UK ENERGY LAW AND ELECTRICITY SYSTEM: ELECTRICITY INTERCONNECTION AND CROSS-BORDER GOVERNANCE

1. Introduction

Electricity interconnection concerns the physical and legal mechanisms through which the UK electricity system exchanges electricity with neighbouring jurisdictions. Subsea interconnectors connect Great Britain with markets including France, Belgium, the Netherlands, Norway and Ireland. They permit imports when electricity is cheaper or domestic supply is constrained and exports when Great Britain has surplus generation. The UK Government treats interconnection as supporting affordability, security of supply, renewable integration and system flexibility.

Cross-border governance is consequently not simply infrastructure regulation. It combines domestic licensing, international cooperation, market rules, network security, capacity allocation, regulatory coordination and post-Brexit electricity trading arrangements.

2. Domestic Legal Framework

The principal statute is the Electricity Act 1989. Participation in the operation of an electricity interconnector is a licensed activity, and operators normally require an interconnector licence from Ofgem.

The Energy Act 2023 expanded this framework for emerging offshore systems. In particular, it amended the Electricity Act so that operation of a multi-purpose interconnector (MPI)—infrastructure combining offshore generation connections with cross-border transmission—requires an appropriate licence or exemption.

Major interconnector infrastructure may additionally engage the Planning Act 2008, marine licensing, environmental assessment and development-consent requirements.

3. Ofgem and the Cap-and-Floor Regime

Ofgem's cap-and-floor mechanism is the principal regulated investment framework for new GB electricity interconnectors. It limits developers' exposure to market-price risk while preserving incentives for efficient commercial operation. If revenues fall below an established floor, regulatory support may apply; revenues above the cap are returned through the regulatory mechanism.

Ofgem's framework also addresses certification, access rules and charging methodologies. The continuing significance of interconnection is illustrated by Ofgem's 2024 Window 3 decision, which granted regimes in principle to the MaresConnect, LirIC and Tarchon projects following consumer-interest assessments.

4. UK-EU Cross-Border Governance

Brexit fundamentally altered electricity-market governance. EU legislation no longer directly governs GB cross-border electricity flows in the manner applicable before 2021. Instead, the UK-EU Trade and Cooperation Agreement (TCA) establishes a framework for energy cooperation and commits the parties to developing efficient electricity trading arrangements across interconnectors.

As of 2026, this field remains dynamic. The UK Government states that negotiations concerning UK participation in the EU Internal Electricity Market began in May 2026.

Northern Ireland occupies a distinctive position because the Single Electricity Market (SEM) operates across the island of Ireland, requiring continuing cross-border regulatory coordination.

5. Multi-Purpose Interconnectors

Cross-border governance is increasingly connected with offshore wind. MPIs can connect offshore generation while simultaneously permitting electricity trading between national markets.

In March 2026, Ofgem confirmed that Government and Ofgem are pursuing Offshore Bidding Zones with implicit trading arrangements as the preferred market model for MPIs. This illustrates the movement from simple point-to-point cables toward integrated offshore electricity networks.

6. Case Law: R (AQUIND Ltd) v Secretary of State for BEIS [2023] EWHC 98 (Admin)

Case Name/Citation: R (AQUIND Ltd) v Secretary of State for Business, Energy and Industrial Strategy [2023] EWHC 98 (Admin).

Facts: AQUIND proposed a 2,000 MW electricity interconnector between England and Normandy. The Secretary of State refused development consent principally because of concerns about whether an alternative substation location had been properly considered.

Legal Issue: Whether the refusal complied with the Planning Act 2008, applicable National Policy Statements and public-law decision-making requirements.

Judgment: The High Court held the refusal unlawful and quashed the decision.

Legal Principle/Ratio: Infrastructure decisions must properly apply the statutory decision-making framework, consider relevant evidence and comply with the Tameside duty to take reasonable steps to obtain information necessary for a lawful decision.

Significance: Cross-border energy infrastructure remains subject to rigorous domestic planning and administrative-law controls despite its international strategic importance.

7. Case Law: ACER v Aquind, Case C-46/21 P

Case Name/Citation: Agency for the Cooperation of Energy Regulators (ACER) v Aquind Ltd, Case C-46/21 P, EU:C:2023:182.

Facts: The dispute concerned the regulatory treatment of the proposed UK-France AQUIND interconnector and, particularly, its request for exemption from aspects of EU internal electricity-market regulation.

Legal Issue: The proceedings concerned ACER's handling of the regulatory exemption framework applicable to new electricity interconnectors.

Judgment: The Court of Justice addressed ACER's appeal concerning the General Court's annulment of the relevant regulatory decisions.

Legal Principle/Ratio: Cross-border interconnectors operate within a multi-level regulatory structure in which national regulators, ACER and EU electricity-market rules can interact.

Significance: The litigation demonstrates that electricity interconnection requires coordination between different legal systems and regulatory authorities, rather than regulation by one state alone.

8. Conclusion

UK electricity interconnection is therefore governed through overlapping domestic and international regimes. The Electricity Act 1989, Energy Act 2023, Ofgem licensing and cap-and-floor regulation operate alongside planning law, the UK-EU TCA and specialised arrangements for Northern Ireland. Future offshore networks will make governance still more integrated. Effective cross-border governance must reconcile energy security, efficient electricity trading, consumer protection, regulatory sovereignty, renewable integration and international cooperation while ensuring that major interconnector decisions remain legally accountable.