldering 60% of these expenses. In addition to financial burdens, the need for increased redispatch of generation to manage congestion has led to higher carbon emissions, which further complicates the EU’s goal of reducing its environmental footprint.
Achieving and maintaining the 70% interconnection capacity target is not merely about regulatory compliance; it also carries substantial socio-economic and environmental implications. Efficient cross-border electricity trading can reduce electricity costs, enhance the security of supply, and support the integration of renewable energy sources across Europe. But how can this goal be reached within the next year?
To support TSOs in reaching the 70% interconnection capacity target, ACER has put forward three key recommendations:
- Implement co-ordinated capacity calculation and management. Standardised processes among TSOs can effectively manage cross-border electricity flows, addressing loop flows and other congestion issues. Co-ordination ensures a comprehensive understanding of system-wide impacts to meet the 70% requirement.
- Undertake targeted grid developments. Investments in new infrastructure like transmission lines and substations should focus on the most congested areas. This targeted approach is more timely and cost-effective in addressing critical congestion points.
- Reconfigure bidding zones. Properly aligning bidding zones with structural grid congestion reflects true electricity costs and distribution. Adjusting zones can promote optimal capacity use and stimulate necessary investments to meet the 70% requirement.
Since two of these recommendations require a co-ordinated process and organisational structural changes, let’s focus on the recommendation to undertake targeted grid developments in the most congested areas of the grid. This applies to both congestion on the internal network of a country that limits cross-border flows as well as congestion on the interconnectors’ capacity.
While new linear infrastructure (eg, lines, cables, substations, etc) is certainly needed to strengthen European grids, the reality is that – aside from new infrastructure projects already underway – these simply will not be delivered in time to make progress by the end of 2025. Thankfully, some solutions can optimise the use of the existing grid with the potential to accelerate progress and help get more from any new linear infrastructure once it is built.
Addressing grid congestion with APFC
One such solution is advanced power flow control technology, which effectively changes the reactance of the line on which it is deployed. APFC enhances the efficiency of existing grid infrastructure by dynamically managing power flows and redistributing them to alleviate congestion. By unlocking additional network capacity, APFC provides a cost-effective, time-efficient way to enhance grid performance. Moreover, this solution can be deployed within 12 to 18 months of ordering.
The effectiveness of APFC is well-documented through several high-impact installations worldwide. In fact, it is already being leveraged across four continents to increase transfer capacity between regions. The most notable examples include National Grid in the UK, Central Hudson in the USA, and Transgrid in Australia. All three demonstrate the potential of APFC and offer valuable insights into best practices for maximising grid efficiency.
In the UK, National Grid Electricity Transmission (NGET) has implemented APFC at three substations across five circuits operating at 275 and 400 kV to address congestion on critical north-to-south power flow boundaries. This initiative was driven by both the significant growth of renewable generation in Scotland that needs to be delivered to demand centres in England and the unexpected early retirement of conventional generation plants.
By leveraging APFC, NGET redirects power from overloaded circuits to those with spare capacity, optimising power flows on its network. This approach has unlocked more than 2 GW of additional transmission capacity across three key boundaries between Scotland and Northern England. Remarkably, the first 1.5 GW of this extra capacity was achieved within two years. Moreover, when a generator closure occurred earlier than was expected, NGET demonstrated the flexibility of this solution by resizing two deployments in an even shorter timeframe.
Across the Atlantic in the USA, Central Hudson is using APFC at its Hurley substation to provide series compensation on 345 kV circuits. This upgrade increased the transfer capacity of the UPNY-SENY interface in New York State by 185 MW, reducing bottlenecks in an area where heavily loaded grid assets were limiting regional power flows. The alternative option considered for this network need was a fixed series capacitor (FSC) that would have required 25% more substation space, additional site work, a $10 million higher cost, and it would not allow easy resizing. APFC avoided the need for this more disruptive and expensive alternative.
Lastly, Transgrid has implemented APFC across two 330 kV circuits in Australia, unlocking 170 MW of additional interconnection capacity between Victoria and New South Wales. This upgrade supports the transition to renewable energy as coal-fired generation is retired earlier than expected. By deploying APFC, Transgrid avoids the need for costly and environmentally disruptive infrastructure projects, such as reconductoring lines and constructing a transformer in a national park. The project resulted in roughly $170 million USD (268 million AUD) in savings, which was achieved through reduced generation dispatch costs and lower capital expenditures for connected new renewable generation in New South Wales.
Challenge and opportunity
The EU’s 70% cross-border capacity interconnection requirement presents a formidable challenge. However, it also offers an opportunity to transform the European grid into a more efficient, integrated, and sustainable system. Leveraging APFC technology provides TSOs with an opportunity to accelerate progress. By combining APFC with targeted new infrastructure investments and improved bidding zone configurations, TSOs can meet cross-border capacity obligations while also delivering cleaner, more affordable, and reliable electricity — not just by the end of 2025 but for decades to come.
