Europe is not on track to meet its electricity interconnection goals, and the gap could threaten both energy security and system efficiency in the coming decades. According to a new report from Ember, Europe’s current pipeline of cross-border transmission projects falls far short of what is required for an optimised power system by 2040. The think tank warns that timely action is now essential to accelerate ongoing projects, stimulate new proposals and close a growing multi-billion-euro investment gap.

Interconnection expansion crucial for system reliability and cost efficiency

Ember’s analysis underscores that strengthened interconnection is not merely a compliance target but a key driver of system reliability and cost-effectiveness. By 2040, every euro invested in expanding cross-border transmission capacity is expected to reduce generation costs by more than two euros.

However, Europe is still planning for 2030 based on timelines that typically exceed a decade. Ember stresses that decisions made now must already look toward 2040, guided by the EU’s Ten-Year Network Development Plan (TYNDP), which evaluates where new interconnectors are most needed.

Interconnection capacity must nearly double between 2030 and 2040

According to Ember, Europe is expected to reach 167 GW of cross-border exchange capacity by 2030, up from 116 GW in 2024. But achieving an optimal power system in 2040 requires 318 GW, meaning 151 GW must be added during the 2030s—almost doubling current capacity.

Most projects remain in early stages: just over 1 GW is in permitting, 15 GW in planning and 46 GW under consideration. Around 55 GW of additional projects have not yet been proposed, a gap Ember says must be urgently addressed through political support and improved investment conditions.

Funding shortfall threatens Europe’s 2040 goals

Interconnection projects are capital-intensive and heavily reliant on EU support. Historically, the Connecting Europe Facility for Energy (CEF-E) has covered about 31.5% of project costs. But Ember warns that this level of support will be insufficient for the scale of expansion required.

Building the extra 151 GW needed between 2030 and 2040 will cost at least €150 billion, yet the current proposal for the next CEF-E provides only €17 billion for electricity interconnection. According to Ember, this leaves a €30 billion funding gap that must be filled through a mix of EU loans, private financing and alternative funding approaches.

Ember outlines several scenarios, including increased lending from EU institutions such as the European Investment Bank (EIB) or market-driven merchant interconnectors recovering costs through congestion rents, as seen in BritNed and Eleclink.

80% of the EU power system will miss the 2030 interconnection target

Eleven EU Member States—including Portugal, Spain, Italy, France, Germany, Poland and Greece—are projected to fall below the benchmark of having cross-border import capacity equal to at least 15% of their domestic electricity generation by 2030.

Spain and Portugal remain among the least interconnected countries in Europe, with expected interconnection shares of just 4.3% and 10% respectively by 2030. This limits their ability to export abundant renewable energy and benefit from system-wide flexibility.

Major demand centres such as Germany, Italy and Poland, all heavily reliant on fossil fuels, are also projected to remain below 10% by 2030. Italy is a particularly stark case, expected to reach only 4%, even after including connections with non-EU neighbours.

16 countries on track to meet or exceed the target

Despite the widespread lag, 16 countries are on track to reach or surpass the 15% interconnection threshold by 2030. Many of them serve as critical transit corridors rather than end users of exchanged electricity. Examples include Denmark, which links the Nordics to continental Europe, and Hungary, which acts as a hub for Central and Southeastern European flows.

The Baltic States show exceptionally high connectivity, between 40% and 60%, driven by major synchronisation projects accelerated after 2022 for security reasons.

Interconnection now a political priority

Ember highlights how power grid issues have moved from technical discussions into the political spotlight, particularly following the April 2025 Iberian blackout, where cross-border lines were used to blackstart the grid.

The European Grids Package and the next EU budget cycle for 2028-2034 are expected to place strong emphasis on cross-border grid expansion.

According to Ember, accelerating delivery is now essential: both to safeguard security of supply and to ensure the European electricity system is efficient, resilient and ready for the renewable energy transition through 2040.