In the interview
Bastian Schwark, Head of Market Operations at Swissgrid, explains why the demand for control energy has increased, what role solar expansion plays in this growth, and how precise forecasts and innovative market designs can help to reduce costs.
Bastian, why do we need control energy in the first place?
In the electricity system, production and consumption must be balanced at all times. If more electricity is produced than consumed, the grid frequency increases, and vice versa. In order to maintain the balance, Swissgrid, as the transmission system operator, must use control energy to keep the frequency, and hence the grid, stable. Balance groups are responsible for planning production and consumption. They do so by planning the feed-in and feed-out of electricity to and from the transmission grid and drawing up corresponding schedules. If there are any deviations, for instance due to outdated weather forecasts or power plant outages, grid stability is jeopardised. If this happens, Swissgrid uses control energy to ensure stability, and contracts flexible power plants or consumers to provide it. There are different types of control energy, depending on how quickly it needs to be available: primary, secondary and tertiary control energy.
If there are any deviations, for instance due to outdated weather forecasts or power plant outages, grid stability is jeopardised. If this happens, Swissgrid uses control energy to ensure stability, and contracts flexible power plants or consumers to provide it.
Bastian Schwark
Is the expansion of solar power in Switzerland to blame for the rising demand for expensive control energy?
In recent months, we have noticed major imbalances on certain days in Switzerland. However, the problem is not solar expansion per se, but the lack of clarity in the producers’ forecasts. Looking abroad, we can see that stable grid operations remain possible, even with high volumes of solar energy. This requires reliable, up-to-date forecasts combined with good data communication between all the parties involved, ideally almost in real time. Solar plants do not feed electricity directly into the transmission grid, but into the lower grid levels. In most cases, distribution system operators do not have real-time data on photovoltaic systems, so they have to estimate production based on weather data and forecasts. If, for example, the forecasts are not updated daily over a long weekend, there can be a considerable discrepancy between predicted and actual production. Moreover, if multiple players in Switzerland make the same mistake, the imbalances in the grid add up. Swissgrid then has to use large amounts of control energy, which drives costs up even further. This is because the principle of merit order applies on the electricity market – prices rise in line with demand.
What is the PICASSO system?
PICASSO is the European platform for the secondary control energy market. Market participants can submit bids for secondary control energy via PICASSO. A Europe-wide market for secondary control energy makes sense because it strengthens system security across borders and lowers prices. Not all countries have high imbalances in their grids at the same time. Although Swissgrid is technically ready to participate in this market on a cross-border basis, it is not allowed to do so due to the lack of an electricity agreement. As a result, Switzerland cannot fall back on offers from neighbouring countries when large volumes of control energy are needed. This means that Switzerland only has access to a limited supply when there is a high demand for control energy.
Although Swissgrid is technically ready to participate in this market on a cross-border basis, it is not allowed to do so due to the lack of an electricity agreement.
Bastian Schwark
Has the PICASSO system increased the cost of secondary control energy in Switzerland?
The PICASSO system has brought bid-based procurement for secondary control energy into line with the European standard. This has the advantage of making additional liquidity available on the secondary control energy market. The introduction of the PICASSO system was closely coordinated by Swissgrid in association with the supervisory authority ElCom and the Swiss Federal Office of Energy. The rising costs cannot be blamed solely on the bid-based procedure of the PICASSO system. The main reason for the rising prices is the very high demand for control energy depending on the situation. When high demand meets limited supply, this leads to price distortions. ElCom has investigated the issue and initiated countermeasures. Being able to choose from a wider range of offers would certainly help improve matters. This could be achieved by joining the European platforms.
Couldn’t Swissgrid simply provide more control energy?
No. That would neither lower prices nor be viable for the future. The installed capacity of photovoltaics will multiply in the coming decades. There would not be enough power plants that Swissgrid could contract to obtain control energy. Experience in Germany has shown that despite the massive expansion of renewable energies, less control energy is being used. This has been achieved partly thanks to improved forecasts, and partly thanks to a very liquid market in the short term. The current procurement regime in Switzerland is designed in such a way that we can manage even major imbalances independently, such as the sudden outage of Switzerland’s largest power plant.
What are Swissgrid and the industry doing to reduce the imbalance in the grid?
Our short-term goal is to improve the data basis. More accurate, up-to-date forecasts will not only help the balance groups, but also allow Swissgrid to make the grid more stable and operations more economical. The industry has set up a joint working group for this purpose. In addition, Swissgrid will implement further measures from 2026 to enable balance groups to help each other to balance the system in the future and benefit financially at the same time. The result would be that less control energy would be required whilst reducing the overall costs.
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