Global Electricity Arbitrage with Interconnectors

A new report has been uploaded. You can find it in Classroom --> 6.2.
Below, it's a summary of key points, along with useful screenshots.

Electricity interconnectors, often referred to as "supercables," are high-capacity transmission lines that link the power grids of different countries or regions.

Their primary function is to balance the variability of renewable energy sources like wind and solar by moving electricity from where it is abundant to where it is needed. Since weather conditions differ across locations, one region may produce surplus green energy while another faces a shortage.

Interconnectors allow for "arbitrage," where traders buy electricity in a region with low demand (and low prices) and sell it to a region with high demand. A key example is the Viking Link between the UK and Denmark, which allows the two nations to exchange power based on real-time wind speeds and consumption needs.

Despite their benefits, building these supercables involves significant challenges. Developers are proposing ambitious projects to connect distant time zones—such as Australia to Singapore or Morocco to Europe—to take advantage of differing peak usage hours.

However, these projects are incredibly expensive and technically difficult, requiring specialized ships to lay cables on the seabed during narrow weather windows. The industry also faces supply chain bottlenecks for essential equipment like transformers, as well as political and security risks regarding control and potential sabotage of critical infrastructure. Nevertheless, if these hurdles can be overcome, interconnectors could play a vital role in making renewable energy more reliable and globally accessible.

Relevant Sources:

[1] Financial Times: https://www.ft.com/content/db0a6697-c120-4f72-b876-e7bbc6e1e6e9

[2]: The Economist: https://www.economist.com/international/2025/01/23/why-dont-more-countries-import-their-electricity?

[3]: Bloomberg: https://www.bloomberg.com/news/articles/2025-09-11/suncable-project-turns-to-data-centers-pushing-back-singapore-exports?

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