Cross-border electricity transmission

Cross-border electricity trading, which has increased sharply as a result of the liberalisation of energy markets in Europe, makes use of the opportunities that have arisen for the international exchange of energy. The transmission networks, which were originally constructed for domestic transport, have meanwhile been greatly expanded in order to facilitate international electricity trading. Historically speaking, national electricity markets form a single tariff zone. Any capacity shortfalls that arise in Switzerland are compensated through network administration carried out by Swissgrid. By contrast, in the case of international electricity exchange, shortfalls are managed in accordance with market-based procedures. Shortfall management is one of the core duties of transmission network operator Swissgrid. In accordance with Article 17 of the Electricity Supply Act, ElCom can regulate the procedures for awarding network capacities at Switzerland's borders. In its capacity as regulator, it thus supervises shortfall management carried out by Swissgrid and the participating market players, and specifies the regulatory guidelines in conjunction with foreign authorities. The cited Article stipulates that cross-border transmission network capacities must be awarded in accordance with market-based procedures. At Switzerland's borders, this mostly takes place via explicit auctions, at which electricity traders have to buy cross-border network capacity before they can conclude energy transactions. Here, long-term contracts that Swiss electricity suppliers have concluded with France are an exception. In the procedure for awarding cross-border network capacities, priority is given to deliveries on the basis of long-term contracts (or LTCs). For the more efficient use of transmission network capacities, implicit auctions - which are also referred to as "market coupling" - are a generally recognised solution. In an implicit auction, transmission network capacity is procured at the same time as the conclusion of an energy transaction.

ElCom is taking steps to ensure that cross-border transmission network capacity is utilised as efficiently as possible. For this purpose, in cooperation with the regulators in Switzerland's neighbouring countries, it is developing the organisational options for optimising the purchase of transmission network capacity by auction, optimising the procedures for explicit auctioning of capacity, and endeavouring to implement market coupling with neighbouring tariff zones. These objectives are based on the premise that efficient access to the neighbouring markets will make a significant contribution towards Switzerland's supply security, and competitive energy prices are of immense importance for the Swiss labour market.

https://www.elcom.admin.ch/content/elcom/en/home/topics/cross-border-electricity-transmission.html