This article addresses the potential of interconnecting electricity systems to geographically aggregate remotely located variable power sources. Increasing the deployment of power generators using variable renewable power sources, such as wind and solar, brings power balancing challenges in electricity systems. One mean to achieve power balancing and to share balancing resources, is to interconnect.
The article provides insights for electricity trading through a submarine power cable between Europe and the eastern part of North America. While such ambitious power interconnection concepts appear in recent literature, this article is the first to present a techno-economic analyses. This article concludes that, a 4000 MW cable between Europe and North America could bring an annual socio-economic benefit of 177 M€ in 2030. In addition to the differences in generation costs, mutual benefits from electricity trading between Europe and North America derive from different daily peak demand times, low correlation in generation from renewable energy sources, and in seasonal demand variations. The results of the cost-benefit analysis indicate that the benefit for society is sufficient to cover the investment costs. Thus, the proposed interconnector is welfare improving.