The waters off Singapore teem with tankers, container ships, freighters and smacks, importing everything from oil to electronics. Yet there is one commodity none of these vessels carries, and which the city-state wants: electricity. The tiny, rich island powers itself mostly by burning imported natural gas, despite pledging to cut emissions to net-zero by 2050. It has little room to build its own wind or solar farms. So Singapore plans to get hold of clean power in a different way: down long-distance cables from its neighbours. Its government has given preliminary approval for undersea transmission cables from Cambodia, Indonesia, Vietnam and even Australia, some 4,300km away. In ten years’ time Singapore wants to import a third of the power it consumes this way.

At a time of rising geopolitical and trade tensions, it may seem mad to embrace dependence on other countries for electricity, perhaps the most critical input in any modern economy. Yet some countries are doing just that. The European Union wants all its members to be able to import or export electricity equivalent to at least 15% of their domestic generation by 2030. Britain already has undersea links with six countries and is building more. New cables in Africa, such as those between Kenya, Tanzania and Ethiopia, are making more power-sharing possible there. Bangladesh began buying Nepalese electricity via India’s grid in November. Malaysia, Laos, Singapore and Thailand have also begun trading multilaterally. And Bolivia, Colombia, Ecuador and Peru recently agreed to further integrate their power grids, with the same aim in mind.

The rationale for such projects is simple. When countries can tap imports at times of peak demand or reduced domestic generation, they can avoid building largely redundant and therefore costly spare capacity. Cables under the English Channel tend to carry power from Britain to France in the morning, since French consumers take more time over breakfast than Brits, but the other way in the afternoon, as the British turn on their kettles to make cups of tea. The one-hour time difference between the countries also spaces out peaks in demand.

Trading power can also help countries decarbonise. Neither wind nor sunshine is constant, so grids with lots of solar or wind power tend to suffer from too little generation on cloudy or still days and too much when the sun is blazing or the wind howling. Cables to other countries relieve both surfeits and shortages. Exporting countries can sell power that would otherwise go to waste and importing countries get cheap, clean energy. All told, EU regulators estimated the benefits of integrating their grids at €34bn ($35.5bn) a year in 2021.

Yet in 2023, only 2.8% of the world’s electricity was traded internationally. Outside Europe, exchanges remain minimal—mostly just a few big hydropower projects sending electricity across nearby borders, from Paraguay to Brazil, for instance, or Laos to Thailand. The hold-up used to be technical: lots of power was lost in transmission, making long-distance exports uneconomic. Nowadays, however, high-voltage direct-current cables are extremely efficient. Projects in Brazil and China have shown their viability over distances of thousands of kilometres.

Instead, the problem is geopolitics. Governments worry that neighbours might pull the plug on their power supply. Agreeing on and applying rules governing trade in power requires savvy regulators. And citizens fret, too, either that a valuable national resource will be siphoned off by foreigners or, conversely, that grasping foreign firms will exploit local consumers.

Current events

The concerns are understandable. Europe, after all, was punished following the invasion of Ukraine for its dependence on Russian gas. Russian sabotage in the Baltic Sea also shows that subsea cables are vulnerable to hostile foreign powers. Norwegians are miffed that power prices have spiked at home because of power shortages on the other side of the Skagerrak. And Icelanders ask whether it is worth flooding pristine valleys for hydroelectric schemes whose entire output would be exported.

Links between India and Pakistan or Japan and South Korea could bring huge benefits to all the countries concerned, but mutual distrust means they are unlikely to happen soon. By the same token, the grids of America and Mexico would benefit from closer connections, but “disagreements over the rules of the game” prevent this, says Ismael Arciniegas Rueda of RAND, a think-tank. The fear that other countries might be snaffling a valuable resource seems to have contributed to Malaysia’s ban on the export of renewable power in 2021 (it lifted the ban in 2023). “Every country is, understandably, looking out for their own interest,” says Eugene Toh of Singapore’s Energy Market Authority.

Though the obstacles are daunting, in practice trade in power tends to be a big success. Consider Britain’s oldest “interconnector”, as its two-way links to other European countries are known: it has been carrying power back and forth to France for almost 40 years with only brief technical interruptions. Trading continued throughout Brexit. Britain has added a further eight interconnectors, with a total capacity of almost 10GW, or roughly a fifth of its peak power consumption. Its regulators want to almost double that, to 18GW by 2032. In 2021 National Grid, the firm that owns most of Britain’s interconnectors along with counterparts from the countries concerned, estimated that current and planned links would save British consumers £20bn ($24.5bn) by 2045.

Investors are energised, too. Britain’s first interconnector to be built under the current regulatory regime, to Belgium in 2019, was so profitable in its first five years that it hit a legally binding cap, and has had to return £185m to consumers. This has sparked others’ interest. Meridiam, an asset manager, is funding a new cable linking Britain to Germany. The tunnel under the English Channel now carries cables as well as trains. National Grid, whose interconnector to Denmark is the world’s longest at 765km, has even contemplated linking Britain and America. Longer distances mean more upfront costs, but the power grids at either end are less likely to have the same weather or demand patterns, meaning more potential for arbitrage, says Rebecca Sedler of National Grid.

One advantage of Britain’s interconnectors is flexibility in an uncertain world. The grids to which Britain is linked have different energy mixes. France relies on nuclear, whereas hydropower dominates in Norway. That gives it a more varied, and therefore more reliable, power supply. What is more, Britain typically imports more power than it exports. But when Europe started to wean itself off Russian gas and some French nuclear plants paused in 2022, the predominant flow reversed, and Britain briefly became a net exporter. As ever more wind farms are built in the North Sea, British regulators expect their country to export lots of power, allowing the flow to reverse more lastingly.

Since Europe has shown the potential for long-distance connections, more ambitious projects are being started. A cable is being laid from Greece to Cyprus, a daunting task given the 900km distance and the depth of the Mediterranean. Other models offer one-way transmission, such as a proposed cable from Morocco to Britain. XLinks, the firm behind it, argues that the combination of wind at night, sun during the day and batteries as needed means it can provide both baseload and peaking power. Sun Cable, the firm hoping to connect Australia and Singapore, offers a similar mix over an even greater distance.

Another variation is to build connections from the same offshore wind farm to more than one country. That means the power produced can be sent to the most lucrative market at any given moment, and the cables can be used as an interconnector when the weather is calm. The first such scheme, in the Baltic between Denmark and Germany, is already running. Others are planned in the North Sea.

Electrons for peace

Europe is both wealthy and unusually economically integrated, of course. It has high-powered regional regulators that can develop and enforce the rules required to connect national grids, which often run on different frequencies and voltages, and under different pricing regimes. The high-voltage cables needed have also risen in price as more projects compete for scarce supply. But there is no reason in principle why other parts of the world could not benefit as much. South-East Asian countries, for example, could save $100bn by 2040 by adding 230GW of new transmission and interconnection, reckons TransitionZero, a climate-research firm.

Western Europe also has stable geopolitics. This is not by chance. European economies are tied together in a self-conscious effort to banish conflict. A mutual dependence on power-trading elsewhere may similarly help to diminish worries about neighbouring countries. If not, the solution to fears about relying on a single import cable is to have lots of them, as Britain has and Singapore plans to. As with all trade, selling power across borders benefits everyone. That so many countries ignore the potential is shocking.