Europe’s electricity system has reached a critical inflection point. Accelerating decarbonisation while sharply reducing dependence on imported fossil fuels will require the continent to integrate unprecedented volumes of renewable generation over the coming decade. At the same time, Europe must safeguard affordability and ensure the uninterrupted security of supply. Meeting these twin imperatives demands an electricity market that is far more integrated, flexible, and coordinated across borders than it is today.

The European Union (EU) Agency for the Cooperation of Energy Regulators (ACER) has released its 2025 Monitoring Report on transmission capacities for cross-zonal trade of electricity and congestion management in the EU, an assessment that carries major implications for the efficiency and resilience of Europe’s interconnected power system. The report underscores a decisive finding: Europe’s success depends on a far more integrated, flexible, and cross-border-coordinated transmission network.

Some of the key findings are:

  • Cross-border transmission capacity remains significantly underutilised: In 2024, transmission system operators (TSOs), in the Core region (comprising 13 European countries of Austria, Belgium, Croatia, the Czech Republic, France, Germany, Hungary, Luxemburg, the Netherlands, Poland, Romania, Slovakia and Slovenia) made only 54 per cent of physical capacity available on the most congested lines, far below the EU-mandated 70 per cent requirement. As a result, Europe captured only 40 per cent of the potential EUR580 million in welfare gains that full compliance would have delivered.
  • Insufficient transmission availability directly drives price volatility: During the 2024 summer price spikes in South-East Europe, higher cross-zonal capacity from Central Europe would have prevented roughly half of the most severe high-price events, demonstrating the stabilising effect of well-functioning transmission corridors.
  • Constraints in the transmission system are imposing massive economic costs: Europe spent EUR4.3 billion in 2024 on remedial actions to manage grid congestion, covering nearly 60 TWh of redispatching. These costs reflect structural bottlenecks that transmission reinforcements are failing to resolve quickly enough.
  • Grid development is not keeping pace with system needs: ACER’s monitoring shows that over 60 per cent of major transmission projects are delayed, widening the gap between renewable-energy expansion and cross-border transfer capability. This slowdown perpetuates reliance on expensive interim measures and limits market integration.

Despite progress, such as the Core flow-based market coupling, Europe risks missing the end-2025 deadline for full application of the 70 per cent rule. Key challenges include:

  • Absence of a regional congestion-management and cost-sharing framework in the Core region.
  • Persistent loop flows that distort cross-border capacity allocation.
  • Slow deployment of grid reinforcements and non-wire alternatives.
  • Technical difficulty meeting the 70 per cent requirement in intraday markets, where TSOs have less time to apply remedial actions.

Europe’s clean-energy transition depends on three key actions. First, the transmission grid must expand much faster, combining new lines with advanced technologies like dynamic line rating, flexible AC systems, and storage to relieve congestion and move renewables across borders more efficiently. Second, TSOs need more coordinated and cost-effective remedial actions. Redispatching and countertrading remain essential short-term tools, but regional pooling and harmonisation can significantly reduce today’s high operational costs while larger grid projects advance. Third, revisiting bidding-zone configurations, in regions where structural bottlenecks persist, can cut redispatch volumes, improve price signals, and help meet the 70 per cent cross-zonal-capacity requirement.

According to the report, these measures, such as accelerated grid build-out, better operational coordination, and thoughtful bidding-zone reform, form the backbone of a secure, affordable, and fully integrated European power system capable of supporting rapid renewable expansion.

The full report can be accessed here.