Swiss Pursue Day-Ahead Power-Market Link as EU Halts Talks

Swissgrid AG and Epex Spot SE are pursuing plans to link Switzerland’s day-ahead power market with European Union countries as soon as this year even as the bloc halted talks on the Alpine nation joining its energy market.

Swissgrid is going ahead with preparations for the link with Paris-based electricity exchange Epex Spot, according to Andreas Schwander, a spokesman for the grid operator. Epex Spot said it still plans to open an office in Bern, a condition for the linkage of the day-ahead markets.

Switzerland connects Europe’s biggest power markets with Italy, importing and exporting 176 terawatt-hours of electricity in 2012, or three times the power it consumed, Swiss government data show. The EU halted talks on Swiss utilities joining its energy market after the country’s voters approved immigrant quotas on Feb. 9, a move contrary to market-opening pacts with the 28-nation bloc going back to 2002.

“We have instructions from our regulator to go ahead with the planning,” Schwander, based in Frick, Switzerland, said by phone on Feb. 24. “When everything is ready technically, then we wait and see what happens on the political side.”

Switzerland is still interested in integrating electricity trading with the EU, known as market coupling, and is going ahead with preparations, Dario Ballanti, a spokesman for Swiss energy regulator Elcom, said by phone from Bern on Feb. 24. “Nothing has changed for us so far,” he said.

Suspended Talks

The country is already coupled with France and Germany for intraday trading. A system linking its day-ahead market with Europe is achievable this year, Ballanti said.

“The technical effort is relatively small as Switzerland’s trading system is compatible with the price-coupling mechanism that is used in the European market,” Wolfram Vogel, a spokesman for Epex Spot in Paris, said by e-mail on Feb. 24.

EU officials suspended talks on a potential Swiss electricity market pact, under way since 2007, after the anti-immigration referendum. The power agreement is a condition for the integration of the day-ahead market to the bloc.

“The Commission stands ready to listen to the Swiss proposals” on the country’s implementation of measures to limit immigration, which the EU’s executive arm hasn’t seen yet, Laszlo Andor, European employment commissioner, said in an e-mailed statement today. “The ball is in their court.”

Single Market

Switzerland is now discussing how to proceed after the EU canceled a planned meeting to discuss the technicalities of electricity market integration, Dominique Bugnon, a government spokesman, said by e-mail from Bern today.

Linking Switzerland’s day-ahead market would ease price differences with neighboring countries and allow the country’s cross-border power lines to be used more efficiently, Bugnon said. That’s “important for the implementation of the EU single market and the positioning of Switzerland in the EU market,” he said.

Switzerland imported 87 terawatt-hours of power in 2012 and exported 89 terawatt-hours, more than the 59 terawatt-hours it consumed, according to data from the Swiss Federal Office of Energy. The country imported 17.5 terawatt-hours from France in 2012 and exported 21.5 terawatt-hours to Italy, the data show. One terawatt-hour can power 2 million European homes.

The suspension of the talks will probably slow the market coupling process, according to the European Federation of Energy Traders, a lobby that represents more than 100 trading companies from EON SE in Germany to France’s EDF SA.

“If there is no political pressure, market coupling with Switzerland could happen rather quickly, even in the second or third quarter this year,” Jerome Le Page, a Brussels-based market and regulation consultant at EFET said by e-mail on Feb. 24. “Europe needs Switzerland as much as Switzerland needs Europe.”

To contact the reporter on this story: Julia Mengewein in Frankfurt at jmengewein@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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