Lack of agreement with the EU drives up electricity prices in Switzerland
St.Gallen - The lack of an agreement between Switzerland and the EU on electricity trading leads to increased electricity costs in Switzerland. Flexibility providers on the intraday market are setting prices at the expense of consumers, as revealed in a study carried out by the University of St.Gallen.
(CONNECT) A study in which the Institute for Operations Research and Computational Finance (ior/cf-HSG) at the University of St. Gallen (HSG) participated has placed the spotlight on a potential future energy agreement between Switzerland and the EU. In Switzerland, large hydroelectric power plants have traditionally served the market for balancing energy, as detailed in a statement issued by the university.
Flexibility providers that supply electricity from biogas plants, small hydropower plants, battery storage facilities and even controllable large consumers such as heat pumps have the ability to “offer grid operators such as Swissgrid flexible electricity production or consumption to stabilize the power grid”, comments Karl Frauendorfer, former director of the ior/cf-HSG, in the statement. However, they can also trade their electricity on the intraday market, although as it stands the energy providers can only operate on one of the two markets.
The recently completed transnational research project DigIPlat, in which the ior/cf-HSG participated and which was co-financed by the Swiss Federal Office of Energy (SFOE), among other parties, demonstrates that linking the two markets would lead to increased market liquidity. “For a flexibility provider, this potentially leads to higher revenues, while end consumers benefit from lower grid fees”, explains Michael Schürle from the ior/cf-HSG.
The study also investigated the role of the PICASSO platform, through which 15 EU countries already exchange cross-border balancing energy. As this helps to even out imbalances between the participating countries, the need for balancing energy is reduced. However, as the statement explains, Switzerland is not yet able to benefit from this situation. “As the electricity agreement with the EU is still lacking, volumes on the Swiss intraday market have collapsed without cross-border trading”, Schürle states. “By participating in the cross-border intraday market and in collaborations such as PICASSO, which would be made possible by an electricity agreement with the EU, local flexibility providers would have additional potential to market their services. At the same time, Swiss consumers could expect lower costs for stabilizing the grid”, he adds. ce/ww