This thesis addresses the challenges posed by the increased penetration of renewable energy sources, particularly the reduction in system inertial response, which affects post-fault frequency dynamics. The research focuses on integrating interconnectors as alternative flexibility providers alongside traditional synchronous generators. A novel modelling setup is introduced for interconnectors that allows them to provide both energy and inertia-dependent primary frequency response simultaneously, marking a significant shift from traditional operations that only manage energy flow. The thesis also explores the economic and operational impacts of these multi-service interconnectors within competitive market environments. It contrasts two market paradigms: a centralized approach, where the interconnector is operated to minimize system operational costs, and a market-based approach, where the interconnector functions as profit-maximizing, privately-owned asset. The advantages of the multi-service model across these market paradigms are analyzed and compared using common market indicators such as social welfare and interconnector revenues.

The research further employs a sampling-based methodology to evaluate system performance under varying conditions, specifically analyzing the impact of wind and demand variability on interconnector operations. Additionally, the thesis explores the impact of incorporating ancillary services from different system layers on interconnectors. It investigates the synergy and interaction between Demand Side Response (DSR) from Thermostatically Controlled Loads (TCLs) and flexible interconnectors to achieve enhanced system performance under proposed market paradigms. The research finally extends to more complex network topologies, such as multi-area systems in a meshed network, exploring both regulated and market operations. Using the enumeration method to capture the market behaviour and estimate the market equilibrium, it offers insights into the planning, operation, and market strategies for interconnectors in realistic power system topologies, highlighting their potential to enhance the security and efficiency of low-carbon power systems.