Riccardo Pozzi is Head of Energy Management at Primeo Energie AG and responsible for procuring electricity, including for EKZ customers. To understand the price of electricity, you have to look at the prices for other energy sources. Because the price of electricity is closely linked to this. So let's look at the price of gas. Because it currently determines the electricity price and there is a lot to be read, seen and heard about it in the media: it is reaching record values. And a rapid price recovery is not yet in sight. "The reasons for this high gas price are, on the one hand, that the gas storage facilities could not be filled in the summer months," explains Riccardo Pozzi. The price of gas was already rising back then. In the hope of a price recovery, the annual filling of the gas storage facilities had been postponed. Added to the wait is the delayed commissioning of the Nord Stream 2 gas pipeline. In the future, this will transport Russian gas directly to Germany via the Baltic Sea. However, political and legal issues have delayed commissioning until now. Thus, the demand is greater than the supply, which drives up the price on the market.
dependence of the electricity price
But what does the price of gas have to do with the price of electricity? Electricity is traded on various exchanges on the European electricity market. The price is determined by the most expensive technology used to generate electricity. This is because these power plants are deployed in the order of their marginal costs (variable costs). And so until the demand is met. The most expensive power plant used thus determines the price. This mechanism is expressed by the so-called "merit order curve".
“Currently, it is mainly gas-fired power plants that determine the price,” explains the energy specialist. This explains the sharp rise in electricity prices. But there is another reason for the increase in electricity costs: CO2 certificates. Power plants have to purchase certificates for the CO2 emissions they produce. These are also traded and their prices are largely influenced by the EU. As a result of the EU's ambitious emission reduction targets, the prices for CO2 certificates have also risen.
Electricity price prospects
"Currently, business customers on the open market who are still without a contract, i.e. customers with a consumption of more than 100 MWh, are feeling the high electricity price very badly," says Riccardo Pozzi and adds: "Up to now, many customers have hoped that the prices would would go down." Customers in basic services would have it better. Because while business customers buy electricity at the current price, the price for customers with basic supply is made up of an average over two years. "Our customers will feel the effects of the current electricity price trend in 2023 and 2024 through a major price increase," explains Karl Resch, Head of Regulation Management and Network Management at EKZ. "Since we have hardly any own production in Switzerland and are therefore dependent on market prices, our price increase will be somewhat larger than that of energy suppliers who have a large proportion of their own production," adds the expert. And he says: "These companies tend to have higher electricity prices over the years, but they don't fluctuate as much". EKZ will also be one of the cheapest electricity suppliers in Switzerland in 2022. The extent to which electricity prices will increase in 2023 has not yet been determined. Because the tariffs will not be determined until summer 2022. However, EKZ continues to work to keep electricity prices as low as possible.
Composition of the electricity price
If you want to know how the electricity price is made up, read the article on energie-experten.ch by Claudio Maag, Deputy Head of Network Management and Regulatory Management at EKZ.
