Reassessing the Role of Interconnectors in Electricity Prices: The Moderating Impact of Renewables

Interconnectors, the high-voltage billion-dollar transmission links between states, are among Australia's largest infrastructure investments. As renewable green energy generation, including wind and solar, expands, policymakers need evidence on whether these links remain economically valuable. While there is ongoing debate between researchers and practitioners about how renewables change the economic value of interconnectors, this study addresses this gap by analysing generators' bidding data to simulate electricity prices under varying levels of interconnector capacity. By comparing different scenarios, it identifies the economic value of interconnectors. The findings guide infrastructure investment policy in the transmission system.