Energy – an intensive exchange

A dam
A dam © FDFA, Presence Switzerland

Switzerland and the European Union (EU) have exchanged energy intensively for decades. Whereas European energy markets used to be regulated through state monopolies, a competition-oriented EU single market for energy has emerged over the last 25 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. The federal Council of Switzerland pursues the goal of negotiating an electricity agreement with the EU. This 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 an environmentally-friendly, competitive and secure energy supply. By 2050 there should be no net greenhouse gas emissions in both Switzerland and the EU. This will require far-reaching changes in the ways that energy is currently produced, traded and consumed. Electricity, for example, is increasingly being generated from renewable energy sources. Because sun and wind are not available round the clock, more flexibility and interconnectivity are needed. With its single energy market, the EU wants to ensure that those challenges are met across borders and in a cost-effective way.

In the electricity sector, Switzerland is very well connected to the European network. Since the synchronization of the French, German and Swiss electricity grids in 1958, at the so-called "Star of Laufenburg", our country has played an important role as an ‘electricity hub’ in the power supply of Central and Western Europe. 41 cross-border power lines connect Switzerland to its 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 power lines and flexible hydroelectric power plants.

Electricity agreement between the EU and Switzerland

Electricity supply is currently undergoing an important transition and the European single energy market continues to develop steadily. The integration of Switzerland in the European electricity market is no longer always guaranteed. Switzerland lacks a legal basis with the EU as an underlying condition. Because both sides profit from the exchange of electricity, the EU and Switzerland are currently negotiating an electricity agreement.

The electricity 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 and fair competition;

  • integrity and transparency in wholesale electricity markets;

  • electricity infrastructure - in particular transmission grids and cross-border lines;

  • cross-border and efficient electricity trade;

  • promotion of electricity from renewable energy sources;

  • environmental protection in the production of electricity;

  • rules for state aid in the production, trade and transmission of electricity;

  • Switzerland's participation in EU authorities and bodies in the electricity sector

Since 2015, the EU has no longer been willing to conclude sectoral agreements with Switzerland before the settlement of essential, institutional issues (legal interpretation, legal monitoring, adoption of law, dispute resolution). Future negotiations on an electricity agreement with the EU are therefore dependent on progress in resolving institutional issues. With the broad package approach in February 2022, the Federal Council outlined how it intends to regulate relations with the EU in the future. The corresponding exploratory talks between Switzerland and the EU are underway. The broad package approach also includes the conclusion of an electricity agreement.