The value of interconnection: a techno-economic comparison of grid integration strategies in Europe and China

The need to reduce carbon emissions combined with the economic benefits of renewable generation sources is completely changing the structure of electricity systems as we know them. Generation from centralized systems is becoming increasingly distributed, variable, and difficult to control. Therefore, for technical and energy security reasons, it is essential to invest in transmission systems and interconnections between areas with different energy mixes. This thesis analyzes the strategies and development models of transmission grids in Europe and China over recent decades, evaluating them through a mixed technical-economic approach that takes into account factors such as economic efficiency, grid improvement, and system security and stability. The main differences between the two models lie in grid development: while the European model follows a more liberal, bottom-up approach, whereby investments are closely linked to market signals, the Chinese model adopts a more centralized, top-down approach, whereby grid expansion is planned first and then investments in generation are made. It should also be noted that the Chinese model also includes regional development objectives for rural and sparsely populated areas. In both cases, the grid serves to ensure energy security objectives by connecting areas with very different energy mixes, ensuring lower price volatility and less dependence on traditional energy sources such as fossil fuels. The two models are reaching a point of near convergence. The European model is adopting more centralized policies thanks to the TYNDP and TEN-E development plans, which provide common objectives for member countries. Meanwhile, the Chinese model is beginning to integrate an electricity market system through regional pilot spot markets, which will be progressively expanded until a full transition to a national market model is achieved.