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European Energy Crisis shocks markets as Russia slashes gas via Nord Stream, spiking prices and triggering rationing, LNG imports, storage shortfalls, and emergency measures to secure energy security before a harsh winter.

Key Points

Europe-wide gas shock from reduced Russian flows drives price spikes, rationing risk, LNG reliance, and emergency action.

✅ Nord Stream cuts deepen supply insecurity and storage gaps

✅ LNG imports rise but terminal capacity and shipping are tight

✅ Policy tools: rationing, subsidies, demand response, coal restarts

As Russian gas cutoffs upend European energy security, the continent is struggling to cope with what experts say is one of its worst-ever energy crises—and it could still get much worse. 

For months, European leaders have been haunted by the prospect of losing Russia’s natural gas supply, which accounts for some 40 percent of European imports and has been a crucial energy lifeline for the continent. That nightmare is now becoming a painful reality as Moscow slashes its flows in retaliation for Europe’s support for Ukraine, dramatically increasing energy prices and forcing many countries to resort to emergency plans, including emergency measures to limit electricity prices in some cases, and as backup energy suppliers such as Norway and North Africa are failing to step up.

“This is the most extreme energy crisis that has ever occurred in Europe,” said Alex Munton, an expert on global gas markets at Rapidan Energy Group, a consultancy. “Europe [is] looking at the very real prospect of not having sufficient gas when it’s most needed, which is during the coldest part of the year.”

“Prices have shot through the roof,” added Munton, who noted that European natural gas prices—nearly $50 per MMBTu—have eclipsed U.S. price rises by nearly tenfold, and that rolling back electricity prices is tougher than it appears in the current market. “That is an extraordinarily high price to be paying for natural gas, and really there is no immediate way out from here.” 

Many officials and energy experts worry that the crisis will only deepen after Nord Stream 1, the largest gas pipeline from Russia to Europe, is taken down for scheduled maintenance this week. Although the pipeline is supposed to be under repair for only 10 days, the Kremlin’s history of energy blackmail and weaponization has stoked fears that Moscow won’t turn it back on—leaving heavily reliant European countries in the lurch. (Russia’s second pipeline to Germany, Nord Stream 2, was killed in February as Russian President Vladimir Putin prepared to invade Ukraine, leaving Nord Stream 1 as the biggest direct gas link between Russia and Europe’s biggest economy.)

“Everything is possible. Everything can happen,” German economy minister Robert Habeck told Deutschlandfunk on Saturday. “It could be that the gas flows again, maybe more than before. It can also be the case that nothing comes.”

That would spell trouble for the upcoming winter, when demand for energy surges and having sufficient natural gas is necessary for heating. European countries typically rely on the summer months to refill their gas storage facilities. And at a time of war, when the continent’s future gas supply is uncertain, having that energy cushion is especially crucial.

If Russia’s prolonged disruptions continue, experts warn of a difficult winter: one of potential rationing, industrial shutdowns, and even massive economic dislocation. British officials, who just a few months ago warned of soaring power bills for consumers, are now warning of even worse, despite a brief fall to pre-Ukraine war levels in gas prices earlier in the year.

Europe could face a “winter of discontent,” said Helima Croft, a managing director at RBC Capital Markets. “Rationing, industrial shut-ins—all of that is looming.”

Unrest has already been brewing, with strikes erupting across the continent as households struggle under the pressures of spiraling costs of living and inflationary pressures. Some of this discontent has also had knock-on effects in the energy market. In Norway, the European Union’s biggest supplier of natural gas after Russia, mass strikes in the oil and gas industries last week forced companies to shutter production, sending further shockwaves throughout Europe.

European countries are at risk of descending into “very, very strong conflict and strife because there is no energy,” Frans Timmermans, the vice president of the European Commission, told the Guardian. “Putin is using all the means he has to create strife in our societies, so we have to brace ourselves for a very difficult period.”

The pain of the crisis, however, is perhaps being felt most clearly in Germany, which has been forced to turn to a number of energy-saving measures, including rationing heated water and closing swimming pools. To cope with the crunch, Berlin has already entered the second phase of its three-stage emergency gas plan; last week, it also moved to bail out its energy giants amid German utility troubles that have been financially slammed by Russian cutoffs. 

But it’s not just Germany. “This is happening all across Europe,” said Olga Khakova, an expert on European energy security at the Atlantic Council, who noted that France has also announced plans to nationalize the EDF power company as it buckles under mounting economic losses, and the EU outlines gas price cap strategies to temper volatility. “The challenging part is how much can these governments provide in support to their energy consumers, to these companies? And what is that breaking point?”

The situation has also complicated many countries’ climate goals, even as some call it a wake-up call to ditch fossil fuels for Europe. In late June, Germany, Italy, Austria, and the Netherlands announced they would restart old coal power plants as they grapple with shrinking supplies. 

The potential outcomes that European nations are grappling with reveal how this crisis is occurring on a scale that has only been seen in times of war, Munton said. In the worst-case scenario, “we’re talking about rationing gas supplies, and this is not something that Europe has had to contend with in any other time than the wartime,” he said. “That’s essentially where things have got to now. This is an energy war.”

They also underscore the long and painful battle that Europe will continue to face in weaning itself off Russian gas. Despite the continent’s eagerness to leave Moscow’s supply behind, experts say Europe will likely remain trapped in this spiraling crisis until it can develop the infrastructure for greater energy independence—and that could take years. U.S. gas, shipped by tanker, is one option, but that requires new terminals to receive the gas and U.S. energy impacts remain a factor for policymakers. New pipelines take even longer to build—and there isn’t a surfeit of eligible suppliers.

Until then, European leaders will continue to scramble to secure enough supplies—and can only hope for mild weather. The “worst-case scenario is people having to choose between eating and heating come winter,” Croft said. 

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London Electricity Tunnel strengthens grid modernization with high-voltage cabling from major substations, increasing redundancy, efficiency, and resilience while enabling renewable integration, optimized power distribution, and a stable, low-loss electricity supply across the capital.

Key Points

A high-voltage tunnel upgrading London's grid, with capacity, redundancy, and renewable integration for reliable power.

✅ High-voltage cabling from key substations boosts capacity

✅ Redundancy improves reliability during grid faults

✅ Enables renewable integration and lower transmission losses

London’s energy infrastructure has recently taken a significant leap forward with the commissioning of its newest electricity tunnel, and related upgrades like the 2GW substation that bolster transmission capacity, a project that promises to enhance the reliability and efficiency of the city's power distribution. This cutting-edge tunnel is a key component in London’s ongoing efforts to modernize its energy infrastructure, support its growing energy demands, and contribute to its long-term sustainability goals.

The newly activated tunnel is part of a broader initiative to upgrade London's aging power grid, which has faced increasing pressure from the city’s expanding population and its evolving energy needs, paralleling Toronto's electricity planning to accommodate growth. The tunnel is designed to carry high-voltage electricity from major substations to various parts of the city, improving the distribution network's capacity and reliability.

The construction of the tunnel was a major engineering feat, involving the excavation of a vast underground passage that stretches several kilometers beneath the city. The tunnel is equipped with advanced technology and materials to ensure its resilience and efficiency, and is informed by advances such as HVDC technology being explored across Europe for stronger grids. It features state-of-the-art cabling and insulation to handle high-voltage electricity safely and efficiently, minimizing energy losses and improving overall grid performance.

One of the key benefits of the new tunnel is its ability to enhance the reliability of London’s power supply. As the city continues to grow and demand for electricity increases, maintaining a stable and uninterrupted power supply is critical. The tunnel helps address this need by providing additional capacity and creating redundancy in the power distribution network, aligning with national efforts to fast-track grid connections that unlock capacity across the UK.

The tunnel also supports London’s sustainability goals by facilitating the integration of renewable energy sources into the grid. With the increasing use of solar, wind, and other clean energy technologies, including the Scotland-to-England subsea link that will carry renewable power, the power grid needs to be able to accommodate and distribute this energy effectively. The new tunnel is designed to handle the variable nature of renewable energy, allowing for a more flexible and adaptive grid that can better manage fluctuations in supply and demand.

In addition to its technical benefits, the tunnel represents a significant investment in London’s future energy infrastructure, echoing calls to invest in smarter electricity infrastructure across North America and beyond. The project has created jobs and stimulated economic activity during its construction phase, and it will continue to provide long-term benefits by supporting a more efficient and resilient power system. The upgrade is part of a broader strategy to modernize the city’s infrastructure and prepare it for future energy challenges.

The completion of the tunnel also reflects a commitment to addressing the challenges of urban infrastructure development. Building such a major piece of infrastructure in a densely populated city like London requires careful planning and coordination to minimize disruption and ensure safety. The project team worked closely with local communities and businesses to manage the construction process and mitigate any potential impacts.

As London moves forward, the new electricity tunnel will play a crucial role in supporting the city’s energy needs. It will help ensure that power is delivered efficiently and reliably to homes, businesses, and essential services. The tunnel also sets a precedent for future infrastructure projects, demonstrating how advanced engineering and technology can address the demands of modern urban environments.

The successful activation of the tunnel marks a significant milestone in London’s efforts to build a more sustainable and resilient energy system. It represents a forward-thinking approach to managing the city’s energy infrastructure and addressing the challenges posed by population growth, increasing energy demands, and the need for cleaner energy sources.

Looking ahead, London will continue to invest in and upgrade its energy infrastructure to support its ambitious climate goals and ensure a reliable power supply for its residents, a trend mirrored by Toronto's preparations for surging demand as that city continues to grow. The new electricity tunnel is just one example of the city’s commitment to innovation and sustainability in its approach to energy management.

In summary, London’s newest electricity tunnel is a major advancement in the city’s power distribution network. By enhancing reliability, supporting the integration of renewable energy, and investing in long-term infrastructure, the tunnel plays a critical role in addressing the city’s energy needs and sustainability goals. As London continues to evolve, such infrastructure projects will be essential in meeting the demands of a growing metropolis and creating a more resilient and efficient energy system for the future.

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European Power Crisis intensifies as record electricity prices, nuclear output cuts, gas supply strain, heatwave drought, and Rhine shipping bottlenecks hit Germany, France, and Switzerland, tightening winter storage and driving long-term contracts higher.

Key Points

A surge in European power prices from heatwaves, nuclear curbs, Rhine coal limits, and reduced Russian gas supply.

✅ Record year-ahead prices in Germany and France

✅ Nuclear output curbed by warm river cooling limits

✅ Rhine low water disrupts coal logistics and generation

Benchmark power prices in Europe hit fresh records Friday as utilities are increasingly reducing electricity output in western Europe because of the hot weather. 

Next-year contracts in Germany and France, Europe’s biggest economies rose to new highs after Switzerland’s Axpo Holding AG announced curbs at one of its nuclear plants. Electricite de France SA is also reducing nuclear output because of high river temperatures and cooling water restrictions, while Uniper SE in Germany is struggling to get enough coal up the river Rhine. 

Europe is suffering its worst energy crunch in decades, and losing nuclear power is compounding the strain as gas cuts made by Russia in retaliation for sanctions drive a surge in prices. The extreme heat led to the driest July on record in France and is underscoring the impact that a warming climate is having on vital infrastructure.

Water levels on Germany’s Rhine have fallen so low that the river may effectively close soon, impacting supplies of coal to the plants next to it. The Rhone and Garonne in France and the Aare in Switzerland are all too warm to be used to cool nuclear plants effectively, forcing operators to limit energy output under environmental constraints. 

Northwest European weather forecast for the next two weeks:
relates to European Power Hits Records as Plants Start to Buckle in Heat
  
The German year-ahead contract gained as much as 2% to 413 euros a megawatt-hour on the European Energy Exchange AG. The French equivalent rose 1.9% to a record 535 euros. Long-term prices are coming under pressure because producing less power from nuclear and coal will increase the demand for natural gas, which is badly needed to fill storage sites ahead of the winter.  

France to Curb Nuclear Output as Europe’s Energy Crisis Worsens
Uniper SE said on Thursday that two of its coal-fired stations along the Rhine may need to curb output during the next few weeks as transporting coal along the Rhine becomes impossible. 

Plants on the river near Mannheim and Karlsruhe, operated by Grosskraftwerk Mannheim AG and EnBW AG, have previously struggled to source coal because of the shallow water, even as German renewables deliver more electricity than coal and nuclear at times. Both companies said generation hasn’t been affected yet. 

“The low tide is not currently affecting our generation of energy because our plants do not have the need for continuous fresh water,” a Steag GmbH spokesman said on Friday. “But the low tide level can make running plants and transporting coal more complicated than usual.”

The spokesman said though that there is slight reduction in output of about 10 to 15 megawatts, which would equate to a few percent, because of the hot temperatures. “This has been happening over some time now and is a problem for everyone because the plant system is not designed to withstand such hot temperatures,” he said.

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UK power grid bottleneck is stalling renewable energy, with connection queues, planning delays, and transmission infrastructure gaps raising costs, slowing decarbonization, and deterring investment as government considers reforms led by a new chief adviser.

Key Points

Delays and capacity gaps that hinder connecting new generation and demand, raising costs and slowing decarbonization.

✅ Connection queues delay projects for years

✅ Planning and NIMBY barriers stall transmission builds

✅ Investment costs on bills risk political pushback

During his three decades at investment bank Morgan Stanley, Franck Petitgas developed a reputation for solving problems that vexed others. Fixing the UK’s creaking power grid could be his most challenging task yet.

Earlier this year, Prime Minister Rishi Sunak appointed Petitgas as his chief business adviser, and the former financier has been pushing to tackle the gridlock that’s left projects waiting endlessly for a connection, an issue he sees as one of the biggest problems for industry.

But there are no easy solutions to tackle the years-long queue to get on the grid or the drawn-out planning process for building clean power generation, with the energy transition stalled by supply delays compounding the problem. And sluggish progress in expanding and improving the electricity network is preventing the construction of new housing developments and offices, as well as slowing the transition to greener power.

That transition has already taken a knock after Sunak last week controversially watered down some of the UK’s climate ambitions, citing in part the cost to consumers. He also acknowledged the issues surrounding the grid and promised the “most transformative plans” in response, drawing on lessons from Europe’s power crisis where applicable. Those are due to be unveiled within weeks. 

Shortly after his appointment, Petitgas offered reassurances to business leaders at a meeting in Downing Street that solutions were being worked on, according to people familiar with the matter. But there’s a lack of confidence across business that enough will be done.

Cost is a big factor in the expansion of the electricity grid, and some argue a state-owned generation model could ease bills over time. Improving the onshore network alone could require investment of between £100 billion and £240 billion ($122-$293 billion) by 2050, according to a government analysis last year. 

With network expansion funded through power bills, that’s a big ask, particularly with Sunak trailing in polls ahead of an election expected next year.

“It’s very difficult for politicians to say more money should be on bills,” said Emma Pinchbeck, chief executive of Energy UK, a trade body. “So you get to a situation where no one wants to pay for the infrastructure investment until it’s really sticky, and that’s where we’ve got to with the grid.”

There are huge competitive and economic implications if the UK falls further behind. With US President Joe Biden spending an estimated $370 billion on climate measures through his Inflation Reduction Act, and China already a world leader in electric vehicles, Britain’s grid inaction is holding it back in the global race to decarbonize, said Jess Ralston, an analyst at the Energy and Climate Intelligence Unit think tank.

“The UK is dithering and delaying, and not making any strategic decisions,” she said. “You can see companies just saying ‘I’m going to the US, or I’m going to China’.” 

In a statement, the government said it’s a “priority to speed up the time taken to connect new power generators and power consumers to the grid.” It added that it’s taking “significant steps to accelerate grid infrastructure,” including support for new Channel interconnectors announced this year.

The government expects demand for electricity to double by 2035 and that will mean more generation that needs to be linked up to the network by cables and pylons. Local grids will also have to expand to accommodate more connection points for electric vehicles and homes, and invest in large-scale energy storage capacity to balance supply.

But so far, the rapid rise in renewable energy investment has not been accompanied by matching spend on the power network, according to BloombergNEF, a pattern seen in Germany’s grid expansion woes as well.

“The pace and scale of what we now have to deliver is significantly different from the last few decades,” said Carl Trowell, president of UK strategic infrastructure at National Grid. “It’s a national endeavor.”

In June, Electricity Networks Commissioner Nick Winser sent the government recommendations for how to accelerate construction of more transmission infrastructure. He said efforts to decarbonize the power sector will be “wasted if we cannot get the power to homes and businesses.”

“We need a seriously stronger sense of urgency,” said Kevin O’Donovan, country manager for Statkraft UK, which is holding off investment in four wind farms and two solar projects due to grid connection delays.

In addition to cost, the other major stumbling block is planning. Politicians in the governing Conservative Party are wary of angering voters with new infrastructure in rural areas that typically vote Tory. Across the country, “Not In My Back Yard” campaigners – NIMBYs — pose a major challenge to projects.

Petitgas, 62, retired from Morgan Stanley last year after nearly 30 years at the bank, where he led its international division from London. The issues over connections and planning have been repeatedly pointed out to Petitgas by investors and trade groups over a series of meetings this year, according to people familiar with the matter, requesting anonymity discussing private talks.

Yet with a general election looming and the issue plagued by political headaches, many are skeptical that Sunak can find the solutions needed.

One business chief said Downing Street considers the issue too tricky and expensive to tackle in the short-term. Others are concerned that while Petitgas has license from Sunak, he doesn’t have influence across the relevant departments to get grids to the top of the agenda.

Wind Farms

Multiple parts of the UK’s climate plans are under pressure. Earlier this month, an auction for contracts to build new wind farms received zero bids from developers, even as wind leads the power mix in many regions, marking yet another green setback. 

The UK is already behind on its target of having 50 gigawatts of offshore wind built by 2030, up from 14 GW today. The challenge is accelerating development without railroading local communities.

Within Sunak’s Conservative Party, some lawmakers are pushing back on new infrastructure in their local areas. A group including Environment Secretary Therese Coffey and former Home Secretary Priti Patel is campaigning against building new pylons across a stretch of eastern England.

According to Adam Bell, director of policy at consultancy Stonehaven, backbench pressure means Sunak is unlikely to take major action on the grid in the near term. He doesn’t see the prime minister accepting Winser’s recommendations, least of all accelerating planning decisions.

“Over the last year, Sunak has favored party management over things that will benefit the country,” Bell said. 

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BC Hydro Asset Management Audit confirms disciplined oversight of dams, generators, power lines, substations, and transformers, with robust lifecycle planning, reliability metrics, and capital investment sustaining aging infrastructure and near full-capacity performance.

Key Points

Audit confirming BC Hydro's asset governance and lifecycle planning, ensuring safe, reliable grid infrastructure.

✅ $25B in assets; many facilities operating near full capacity.

✅ 80% of assets are dams, generators, lines, poles, substations, transformers.

✅ $2.5B invested in renewal, repair, and replacement in fiscal 2018.

A report by B.C.’s auditor-general says B.C. Hydro is doing a good job managing the province’s dams, generating stations and power lines, including storm response during severe weather events.

Carol Bellringer says in the audit that B.C. Hydro’s assets are valued at more than $25 billion and even though some generating facilities are more than 85 years old they continue to operate near full-capacity and can accommodate holiday demand peaks when needed.

The report says about 80 per cent of Hydro’s assets are dams, generators, power lines, poles, substations and transformers that are used to provide electrical service to B.C., where residential electricity use shifted during the pandemic.

The audit says Hydro invested almost $2.5 billion to renew, repair or replace the assets it manages during the last fiscal year, ending March 31, 2018, and, in a broader context, bill relief has been offered to only part of the province.

Bellringer’s audit doesn’t examine the $10.7 billion Site C dam project, which is currently under construction in northeast B.C. and not slated for completion until 2024.

She says the audit examined whether B.C. Hydro has the information, practices, processes and systems needed to support good asset management, at a time when other utilities are dealing with pandemic impacts on operations.

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IEC-PETL Electricity Agreement streamlines grid management, debt settlement, and bank guarantees, shifting power supply, transmission, and distribution to PETL via IEC-built sub-stations, bolstering energy cooperation, utility billing, and payment assurance in PA areas.

Key Points

A 15-year deal transferring PA grid operations to PETL, settling legacy debt, and securing payments with bank guarantees.

✅ NIS 915 million repaid in 48 installments.

✅ PETL assumes distribution, O&M, and sub-station ownership.

✅ 15-year, NIS 2.8b per year supply and services contract.

The Palestinian Authority will pay Israel Electric NIS 915 million and take over management of its grid through Palestinian electricity supplier PETL.

The Israel Electric Corporation (IEC) (TASE: ELEC.B22) and Palestinian electricity supplier PETL have signed a draft commercial agreement under which the Palestinian Authority's (PA) debt of almost NIS 1 billion will be repaid. The agreement also transfers actual management of the supply of electricity to Palestinian customers from IEC to the Palestinian electricity authority, enabling consideration of distributed solutions such as a virtual power plant program in future planning.

Up until now, the IEC was unable to actually collect debts for electricity from Palestinian customers, because the connection with them was through the PA. Responsibility for collection will now be exclusively in Palestinian hands, with the PA providing hundreds of millions of shekels in bank guarantees for future debts. The agreement, which is valid for 15 years, amounts to an estimated NIS 2.8 billion a year, as of now.

IEC will sell electricity and related services to PETL through four high-tension sub-stations built by IEC for PETL and through high and low-tension connection points, similar to large interconnector projects like the Lake Erie Connector, for the purpose of distribution and supply of the electricity by PETL or an entity on its behalf to consumers in PA territory. PETL will have sole operational and maintenance responsibility for distribution and supply and ownership of the four sub-stations.

NIS 915 million in 48 payments

According to the IEC announcement, the settlement was reached following negotiations following the signing of an agreement in principle in September 2016 by the minister of finance, the government coordinator of activities in the territories, and the Palestinian minister for civilian affairs. The parties reached commercial understandings yesterday that made possible today's signing of the first commercial document of its kind regulating commercial relations - the sales of electricity - between the parties. The agreement will go into effect after it is approved by the IEC board of directors, the Public Utilities Authority (electricity), reflecting regulatory oversight akin to Ontario industrial electricity pricing consultations, and the IDF Chief Electrical Staff Officer. Representatives of IEC, the Ministry of Finance, the Public Utilities Authority (electricity), the government coordinator of activities in the territories, the civilian authority, the PA government, and PETL took part in the negotiations.

The agreement also settles the PA's historical debt to IEC. The PA will begin payment of NIS 915 million in debt for consumption of electricity before September 2016 to IEC Jerusalem District Ltd. in 48 equal installments after the final signing, as stipulated in the agreement in principle signed by the Israeli government and the PA on September 13, 2016.

The PA's debt for electricity amounted to almost NIS 2 billion in 2016. The initial spadework for the current debt settlement was accomplished in that year, after the parties reached understandings on writing off NIS 500 million of the Palestinian debt. The PA paid NIS 600 million in October 2016, and the remainder will be paid now.

It was also reported that an arrangement of securities and guarantees to ensure payment to IEC under the agreement had been settled, including the past debt. IEC will obtain a bank guarantee and a PA guarantee, in addition to the existing collection mechanisms at the company's disposal.

Minister of Finance Moshe Kahlon said, "Signing the commercial agreement is a historic step completing the agreement signed by the governments in September 2016. Strengthening economic cooperation between Israel and the PA is above all an Israeli security interest. The agreement will ensure future payments to the IEC and reinforce its financial position. I congratulate the negotiating teams for the completion of their task."

Minister of National Infrastructure, Energy, and Water Resources Dr. Yuval Steinitz said, "In my meeting last year with Palestinian Prime Minister Rami Hamdallah in Jenin, we agreed that it was necessary to settle the debt and formalize relations between IEC and the PA. The settlement signed today is a breakthrough, both in the measures for payment of the Palestinian debt to IEC and Israel and in arranging future relations to prevent more debts from emerging in the future. With the signing of the agreement, we will be able to make progress with the Palestinians in developing a modern electrical grid, aligning with regional initiatives like the Cyprus electricity highway, according to the model of the sub-station we inaugurated in Jenin."

IEC chairperson Yiftah Ron Tal said, "This is a historic event. In this agreement, IEC is correcting for the first time a historical distortion of accumulated debt without guarantees, ability to collect it, or control over the amount of debt. This anchor agreement not only constitutes an unprecedented financial achievement; it also constitutes an important milestone in regulating electricity commercial relations between the Israeli and Palestinian electric companies, comparable to cross-border efforts such as the Ireland-France interconnector in Europe."

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