Why we need electricity trade

To decarbonize Swiss economy, electricity will replace oil and natural gas as the primary energy carrier. Where should that power come from?

Electrical lines – illustrative photo. Image credit: John Middelkoop via Unsplash, free license

Many people argue that all of it should be produced domestically. Careful analysis suggests some share of it should be imported, says Anthony Patt.

Electricity will replace oil and natural gas as the primary energy carrier to decarbonize our economy. Where should that power come from?

Many people argue that all of it should be produced domestically. According to Anthony Patt, careful analysis suggests some share of it should be imported.

Self-reliance plays a huge role in Swiss culture. This desire, coupled with an ethic of hard work and humility, has helped to make Switzerland prosperous and strong. And yet the idea of self-reliance often contradicts reality.

Switzerland’s wealth, and our standing in the world, rest to an exceptionally large extent on international trade and interdependence with other countries.

The dichotomy between reality and myth is particularly strong with respect to energy. We import just over 70% of our primary energy from fossil fuels and uranium. Electricity makes up about a third of our energy consumption.

While we generate about the same amount of electricity as we use domestically, we rely heavily on trade to efficiently balance supply and demand throughout the year.

Balancing capacities

International trade allows Switzerland to diversify power generation sources at any given time, either in Switzerland or in neighboring countries. As solar and wind increase in share, geographic diversification will become even more important.

In Europe, summers bring sunshine and winters bring wind, so it makes sense to balance these two sources of electricity roughly equally.³

Unlike Switzerland, countries in northern Europe have enough electricity in winter of wind power, which peaks in winter.

Denmark, for example, does well in exporting electricity in winter and import in summer. Switzerland and Austria are the two countries where summer-peaking hydropower and solar play a larger role than wind, and hence can export in summer and import in winter.

And even for wind or solar individually, geographic balancing is valuable. By bridging regions spanning multiple weather systems, distances on the order of 500 – 1,000 km, we can greatly reduce the variability of each power source.

Lessened variability allows us to reduce the waste (up to 50%) inherent in storing electricity from one period to the next. The results are lower costs and a lower overall environmental footprint to gain a given reliability standard.

Boost reliance

For Switzerland, do the potential risks inherent in electricity crossing international borders outweigh the gains from geographic diversification? My answer is no, because the risks inherent in international energy trade are very minor.

Researchers examined the dynamics of interdependency and found that exporting countries are typically hurt more by the loss of revenues that come with trade interruptions than importing countries are hurt by the loss of energy supply.⁶ In fact, it is exceedingly rare that exporting countries cause interruptions.

The main exception is when the importing country is highly dependent on a single exporting country – as was the case with Germany’s reliance on Russian natural gas – and the two countries are in conflict for other reasons.

Moreover, the incentives for exporters to be reliable are stronger with renewable electricity than with fossil fuels. Suppose a country interrupts oil or gas exports. In that case, it can still use or export those fuels later, whereas electricity from wind and solar power not exported immediately will be lost forever.

References

¹ Meier, I. (2011). The Swiss as Hobbits, Gnomes, and Trickster of Europe. Journal of Archetype and Culture 86: 39 – 54.

² Wicht, L. (2020). A multi-​sector analysis of Switzerland’s gains from trade. SNB Working Papers 20/2020.

³ Diaz, P., O. Van Vliet and A. Patt (2017). Do we need gas as a bridging fuel? A case study of the electricity system of Switzerland. Energies 10: 861.

⁴ Grams, C., R. Beerli, St. Pfenninger, I. Staffell and H. Wernli (2017). Balancing Europe’s wind-​power output through spatial deployment informed by weather regimes. Nature Climate Change 7: 557 – 562; Pfenninger, S. et al., (2014). Potential for concentrating solar power to provide baseload and dispatchable power. Nature Climate Change 4(8), 689–692.

⁵ Tröndle, T., J. Lilliestam, S. Marelli and S. Pfenninger (2020). Trade-​Offs between Geographic Scale, Cost, and Infrastructure Requirements for Fully Renewable Electricity in Europe. Joule 4: 1929 – 1948.

⁶ Lefèvre, N. (2010). Measuring the energy security implications of fossil fuel resource concentration. Energy Policy 38: 1635 – 1644.

⁷ Williams, E. and T. Gilovich (2008). Do people really believe they are above average? Journal of Experimental Social Psychology 44: 1121 – 1128.

Source: ETH Zurich