Regulatory Aspects and Public International Law Issues of the Construction of Cross-Border Electricity Networks

The role of government and regulation in the construction of regional interconnections and enabling cross-border trade in electricity over long distances is crucial. Only integrated electricity markets and well-designed regulatory frameworks can deliver and maintain cost-effective electricity systems. Interconnected electricity systems, in their turn, can contribute to the objectives of low carbon economy, as cross-border electricity networks can integrate large-scale renewable energy sources. This paper explores the challenges related to the regulatory environment for the construction of cross-border electricity transmission links. It looks at regulatory aspects and public international law issues of cross-border energy trade and investment and international and regional cooperation related to the construction of cross-border electricity networks. First, it examines the right to construct transmission under the law of the World Trade Organization (WTO), focusing on the transit provisions of Article V of the General Agreement on Tariffs and Trade (GATT) and related obligations under the Agreement on Subsidies and Countervailing Measures (ASCM). Second, it discusses rights and obligations arising from the participation at energy-specific international treaties, such as the non-impediment obligation under Article 7 of the Energy Charter Treaty. Third, it looks at the potential of creating legal guarantees for investors under regional trade and energy-specific agreements. The paper draws on existing case law and the experience with electricity market regulations and energy investment regimes in the European Union