A total of 41 lines closely connect the Swiss transmission grid to the European interconnected grid. This connection is what makes it possible to ensure the secure supply of electricity in Switzerland. For example, when electricity bottlenecks need to be overcome in the winter months. Or when international cooperation is required to offset power plant failures or overproduction. On the other hand, Switzerland plays an important role in the European interconnected grid as a transit country and as a major energy store, thanks to its pumped storage power plants.
Liberalisation of the European electricity markets
As part of the interconnected grid, Switzerland is significantly affected by developments in the European electricity market. Following a long period of stability, there has been considerable movement in the electricity industry in the past 20 years. The fundamental change was triggered by the EU’s decision to liberalise the electricity markets and to create an efficient as well as competitive internal electricity market. This generated much greater momentum in the energy exchange. The challenge for the transmission system operators is to maximise the capacity for cross-border trade, while simultaneously ensuring secure grid operation.
Cooperation hampered by the lack of an electricity agreement
Swissgrid faces an additional challenge with these changed framework conditions: Due to the lack of an electricity agreement, Swissgrid is limited both in terms of influencing developments in the European electricity market and in its ability to represent Switzerland’s interests.
Switzerland can only participate in the coupled electricity markets, the flow-based day-ahead market and the intra-day market to a limited extent. Cooperation with the two Capacity Calculation Regions CORE and Italy North is therefore based on contracts under private law. An electricity agreement would allow Switzerland to be automatically included in capacity calculation methods and in redispatching and security coordination processes. This would be of great benefit to the security of grid operations in Switzerland.
Swissgrid also risks losing its access to important control energy cooperation arrangements. At present, it is still involved in the international cooperation for primary control reserves and in the International Grid Control Cooperation (IGCC), in which the imbalances between generation and consumption in different regions are balanced. However, its participation in platforms such as TERRE, MARI or PICASSO is seriously threatened. ENTSO-E, the European Network of Transmission System Operators, and ACER, the European regulatory authority, have stressed that Switzerland’s participation is essential for grid security in Europe.
Basis for European cooperation in Europe achieved
To improve this situation, Swissgrid has significantly intensified its involvement in the European committees. In 2019, in close cooperation with the Swiss Federal Electricity Commission (ElCom), Swissgrid was able to integrate a «Swiss clause» into the new framework agreement for the European transmission system operators (Synchronous Area Framework Agreement, SAFA). This allows Swissgrid to take up negotiations and conclude contracts with the transmission system operators that have joined together to form the CORE and Italy North capacity calculation regions. These private-law contracts create the basis for participating in future cross-border coordination processes.
The challenges remain – Clean Energy Package and Brexit
The European Union is consistently developing the European electricity market further. The implementation of the third internal market package continues to progress, while the fourth internal market package, the «Clean Energy Package», has entered into force. The consequence is that the European grid and market rules are constantly diverging even further from comparable regulations in place in Switzerland.
The «Clean Energy Package» provides for the establishment of regional coordination centres, which will coordinate part of the grid operation in future. Swissgrid does not expect to be able to represent Switzerland’s interests in the coordination centres. At the same time, the package stipulates that transmission system operators must significantly increase the cross-border capacity provided for the electricity market. Swissgrid therefore expects even greater unplanned flows in the Swiss grid in future, as well as higher costs for redispatch and, if need be, restrictions in the import capacity available for Switzerland.
In addition, Brexit is heavily influencing the question of how to allow third countries to access the European market. A possible consequence could be Swissgrid’s exclusion from the ENTSO‑E, the European Network of Transmission System Operators. This would make it increasingly difficult to have any influence on European methods and processes.
Swissgrid is closely monitoring developments in Europe. To be able to ensure grid security in the long-term, Swissgrid is committed to close cooperation and technical solutions at a European level. However, in the long term, private-law agreements between transmission system operators are not an adequate substitute for an electricity agreement.