1. Introduction

Geographic optimisation of interconnector placement refers to the legal, technical, economic and environmental process of determining where a cross-border or inter-regional electricity interconnector should be located so that it maximises system benefits while minimising congestion, losses, environmental impacts, construction costs and regulatory risks.

An electricity interconnector may be an overhead transmission line, underground cable or submarine cable connecting two electricity systems. Its location is not merely an engineering decision. It can affect:

electricity-market integration;

transmission congestion;

renewable-energy integration;

system reliability and security;

network losses;

land and seabed use;

environmental protection;

consumer prices;

cross-border competition;

national energy security; and

the allocation of investment and congestion revenues.

In the European Union, interconnector regulation particularly illustrates how geography, network planning and market regulation are interconnected. EU law requires cross-border capacity to be managed through coordinated mechanisms and links congestion management with investment in interconnection capacity. (EUR-Lex)

2. Meaning of Geographic Optimisation

Geographic optimisation involves identifying the most legally and technically suitable connection points between two electricity systems.

For example, suppose Country A has abundant offshore wind resources while Country B has high electricity demand. An interconnector could theoretically connect several points in each country. The optimal route would depend on factors such as:

available transmission capacity;

distance between connection points;

electricity-demand centres;

renewable-generation locations;

existing grid congestion;

geographical obstacles;

environmental restrictions;

construction and maintenance costs;

security and resilience;

market-price differences; and

regulatory and permitting requirements.

Thus, the question is not simply “Where is the shortest route?” but rather:

Which geographic connection produces the greatest legally permissible system benefit at an acceptable economic, environmental and security cost?

3. Why Geographic Location Matters

A. Congestion management

The location of an interconnector determines how effectively it can relieve congestion.

An interconnector connecting two lightly congested areas may have limited value, whereas one connecting a generation-rich region to a demand-constrained region may substantially improve system utilisation.

The EU regulatory framework recognises this relationship. In the German-Austrian context, ACER found that unrestricted use of the German-Austrian interconnection could create significant structural congestion elsewhere, including on neighbouring borders and within Germany. (ACER)

This demonstrates an important principle:

optimising one interconnector geographically requires consideration of the wider network, not merely the two endpoints.

4. Connection to Renewable Energy

Geographic optimisation has become particularly important because renewable generation is geographically uneven.

Examples include:

offshore wind in the North Sea;

solar generation in southern Europe;

hydropower in Scandinavia;

Himalayan hydropower potential in South Asia; and

geographically concentrated renewable-energy zones.

An interconnector can transfer electricity from a generation-rich region to a demand centre.

Consequently, the optimal location may be determined by the relationship between:

renewable resource location → transmission network → demand centre.

This is particularly important where renewable generation is variable. An interconnected system can allow electricity generated in one region to serve consumers elsewhere when local generation is insufficient.

5. Geographic Optimisation and Network Topology

An interconnector does not operate independently.

Electricity flows according to physical network characteristics rather than simply following the commercial contract between two parties. Consequently, placing a new interconnector at one geographical location can alter power flows across several other transmission corridors.

This creates a network externality.

For example:

Interconnector A–B may increase physical flows through transmission corridor C–D even though the commercial transaction concerns only A–B.

Therefore, geographic planning must consider:

N-1 security;

loop flows;

bottlenecks;

voltage stability;

short-circuit levels;

transient stability;

thermal limits;

available transfer capability; and

interactions with other interconnectors.

6. EU Legal Framework

European electricity law provides a particularly developed legal framework for interconnector planning.

The former Regulation (EC) No 714/2009 established rules concerning cross-border electricity exchanges and interconnection capacity. Its provisions required congestion to be addressed through market-based mechanisms and directed congestion revenues toward purposes including maintaining or increasing interconnection capacity. (EUR-Lex)

The present EU electricity framework continues this emphasis through the Internal Electricity Market Regulation, cross-border capacity allocation rules and EU network-planning mechanisms.

Geographic optimisation therefore operates within a framework of:

non-discriminatory network access;

cross-border capacity allocation;

congestion management;

transmission-system planning;

regulatory approval;

environmental assessment;

third-party access; and

European network-development planning.

7. Interconnector Placement and Capacity Allocation

Geographic placement cannot be separated from capacity allocation.

A poorly positioned interconnector may have substantial nominal capacity but produce limited usable capacity because surrounding transmission networks become congested.

ACER's work concerning the German-Austrian border illustrates this issue. ACER concluded that the existing arrangement could accommodate requested international trading flows only at the expense of major structural congestion on neighbouring borders and within Germany. (ACER)

Therefore:

Nominal interconnector capacity ≠ effective cross-border transfer capacity.

A geographically optimised project should maximise usable capacity, rather than simply installed capacity.

8. Economic Optimisation

A geographic optimisation model generally compares:

Benefits

congestion reduction;

price convergence;

increased market competition;

renewable-energy integration;

reduced curtailment;

improved reliability;

reserve sharing;

reduced generation costs;

improved utilisation of existing assets.

Costs

construction;

converter stations;

land acquisition;

submarine cable installation;

environmental mitigation;

maintenance;

losses;

permitting;

financing;

security measures.

The legally relevant question is therefore often one of cost-benefit proportionality and system efficiency.

9. AC Versus DC Considerations

Geographic optimisation also determines the appropriate transmission technology.

For long-distance submarine interconnectors, HVDC is frequently used.

The BritNed project provides a useful illustration. The UK-Netherlands interconnector involved a submarine cable of approximately 260 kilometres and 1,000 MW capacity. Because the connected networks operated in AC, converter stations were required at both ends to convert AC to DC and back to AC. (Brick Court Chambers)

This demonstrates that geographic distance affects technological architecture.

A longer route may require:

HVDC technology;

converter stations;

special cable protection;

additional marine surveys;

specialised maintenance arrangements.

Consequently, geographical optimisation must incorporate technology selection.

10. Environmental and Spatial Planning

Interconnector placement also creates environmental-law questions.

Potential impacts include:

protected habitats;

marine ecosystems;

bird migration;

fisheries;

coastal communities;

forests;

agricultural land;

cultural heritage;

indigenous/community interests; and

visual impacts.

Consequently, the geographically shortest route may not be legally or environmentally feasible.

A longer alternative may become preferable where it avoids:

protected areas;

heavily populated regions;

sensitive marine habitats; or

difficult terrain.

Thus:

Geographic optimisation is constrained optimisation, not simply distance minimisation.

11. Security of Supply

Location also affects energy security.

An interconnector can provide:

emergency electricity imports;

reserve sharing;

balancing support;

diversification of supply;

restoration assistance following system disturbances.

However, excessive concentration of interconnection capacity in a single geographical corridor may create vulnerability.

A resilient network therefore seeks geographical diversification rather than dependence on one transmission route.

12. Legal Case: Baltic Cable AB v Energimarknadsinspektionen

A particularly important EU case is Case C-454/18, Baltic Cable AB v Energimarknadsinspektionen, decided by the Court of Justice of the European Union on 11 March 2020.

The case concerned a cross-border electricity interconnector between Sweden and Germany and the treatment of revenues obtained from allocating interconnection capacity.

The Court held that an undertaking merely operating a cross-border interconnector could fall within the relevant concept of a transmission-system operator under the EU electricity framework. (EUR-Lex)

The Court emphasised that interconnector operation participates in cross-border electricity trade and can enhance competition in the internal electricity market. (EUR-Lex)

Significance for geographic optimisation

The case demonstrates that an interconnector is not merely a physical cable.

Its geographical placement creates legal consequences concerning:

market integration;

congestion;

revenues;

network investment;

regulatory supervision; and

cross-border competition.

The Court further held that congestion-revenue rules had to be applied in a way that allowed an interconnector operator to operate in financially acceptable conditions, including an appropriate return. (EUR-Lex)

13. Case: Aquind v ACER

The proposed AQUIND Interconnector, linking Great Britain and France, generated important regulatory litigation concerning exemption from EU electricity-market rules.

In the relevant proceedings, the project promoter sought exemption under Article 17 of Regulation 714/2009. The EU courts considered the scope of review applicable to ACER's assessment of complex technical and economic questions concerning proposed interconnectors. (EUR-Lex)

ACER had previously refused the requested exemptions, concluding that the required investment-risk condition was not demonstrated with sufficient certainty. (ACER)

Importance

This illustrates that geographic interconnector development requires more than technical feasibility.

The project must also satisfy regulatory requirements concerning:

investment risk;

third-party access;

tariffs;

congestion revenues;

unbundling; and

market competition.

14. Case: BritNed Development Ltd v ABB

The BritNed litigation is also significant because it involved the construction of the UK-Netherlands electricity interconnector.

BritNed alleged losses arising from an international power-cables cartel involving ABB and other manufacturers. The litigation considered, among other matters, the price paid for the cable component of the interconnector. The English courts awarded damages in relation to the overcharge claim. (CaseNode)

Relevance to geographic optimisation

This case demonstrates that the economics of interconnector placement depend not only on route selection but also on:

cable procurement;

construction costs;

competitive tendering;

technology;

capacity decisions; and

financing.

Interestingly, the case also illustrates how a decision about capacity and technology becomes intertwined with the economics of geographic planning.

15. German-Austrian Border and Structural Congestion

ACER's decisions concerning the German-Austrian border provide another important regulatory example.

ACER identified a situation in which the interconnector could accommodate requested international trading flows only by creating significant congestion elsewhere. (ACER)

This demonstrates a fundamental principle:

The optimal location of an interconnector must be evaluated against the whole transmission network.

An apparently beneficial connection may simply transfer congestion from one geographical location to another.

16. Multi-Criteria Geographic Optimisation

A sophisticated legal-planning framework can use the following criteria:

17. Geographic Optimisation in India

The same concept is relevant to India's interconnected electricity system.

India has geographically differentiated:

renewable-energy resources;

hydroelectric resources;

coal-generation clusters;

industrial demand;

urban demand centres; and

transmission constraints.

The Electricity Act, 2003, central and state transmission planning, CERC regulations and the activities of transmission-system institutions provide the broader legal setting for inter-regional transmission development.

For India, geographic optimisation can be particularly important for connecting:

Rajasthan and Gujarat solar resources;

western and southern renewable-generation zones;

Himalayan hydropower resources;

eastern generation resources;

major industrial load centres.

The central legal question is whether transmission investment creates sufficient system benefits while satisfying requirements concerning planning, access, environmental regulation, land and regulatory approval.

18. Geographic Optimisation and Energy Justice

Location also has an energy-justice dimension.

A geographically optimal route from a purely economic perspective may impose significant burdens on a particular community.

Therefore, modern energy law increasingly requires consideration of:

Distributional justice

Who receives the benefits and who bears the costs?

Procedural justice

Were affected communities given meaningful participation?

Recognition

Were local communities and vulnerable groups properly considered?

Intergenerational justice

Does the project support long-term energy security without imposing disproportionate environmental burdens?

Thus, geographic optimisation should not be understood purely as a mathematical minimisation problem.

19. Legal Principles Emerging from the Case Law

Several principles can be derived from the European case law and regulatory practice.

1. Interconnectors are part of the internal electricity market

Baltic Cable demonstrates that an interconnector participates directly in cross-border electricity trade and market integration. (EUR-Lex)

2. Congestion must be addressed systematically

Interconnection capacity cannot be evaluated in isolation where flows create structural congestion elsewhere. ACER's German-Austrian decisions illustrate this principle. (ACER)

3. Revenue regulation affects investment

The treatment of congestion revenues influences the economic viability of interconnector operators and future investment. (EUR-Lex)

4. Regulatory authorities must assess complex technical-economic questions

The AQUIND litigation demonstrates the importance of regulatory assessment of investment risk and market conditions. (EUR-Lex)

5. Infrastructure procurement affects overall project economics

The BritNed litigation shows how cable procurement and competition can materially affect the economics of interconnector development. (CaseNode)

20. Future Direction

Future geographic optimisation is likely to involve increasingly sophisticated whole-system planning.

The process may combine:

artificial intelligence;

digital twins;

probabilistic grid modelling;

renewable-generation forecasting;

climate-risk mapping;

seabed mapping;

electricity-market simulations;

transmission expansion planning; and

environmental-impact modelling.

Instead of asking:

“Where should we build the next interconnector?”

regulators will increasingly need to ask:

“Where should the entire transmission network be developed so that interconnectors, renewable generation, storage and demand centres operate as an integrated system?”

Conclusion

Geographic optimisation of interconnector placement is a multidisciplinary concept at the intersection of energy law, electricity-market regulation, engineering, economics and environmental governance.

The central legal principle is that an interconnector should not be assessed merely as an isolated physical cable between two countries. Its location affects congestion, market integration, renewable-energy utilisation, network security, environmental impacts and investment economics.

The Baltic Cable judgment demonstrates the importance of interconnectors to cross-border electricity markets and the legal treatment of congestion revenues. (EUR-Lex) The AQUIND proceedings demonstrate the regulatory importance of investment risk and exemptions, while the BritNed litigation illustrates the economic and procurement dimensions of interconnector construction. (EUR-Lex) ACER's German-Austrian work further shows that geographical optimisation must consider network-wide congestion rather than merely the capacity of the proposed interconnector itself. (ACER)

Accordingly, the modern legal approach should treat interconnector placement as strategic network planning, balancing market efficiency, security of supply, environmental protection, investment incentives, public participation and long-term energy-system resilience.