Strengthening interconnectivity, they argue, will also reinforce security of supply at a time when Europe is distancing itself from Russian energy and pushing toward a new era of energy independence.
But the enthusiastic language coming out of Brussels raises a fundamental question: how realistic is it to expect that interconnectivity alone can overcome the structural challenges facing Europe’s energy market? And even more critically, can a more connected grid bring electricity prices down when the underlying generation mix remains costly, intermittent and heavily dependent on imported fuels?
Europe’s strategic vision rests on the assumption that a highly interconnected electricity system based on renewable will allow electricity flows to be optimally shared across borders, balancing periods of surplus wind or solar in one region with deficits in another. In theory, this is sound. Interconnection reduces congestion, improves price convergence between countries and enhances the flexibility of the overall system. However, interconnection can only transmit the electricity that exists; it cannot make expensive production cheaper, nor can it compensate for flawed assumptions about energy independence.
This is where EU planning runs into reality. Today, nearly 70% of Europe’s gross available energy still comes from fossil fuels, and a staggering 98% of its oil and gas is imported. These imports shape not only overall energy security, but the cost base of industrial power prices—which are already twice as high as in China and three times higher than in the United States. Europe’s competitiveness is eroding precisely because it relies so heavily on high-cost energy sources (such as subsidised renewables) while simultaneously imposing strict climate and regulatory constraints against fossil fuel power, that raise costs further.
Against this backdrop, the idea that Europe can rapidly become energy independent solely by electrifying everything, from industry to mobility to heating, appears deeply unrealistic. Electrification increases electricity demand dramatically, yet the bulk of that electricity must come from sources that are either intermittent or expensive to integrate into the grid. Solar PV and wind, despite their success stories, still have low-capacity factors, require massive overbuild, and increasingly depend on costly battery storage to ensure reliability. Their levelised costs do not reflect the true system cost of integrating large volumes of variable power into a grid that must remain stable at all times.
Meanwhile, Europe continues to shy away from tapping its own indigenous hydrocarbon resources, whether in the North Sea, the Adriatic, the East Mediterranean or the Black Sea. Without a pragmatic reassessment of domestic production, Europe will continue to rely on imports for decades, regardless of rhetoric. In such a context, hopes of cheap electricity are misplaced. Grid interconnectivity is beneficial, even necessary, but it cannot by itself compensate for a structurally high-cost generation base.
This brings us to the crucial question: what will the EU’s latest grid package and Energy Highways initiative mean for South East Europe?
South East Europe (SEE) presents both opportunities and vulnerabilities. On the one hand, the region stands to benefit from improved cross-border flows that can optimise the use of diversified supply sources, including LNG terminals in Greece, hydro from the Western Balkans, and growing renewables in Greece, Bulgaria and Romania. Enhanced interconnectivity could help stabilise prices in smaller markets historically influenced by single suppliers.
But SEE also faces structural constraints. Much of the region still relies heavily on natural gas—traditionally from Russia—and lignite, which is gradually being phased out. Electricity systems remain relatively fragmented, and affordability remains a persistent challenge. High grid investment costs may take years to translate into lower end-user prices, and without low-cost base generation, the benefits will be limited. Moreover, the region’s renewable expansion is still at an early stage, with storage, balancing capacities and market reforms lagging behind Western Europe.
In practice, the EU’s grid package may improve flexibility, but it cannot override the economic fundamentals: electricity will remain expensive in SEE so long as new investments are required across the system, generation, transmission and storage, without corresponding reductions in production costs.
Ultimately, Europe’s push for deeper interconnectivity is positive and necessary. But it is not a substitute for addressing Europe’s core energy dilemma: high dependency on imported fuels, insufficient domestic production, and a renewable strategy that remains technologically impressive yet economically incomplete. If the EU truly wants lower electricity prices, interconnectivity must be matched with a broader, more pragmatic energy policy, one that recognises that affordable electricity depends first and foremost on affordable generation. Only by aligning political ambition with economic realism can Europe hope to deliver the secure, low-cost energy future it envisions.
*Chairman and Executive Director of the Institute of Energy for SE Europe (IENE)
(Editorial of IENE’s “Energy Weekly Report”, No 480, December 12, 2025)