Beyond Borders | Power Grid Interconnections and Regional Electricity Markets for the Sustainable Energy Transition

This report provides a foundational guide to regional energy integration, with a particular focus on developing and emerging economies. Many regions are about to integrate power grids and markets across national boundaries, which can offer economic benefits, enhanced power supply quality and security, and opportunities for scaling up climate change mitigation measures. The report begins with an overview of the different levels of power system integration, followed by an analysis of the primary drivers behind regional energy integration. It identifies five key building blocks essential for achieving deeper integration: interconnection infrastructure, planning and investment coordination, technical and operational coordination, commercial arrangements and market design, and institutional architecture. The report also highlights the key challenges hindering the development of these building blocks, particularly issues related to political cooperation and financing. It concludes by advocating for a collaborative, step-by-step approach, along with institutional capacity building and innovative financing mechanisms, to advance regional energy integration efforts.