Foreign trade ensures balance

With electricity threatening to become a scarce commodity this winter, the Confederation has appealed for savings. At the same time, Switzerland sold more electricity abroad in the first nine months of 2022 than it did for the same period in 2021 – due to higher electricity prices and the need to export domestic electricity surpluses that can’t be stored. Electricity is exported mainly in the summer, while in winter Switzerland is often dependent on imports.  

In terms of volume, Switzerland has not exported more electricity in the current year compared to the previous year, but sales have risen due to significantly higher electricity prices. According to electricity statistics, Switzerland exported 3 terawatt hours (TWh) less in physical terms between January and September 2022 compared to the same period in 2021. It also imported more electricity than it exported in the first nine months. Net imports amounted to 1.4 TWh, with a total production of 42.7 TW.

For each of the last 20 years, Switzerland has had an export surplus for most of the year, although net exports have been low in relation to total annual production. 

Few countries able to supply as flexibly as Switzerland during winter

But why is electricity exported at all if we are heading for a shortage this winter? Unfortunately, electricity cannot simply be stored today for use at a later stage when its needed during the colder months. It also cannot – at least not yet – be stored electrically in large quantities. At any given time, as much electricity as is currently being consumed must be fed into the grid. Otherwise, electricity interruptions could occur.

Foreign trade helps to balance out seasonal fluctuations, contributing to a secure electricity supply. If supply exceeds demand, surplus electricity is exported. If demand is higher, we must import electricity.

Our country tends to export during the summer and autumn months, when domestic hydropower in particular produces a lot of electricity. In winter, when water levels are lower, it supplies less. Demand has also been shifting more and more towards the winter half-year over the past few decades: during the 1960/1961 winter, the share of the country’s consumption in the hydrological year was 49.5%. In more recent years, it has been over 50 percent – and was 54.3% for the 2020/2021 winter.

Historically interconnected

Our electricity grid is connected to those of neighbouring countries at 41 points and is part of a grid that extends across the entire European continent. Electricity flows freely throughout this network, seeking its way along the path of least resistance, just like water.

While Italy is by far the most important consumer of domestic electricity, our most important electricity suppliers are France and Germany. 

The foundation stone for the European interconnected grid was laid as early as 1958 with the so-called Star of Laufenburg, when the Swiss, German and French grids were linked. This allowed the countries to support each other with surpluses or shortages, and electricity could be imported or exported as needed. This is still the case today, but in an interconnected system that now includes almost all of Europe.

Martin Koller, Head of Corporate Strategy and Economics at Axpo, explains why self-sufficiency is not a good idea – and why Switzerland is well positioned in winter despite its dependence on imports.

Martin, does Axpo sell electricity abroad that we need in Switzerland?

No, we do not export electricity when demand exceeds supply, and particularly not in winter. During these times, the electricity we produce in Switzerland stays in Switzerland and is consumed here at the time of production. We only export when there is no demand in Switzerland. More often than not, electricity from foreign power plants is typically transported to Switzerland during the winter. This is another reason why investments abroad are key to Switzerland's security of supply.

What is wrong with Switzerland being self-sufficient in electricity?

The electricity generated by Swiss power plants – especially hydroelectric power – fluctuates seasonally: in summer there are surpluses, but in winter there are often deficits. Switzerland therefore needs to trade electricity with its neighbouring countries. However, thanks to its reservoirs and storage hydropower plants, it can supply more electricity at short notice than most other European countries. So, while it is dependent on imports in winter, the flexibility to supply a lot of electricity at short notice is a great advantage. If a neighbouring country is struggling with a bottleneck, we can deliver valuable electricity very quickly. In return, we get more electricity delivered, simply at other times of the day.

But suppose we were to expand production in Switzerland to such an extent that we could reliably cover the demand even in winter?

That would mean huge investments and at the same time we would still have the problem of surpluses. Without an interconnected grid and well-functioning foreign trade, we would no longer be able to export these surpluses. This would result in our grid collapsing, so it’s not a good idea.