Interconnectors and electricity prices: how cables between countries shape your bill

Why can electricity cost twice as much in Tallinn as in Helsinki on the same afternoon, yet the same in Vienna and Munich most of the time? The answer lies in the cables and lines between countries, and in the way Europe’s day-ahead market uses them.

Market coupling: one auction for most of Europe

Since the 2010s the national day-ahead markets have been joined into the Single Day-Ahead Coupling (SDAC). Every day around noon a common algorithm takes all buy and sell bids from the participating countries, together with the available cross-border transmission capacity, and calculates prices and flows for the next day in one go. From delivery day 1 October 2025 the market moved from hourly to 15-minute time units.

For consumers this is invisible but important. The price shown for your bidding zone is not a national price set in isolation; it is the result of a Europe-wide calculation in which wind in the North Sea, hydro reservoirs in Norway and solar in Spain all play a part. A cold, still evening in Germany can therefore raise prices in Denmark or the Netherlands too.

The logic is simple: power flows from the cheaper zone to the more expensive one until either the prices are equal or the cable is full. If there is enough capacity, neighbouring zones end up with the same price. If the cable is full, a congestion occurs and the prices split. The price difference is then collected as “congestion income” by the transmission system operators.

Flow-based coupling and bidding zones

In meshed continental grids, power does not follow the commercial contract path: a sale from northern Germany to Austria physically spreads across lines in neighbouring countries. To take this into account, Central Western Europe and later the wider Core region and the Nordic region switched to flow-based market coupling. Instead of a single fixed capacity per border, the algorithm checks how each trade loads the critical lines in the grid.

Bidding zone borders matter just as much. The best-known example is Germany and Austria, which shared a single price zone until 1 October 2018. Since the split, at least 4.9 GW can be traded across that border; when trade exceeds what the grid can carry, Austrian and German prices diverge. You can compare them today on the Austria and Germany pages. Sweden and Norway go further, with several zones inside the country: compare southern Sweden (SE4) with southern Norway (NO2).

Key links and what they do to prices

• NordBalt (Sweden–Lithuania) and Estlink (Finland–Estonia) connect the Baltic states to the cheaper Nordic market. When they are available, Baltic prices are pulled towards Nordic levels; see Lithuania.
• NordLink (Norway–Germany) lets Norwegian hydropower import cheap German wind and solar surplus and export when German prices are high. It is one reason why southern Norwegian prices now follow continental trends more closely.
• Viking Link (Denmark–Great Britain) connects western Denmark (DK1) to the British market, which is often more expensive.
• France–Spain: the Iberian Peninsula has only about 2,800 MW of exchange capacity with France. A new Bay of Biscay link is due in 2028 and will raise it to about 5,000 MW. The weak connection is why Spanish and Portuguese prices often decouple from France.

When a cable fails: the Estlink 2 example

Outages show the value of interconnectors most clearly. On 25 December 2024 the Estlink 2 cable between Finland and Estonia was damaged, removing 650 MW of transmission capacity. It returned to commercial use only on 20 June 2025.

The price effect was immediate. In the week of 14 February 2025, the average day-ahead price was about 184 €/MWh in Estonia but 84.6 €/MWh in Finland. Market participants in Estonia estimated the extra cost to Estonian consumers at around 50 million euros for February alone. Over the whole of 2025 the average price was 80.39 €/MWh in Estonia against 40.49 €/MWh in Finland.

The gap that week was roughly 99 €/MWh, or about 10 cents per kWh. If a whole month looked like that, a household using 300 kWh would pay around 30 € more on the energy part of the bill, purely because of where the customer lives relative to a damaged cable.

What this means for consumers

More interconnection generally lowers prices in expensive zones and raises them somewhat in cheap exporting zones. That is why Norwegian and Swedish consumers sometimes see cables as a cost, while Baltic and Spanish consumers want more of them. Over the whole system, interconnectors reduce the need for back-up plants and help absorb solar and wind surpluses that would otherwise cause negative prices.

If your price suddenly separates from your neighbour’s, check whether a link is out of service or whether generation at home has dropped. The generation mix pages show imports and local production hour by hour, and the raw data are available on our open data page.

Frequently asked questions

Sources

• EPEX SPOT – 15-minute MTU in SDAC goes live
• SMARD (Bundesnetzagentur) – German-Austrian bidding zone split
• Red Eléctrica – Bay of Biscay interconnection
• Fingrid – EstLink 2 returns to commercial use
• ERR News – EstLink 2 outage cost in February 2025

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