Energy – an intensive trade

A dam
A dam © FDFA, Presence Switzerland

The European Union (EU) and Switzerland have traded energy intensively for decades. Whereas European energy markets used to be regulated on national level, an EU single market for energy has emerged over the last 20 years. The result of this development is a new legal and economic reality of the energy markets surrounding Switzerland. This is particularly relevant in the electricity sector. Switzerland and the EU therefore negotiate an electricity agreement which is intended to allow full access for Switzerland to the single market for electricity and ensure cooperation in this sector with the EU in the future.

Switzerland and the EU are both striving for a low-emission, competitive and secure energy supply. This will require far-reaching changes in current structures. Electricity, for example, is increasingly being generated from renewable energy sources. Because sun and wind are not always available when the energy consumption increases, more flexibility and interconnectivity are needed. With its single energy market, the EU wants to ensure that those challenges are met across borders and cost-efficiently.

In the electricity sector, Switzerland is very well connected to the European network. Since the synchronization of the French, German and Swiss electricity networks in 1958, our country has played an important role as an “electricity hub”. 41 cross-border power lines connect Switzerland to the neighboring countries. This allows a flourishing electricity trade. Economically speaking, both Swiss consumers and producers profit significantly from this integration, as electricity supply becomes safer and cheaper. Furthermore, Switzerland contributes to achieving the EU’s energy and climate policy objectives with its hydroelectric power plants and power lines.

An electricity agreement between Switzerland and the EU

Electricity supply is currently undergoing an important transition and the European single energy market continues to develop steadily. The integration of Switzerland in this market has declined in some aspects. Switzerland lacks a legal basis with the EU. Because both sides profit from the exchange of electricity, the EU and Switzerland are currently negotiating an electricity agreement.

The negotiations cover mainly the following aspects: equal, free and fair market access, common application of rules in the field of electricity for all market participants, fair competition, integrity and transparency in wholesale trade of electricity, electricity infrastructure (in particular transmission grid and cross-border cables), cross-border electricity trade, promotion of electricity from renewable energy sources, environmental protection in the electricity sector, rules for state aids as well as cooperation between contracting parties, authorities and institutions.

The electricity agreement being considered a market access agreement, the conclusion of this negotiation depends on the progress of the institutional agreement negotiations between Switzerland and the EU.