It’s an unconventional idea: Industrial companies that had purchased electricity cheaply for 2023 could save part of it and sell it. You would not only earn money – but also help to ensure that there is enough electricity in winter.
The economic blood of Switzerland flows through power lines: overhead power lines near Gormund not far from Lake Sempach.
It’s going to be tight this winter. Every additional kilowatt hour is needed to protect us from a power shortage. And this seems increasingly likely, as the recent rise in electricity prices on the stock market suggests.
This could give some large consumers the following idea: they should consider reducing their activities in the particularly critical first quarter of 2023 in order to sell the electricity they have saved on the exchange at the maximum price. He could make a lot of money that way. This is by no means meant cynically, but can relieve the power system.
The first companies are knocking on the door of suppliers
So it’s about the big consumers from the economy who use more than 100,000 kilowatt hours (or 100 megawatt hours, MWh) a year. You can stock up on electricity on the open market. Very large industrial companies are sometimes even active on the market themselves.
A company that bought electricity for two years in 2021 for an average of 100 euros per MWh could run through the following scenario: The price on the futures market for Swiss electricity in the first quarter of 2023 is currently an enormous 1700 euros (Friday) – around 20- times as high as before the first turbulences in autumn 2021. For each MWh saved and forward sold, the company could thus achieve a whopping profit of 1600 euros.
Let’s take a medium-sized industrial company that prefers the maintenance of its machines to January 2023. As a result, he saved 500 MWh in January and sold them on the futures market for the said 1700 euros. Then he would pocket a profit of 800,000 euros. At the same time, 500 MWh would be free, which could be used elsewhere in the economy.
Are the companies queuing up at their electricity suppliers to thread such lucrative “deals”? Not yet, but the topic is coming up when you ask around in the industry. One hurdle: Most companies have concluded so-called full supply contracts. Customers therefore do not purchase a certain amount of electricity in advance, but have fixed the price and ultimately pay for what they actually use.
If the customer needs more than planned, the electricity supplier will pay for the additional costs if the price has risen in the meantime, writes the Grisons electricity company Repower. Conversely, the additional proceeds from the sale of the excess security, i.e. if the customer consumes less than planned, remain with the electricity supplier.
But would Repower consider a customer’s request if they offered to use significantly less electricity in the first quarter of 2023 so that it could be sold at a high price on the futures market? Such an offer would certainly be looked at if it made a real contribution to reducing the load, explains Repower.
However, it should be borne in mind that with full supply contracts, the electricity does not belong to the customer until it is delivered. If, on the other hand, a customer appears independently as an actor on the market, he has the option of buying or selling quantities at any time.
In winter, every kilowatt hour counts
If the companies develop ideas on how they could make money with the energy that was previously bought cheaply, this shows that the market mechanisms are at work, explains the Zurich City Electricity Works (EWZ). The subject has been taken up, but a final opinion has not yet been reached.
The matter is tricky: “How can a company guarantee us that, for example, on February 7, 2023 from 11 a.m. to 12 p.m. it only needs 2 instead of 5 megawatt hours?” says an EWZ spokesman. And if a power shortage were declared, the market would be suspended, making such contracts even more difficult to enforce.
The third-largest electricity company in Switzerland, BKW, is not actively approaching customers on the matter. But she confirms that she is looking for individual solutions with companies in individual cases. For example, a company that installs new machines and thus has a production interruption in the first quarter, which frees up electricity. With these solutions, the aim is not to make a profit, writes BKW almost apologetically. But no one needs to apologize for this, as barter deals like this could help alleviate the power shortage.
The co-founder of the energy service provider Ompex, Oliver Meyhack, definitely recommends companies to approach the suppliers and make such agreements palatable to them. However, there are smaller electricity companies whose statutes prohibit them from taking risks in trading. But such considerations do take place with bulk consumers, says Meyhack. They even explored going directly into electricity trading, which would bypass the established electricity companies.
The tension for the first quarter of 2023 seems to be increasing, as the unchecked price increase suggests. Energy suppliers in particular should therefore also consider unconventional solutions. This would include reaching out to their customers and proposing such deals where there is room for them. Because in winter, every kilowatt hour that saves Switzerland from rationing and shutdowns counts.