The Economics Behind Electricity Imports Worldwide

Why Some Countries Import Large Amounts of Electricity

Electricity is a fundamental resource for modern economies, yet many nations rely on imports to meet their energy demands. This practice raises an important question: why do countries, particularly wealthy ones, import electricity despite having their own energy sources?

A recent debate has emerged in Tanzania after the government announced plans to purchase electricity from Ethiopia via Kenya to supply the northern regions. This move comes despite Tanzania reportedly producing more electricity than it consumes. The government has justified the decision as a cost-effective measure to minimize transmission losses when transporting power from the southern part of the country to the north. However, multiple factors drive countries to import electricity rather than relying solely on domestic production.

Reasons for Electricity Imports

1. Cost Efficiency – In some cases, importing electricity is more economical than generating it domestically, especially if the country relies on expensive energy sources such as fossil fuels.
2. Energy Reliability – Diversifying energy sources enhances energy security and reduces dependency on a single generation method or fuel type.
3. Balancing Renewable Energy Supply – Countries with variable renewable energy sources, such as wind and solar, may import electricity to stabilize supply when generation fluctuates due to weather conditions.
4. Transition to Clean Energy – Some nations import electricity from areas with abundant renewable energy, accelerating their shift to sustainable power while reducing reliance on polluting energy sources.
5. Cross-Border Grid Integration – Interconnected energy grids create a more efficient and cost-effective energy distribution system, fostering regional cooperation and reducing infrastructure costs.

Top Electricity-Importing Countries

According to data from the Observatory of Economic Complexity (OEC), European countries dominate the list of the world's top electricity importers in 2023.

• Germany: Imported 9.95% of its electricity in 2023 at a cost of $7.52 billion. The main suppliers were France, Austria, the Netherlands, Switzerland, and Denmark. The increase in imports was largely due to the shutdown of Germany's last three nuclear power plants in April 2023.

• Italy: Ranked second globally, Italy imported electricity worth $7.21 billion, making it the ninth-most imported product in the country. Imports accounted for 9.53% of Italy’s electricity, sourced primarily from Switzerland, France, Montenegro, Slovenia, and Greece.

• Switzerland: Despite being known for its hydro and nuclear power, Switzerland imported 5.57% of its electricity, valued at $4.21 billion. The country sources electricity from France, Germany, Austria, and Italy to complement its domestic production.

• United Kingdom: The UK imported 5.12% of its electricity in 2023, spending $3.87 billion. The UK’s domestic power generation mainly relied on natural gas (32%), wind (29.4%), and nuclear (14.2%), with imports balancing demand.

• Hungary: Imported 4.46% of its electricity, costing $3.37 billion. Hungary’s power generation is predominantly nuclear, with the Paks Nuclear Power Plant accounting for 44.8% of its total electricity supply. Other sources include natural gas (20.5%) and solar energy (19.6%).

Conclusion

While electricity imports are often associated with supply shortages, many developed nations purchase electricity strategically to cut costs, enhance reliability, and support sustainability goals. Cross-border energy cooperation continues to shape global energy policies, promoting efficiency and resilience in electricity supply networks.