Federal Electricity Commission
Bern, 15.08.2024 – The second round of tenders for the hydroelectric reserve for the winter of 2024/2025 closed on 15 August 2024. In this round, bids for a volume of 82 gigawatt hours (GWh) were awarded, amounting to a total cost of EUR 5.6 million. The first round, which took place in July and involved a volume of 63 GWh, cost EUR 3.3 million. The combined volume from both rounds thus aligns with the range set by ElCom for acquiring a hydroelectric reserve, which is a total of 300 GWh with a tolerance of +/- 100 GWh. The total expenses for the two rounds amount to EUR 8.9 million. An additional tender is planned for the upcoming weeks.
During the second round of tenders for the hydropower reserve organized by the national transmission grid company Swissgrid, a total of 93 bids were received from various operators, totaling 443 GWh. ElCom decided to allocate the hydropower reserve to bids amounting to 82 GWh. The acquired quantity falls within the previously established key values for the partial tenders, with the ultimate goal being to reach a total of 300 GWh, within a margin of +/- 100 GWh. Analyzes conducted alongside the tender process indicate that the costs for the partial quantity purchased, which stands at EUR 5.6 million, can be attributed to price forecasts in the electricity market. The average price for the awarded energy amounts to 68.2 EUR/MWh (the average price for the first partial award was 53.17 EUR/MWh).
With the recently acquired partial quantity, further progress has been made in building a global reserve to safeguard against exceptional and unpredictable critical shortages. The acquisition spread over multiple tranches aims to mitigate financial risks caused by potential price fluctuations in the market. If conducted as a single tender, the award could occur during a period of particularly high prices; however, spreading the acquisitions across different dates helps to reduce that risk.
The hydroelectric reserve is part of the electricity reserve for the winter
The tender for the hydroelectric reserve for the next winter is governed by current legislation, namely the Winter Reserve Ordinance. Participating power plants in the reserve receive compensation for maintaining the reserve, based on a competitive tendering procedure. The EUR 5.6 million cost associated with the partial amount of energy acquired for reserve maintenance will be borne by all electricity consumers in Switzerland through a surcharge on the network usage tariff, proportional to their consumption; this will also apply to the costs incurred from subsequent partial tenders.
To ensure that energy can be successfully called upon when needed, the reserve is distributed among different groups of power plants.
The reserve will be utilized when the market can no longer meet demand. Swissgrid will then request the required reserve quantity.
Schedule and next steps
Swissgrid intends to procure the hydropower reserve between July and September 2024, according to the key values published by ElCom. The energy is set to be preserved from early February 2025 to mid-May 2025. A mid-May date was chosen as the conclusion of the conservation period based on historical data regarding the filling levels of Swiss storage lakes. Trends in previous years indicate that the levels typically rise from that point onward.
About ElCom
The Federal Electricity Commission (ElCom) serves as the national regulatory authority in the electricity sector. ElCom operates independently. It oversees compliance with the Electricity Supply Act and the Energy Act, taking necessary actions and issuing required decisions for this purpose.
ElCom monitors electricity prices and acts as a judicial authority in disputes related to grid access. Additionally, it ensures the security of the nation’s electricity supply and addresses issues concerning international electricity transmission and trade. Finally, it issues decisions on feed-in tariffs and resolves disputes between consumers and their grid operators. The members of ElCom are appointed by the Federal Council and must remain independent of the electricity industry.
Address for sending questions
Simon Witschi, Head of Services, tel. 058 466 08 49
Antonia Adam, Media and Communication, tel. 058 466 89 99
Federal Electricity Commission ElCom
3003 Berne
Tel. +41 58 462 58 33
Fax +41 58 462 02 22
Email: info@elcom.admin.ch
www.elcom.admin.ch
Author
Federal Electricity Commission
Hydroelectric Reserve Tender Results for Winter 2024/2025
Bern, 15.08.2024 – The second call for tenders for the hydroelectric reserve for the winter of 2024/2025 closed on 15 August 2024. Bids for a total volume of 82 gigawatt hours (GWh) were awarded, with costs amounting to EUR 5.6 million.
Tender Details and Outcomes
The initial tranche, acquired in July, included 63 GWh at a cost of EUR 3.3 million. The total volume acquired thus far is in line with the range specified by ElCom, aiming for a cumulative total of 300 GWh, allowing for a tolerance margin of ±100 GWh. The cumulative financial commitment for both tranches stands at EUR 8.9 million.
During the second tender organized by the national transmission grid company, Swissgrid, there were 93 bids submitted by various operators, totaling 443 GWh of proposed hydropower. Ultimately, the award focused on securing 82 GWh, reinforcing the targeted acquisition volume set by ElCom.
Cost Breakdown and Market Insights
The costs associated with the 82 GWh acquired can be justified by the price forecasts in the electricity market, revealing an average award price of 68.2 EUR/MWh. This average reflects an increase from the first tranche’s average rate of 53.17 EUR/MWh.
Benefits of Multiple Tenders
By conducting the tender process in multiple phases, Swissgrid aims to mitigate financial risks arising from potential market volatility. A single tender could coincide with peak pricing, but spreading awards over multiple dates reduces this exposure, ensuring better financial management for electricity consumers.
Importance of the Hydroelectric Reserve
The hydroelectric reserve serves as an essential component of Switzerland’s electricity security during the winter months. Governed by the Winter Reserve Ordinance, participating power plants receive compensation through a competitive bidding process. The related costs, including the latest EUR 5.6 million for the reserve, are collectively shouldered by Swiss electricity consumers via a surcharge on network usage tariffs.
Distribution and Activation of the Reserve
To ensure effective deployment when required, the hydroelectric reserve is allocated among a varied group of power plants. Swissgrid can activate this reserve when the electricity market fails to meet demand, thus safeguarding against critical shortages.
Next Steps: Schedule for Future Tenders
Swissgrid plans to procure additional hydropower reserves between July and September 2024, adhering to the key values published by ElCom. The conservation period for the secured energy will commence in early February 2025 and continue until mid-May 2025, strategically timed based on historical data regarding the water levels of Swiss storage lakes.
Overview of the Federal Electricity Commission (ElCom)
The Federal Electricity Commission (ElCom) is Switzerland’s national regulatory authority responsible for electricity oversight. Its independence is a cornerstone of its operations, as it ensures compliance with both the Electricity Supply Act and the Energy Act. Key functions of ElCom include:
- Monitoring electricity prices and market compliance
- Resolving disputes concerning grid access
- Ensuring the security of national electricity supplies
- Overseeing international electricity transmission and trade
- Issuing decisions on feed-in tariffs and resolving consumer grievances
Contact Information for Inquiries
Address: Federal Electricity Commission ElCom, 3003 Berne
Telephone: +41 58 462 58 33
Fax: +41 58 462 02 22
Email: info@elcom.admin.ch
Media Contact:
Simon Witschi, Head of Services, tel. 058 466 08 49
Antonia Adam, Media and Communication, tel. 058 466 89 99
Author
Federal Electricity Commission