Balancing-market design and opportunity cost: The Swiss case

Abstract

The energy transition entails many changes to the existing system. This study focuses on the Swiss electricity balancing market and its adaptation in the context of the energy transition. An operational model for a set of Swiss hydropower plants is used to quantify the opportunity costs of balancing provision under the past, current, and future market designs. The results show that compared to the former balancing-market design, significant cost savings can be achieved by the planned modifications. In addition, the analysis shows how the cost dynamics may change in the future with an increasing share of renewable energies.