15 years of Swissix
The first Swiss Day-Ahead auction took place on 5 December 2006 for delivery on 6 December 2006. This market-launch also set the electricity price benchmark for Switzerland, the Day-Ahead Index Swissix. Swissix refers to the Swiss Electricity Price Index and is calculated and published daily as Swissix Base (24 hours of the next day) and Swissix Peak (from 8AM to 8 PM of the next day).
In 2021, market participants on all segments of the Swiss market traded a combined volume of 23.9 TWh. This represents 38% of the national power consumption in that year. For EPEX SPOT, the Swiss market is an important one, as 30 companies from Switzerland are active across all our European markets.
A history of cooperation
Switzerland is strongly rooted within the European electricity sector. In the 2000s, the country created an electricity market model similar to the EU and unbundled the sector just like the transmission system operators (TSOs) in other European countries. Moreover, Switzerland was a pioneer in cross-border electricity transport, with the “Star of Laufenburg” being the first European interconnector. Today, Switzerland shares 41 interconnectors with its neighbours.
All this lead to the launch of the Swiss Day-Ahead market in 2006, which was however never coupled with neighbouring countries. The continuous Intraday market started in 2013 and was coupled to Austria, France and Germany from launch.
Overtaken by European progress
However, with the European Single Intraday Coupling coming to life in 2018, and without an electricity trading agreement between the EU and Switzerland in place, the Swiss Intraday market was decoupled the same year. Since then, trading only happens within Switzerland, without parallel inclusion of cross-border capacity. As an effect, traded volumes have sharply declined by 90 percent.
Last coupled solution comes to an end
The last solution for implicit cross-border trading stopped on 21 September 2021, when the Intraday auctions at 4.30 pm and 11.15 am were decoupled from Italy. Since then, market participants need to estimate and buy cross-border capacity additionally to the electricity – which leads to inefficiencies and overall welfare losses. These inefficiencies will, in the end, result in higher prices for end consumers in both Switzerland and the surrounding EU countries. The end of the coupled Intraday auctions marks a further crucial step of a disintegration process which happens due to a missing electricity agreement between Switzerland and the EU, which would give Switzerland equal access to the EU Internal Energy Market.
Dead end street for negotiations
In 2012, negotiations of a framework agreement, including an agreement on electricity trading, were started. However, with the referendum on immigration in 2014 and the formal withdrawal of the EU membership application in 2016, the relationship between Switzerland and the EU worsened. In May 2021, after a year-long stalemate, the negotiations on a framework agreement were officially stopped.
The geographical heart of Europe
Today, Switzerland is neither part of the Single Day-Ahead Coupling nor of the Single Intraday Coupling, although the country, being in the geographical heart of Europe, is a central platform for the EU Internal Energy Market from a physical point of view. As Switzerland is integrated as a “copperplate” into the calculation of the electricity market coupling, unplanned
flows are putting high stress levels on the Swiss grid. This leads to significant welfare losses for Swiss and EU industries and citizens.
In short, the achievements and the benefits of the European Union Internal Energy Market – and to a certain extent, grid stability and security of supply – are put at risk by the missing electricity trading agreement between the EU und Switzerland.
Hope for further integration in the face of climate change
Although recent political developments have not been promising. market participants remain hopeful that the Swiss power market can be further integrated into the pan-European Market Coupling. Their common goal of climate neutrality calls both Switzerland and the EU for a new prioritisation of the electricity agreement by all involved stakeholders. This would be beneficial for both Swiss and European end-consumers.