Julia Engel, Energy Policy Specialist at Alpiq, explains in this interview why the Bilaterals III package and, in particular, an electricity agreement with the EU are crucial for Switzerland – from both an economic and energy-policy perspective.
Julia, Switzerland has negotiated the so-called Bilateral Agreements III with the EU. The Federal Parliament is currently debating the matter, after which there will be a referendum. Why is having a regulated relationship with the EU so important right now in particular?
Switzerland is closely intertwined with Europe economically, socially and in terms of energy policy. The bilateral approach has proven successful over many years, firstly because it gives us access to the European single market in sectors that benefit Switzerland. At the same time, it also preserves the special features of our political system, direct democracy and federalism. Particularly in times of geopolitical uncertainty, a reliable, regulated framework with our most important partner is an extremely valuable asset that merits protection. Without these agreements, there is a risk of legal uncertainty and ultimately, disadvantages for Switzerland as a location.
A new key element of the Bilaterals III is the electricity agreement. Why does Switzerland need such an agreement from an energy-policy perspective?
Although Switzerland is physically closely integrated with the European electricity system, we are not part of the EU internal electricity market. As a result, we are not legally involved – the collaboration is on shaky ground. Electricity flows in both directions across the borders every day, but in winter Switzerland is always reliant on imports because we don’t produce enough electricity ourselves at that time. As things stand today, neighbouring countries can limit the amount of electricity available for trading. An electricity agreement will secure import opportunities. This will strengthen our security of supply, particularly in winter. Furthermore, the costs of ensuring a reliable electricity supply are lower when electricity agreement is in place than when they are not.
The electricity agreement is also critical for the stable operation of our transmission network. Electricity flows must be predictable and plannable. Our neighbouring countries work closely together, but our network operator is currently on the sidelines. The electricity agreement will bring Switzerland into the coordination processes for network operation and reduce the risks for network operation overall. A binding electricity agreement will also establish reliable framework conditions in terms of network stability and secure long-term cooperation with our neighbours.
In short, an electricity agreement will create legal certainty, strengthen our security of supply and network stability, and reduce the system costs. From an economic point of view, the electricity agreement will yield enormous benefits for Switzerland.
An electricity agreement will strengthen our security of supply and network stability, and reduce the system costs.
Critics fear rising prices and declining public service standards. To what extent are these concerns justified?
I can’t understand these concerns – quite the contrary: the electricity agreement will ensure stable prices because winter power and network stability costs will fall, as I already explained above. Experience from the EU also shows that competition leads to greater efficiency and fairer prices in the long run.
With the opening up of the market, there will also be a regulated basic supply for households and smaller companies, similar to what we have today. At the same time, all consumers will have the right to choose their electricity provider freely – if you don’t want to, you don’t have to do anything; you simply stay in the basic supply.
The fears about public services are also unfounded. The existing structure of public-sector energy supply companies can remain in place as usual.
The Federal Council places particular emphasis on security of supply. What exactly does this mean for Switzerland?
To expand on what I said above, security of supply means that electricity is reliably available at all times – even in extreme situations. With the expansion of solar and wind energy, production fluctuations are increasing; the best way to compensate for this is to have a large, networked system. The electricity agreement will enable Switzerland to participate on an equal footing in the European mechanisms for network stability and cope with bottlenecks more effectively. Without an agreement, we would have to accept expensive unilateral measures such as additional reserve power plants that don’t make sense either from an economic or climate-policy perspective.
What economic benefits will an electricity agreement have for Switzerland and its companies?
Secured market access makes it possible to plan – for investments, for trade and for the expansion of renewable energies. The Swiss electricity industry will be able to bring its strengths, such as in hydropower and flexibility, to the European market. At the same time, industry and commerce will benefit from more stable prices and greater security of supply. Overall, the electricity agreement will strengthen Switzerland as a business location and reduce systemic energy supply costs over the long term.
As an energy company, why does Alpiq explicitly support this course of action?
Alpiq is committed to a secure, sustainable and economically efficient energy supply. This requires reliable framework conditions and close cooperation with Europe. An electricity agreement will ensure clear rules, a level playing field in the market and better integration of renewable energy. For us, one thing is clear: a networked Switzerland at the heart of Europe is stronger and more resilient in terms of energy policy than if we go it alone. That is why we support the electricity agreement with the EU.
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