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Cross-border Effects of Capacity Remuneration Mechanisms: The Swiss Case

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  • Florian Zimmermann
  • Andreas Bublitz
  • Dogan Keles
  • Wolf Fichtner

Abstract

In this article, cross-border effects of different market design options are analyzed using Switzerland, which is strongly interconnected to larger neighboring markets, as a case study. An investigation is conducted with an agent-based model where in one scenario, all market designs are represented according to the current legislation, and in another, energy-only markets (EOM) are assumed in all considered countries. The results show that wholesale electricity prices are highly dependent on the chosen market design and in the annual average are up to 27% higher in the EOM scenario. Due to expected larger interconnector capacities, this increase is evident in all simulated markets. Furthermore, the results indicate that the planned market design changes in the neighboring countries decrease investments in Switzerland. However, generation adequacy is still guaranteed due to the high Swiss hydropower storage capacity. Our results suggest that, under the current circumstances, a domestic mechanism in Switzerland is not required.

Suggested Citation

  • Florian Zimmermann & Andreas Bublitz & Dogan Keles & Wolf Fichtner, 2021. "Cross-border Effects of Capacity Remuneration Mechanisms: The Swiss Case," The Energy Journal, , vol. 42(2), pages 53-90, March.
    • Handle: RePEc:sae:enejou:v:42:y:2021:i:2:p:53-90
    DOI: 10.5547/01956574.42.2.fzim
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    References listed on IDEAS

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    1. Bublitz, Andreas & Keles, Dogan & Fichtner, Wolf, 2017. "An analysis of the decline of electricity spot prices in Europe: Who is to blame?," Energy Policy, Elsevier, vol. 107(C), pages 323-336.
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    Cited by:

    1. Misconel, S. & Zimmermann, F. & Mikurda, J. & Möst, D. & Kunze, R. & Gnann, T. & Kühnbach, M. & Speth, D. & Pelka, S. & Yu, S., 2024. "Model coupling and comparison on optimal load shifting of battery electric vehicles and heat pumps focusing on generation adequacy," Energy, Elsevier, vol. 305(C).
    2. Will, Christian & Zimmermann, Florian & Ensslen, Axel & Fraunholz, Christoph & Jochem, Patrick & Keles, Dogan, 2024. "Can electric vehicle charging be carbon neutral? Uniting smart charging and renewables," Applied Energy, Elsevier, vol. 371(C).
    3. Signer, Tim & Baumgartner, Nora & Ruppert, Manuel & Sandmeier, Thorben & Fichtner, Wolf, 2024. "Modeling V2G spot market trading: The impact of charging tariffs on economic viability," Energy Policy, Elsevier, vol. 189(C).

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