Incentives for an adequate, economic and reliable Swiss transmission grid
Title: Incentives for an adequate, economic and reliable Swiss transmission grid
Series/Number: Swiss Federal Office of Energy (SFOE); 2006/11
As Switzerland moves towards a more liberalized and competitive electricity market, an essential task of policy makers will be to ensure that incentives are in place for the construction, maintenance and operation of adequate, economic and reliable transmission infrastructure. As well as continuing to serve the domestic market, the location of Switzerland within the centre of Europe also means that policy should embrace opportunities in servicing the developing European Internal Market by providing transit and other services. In developing such policy, however, theory and experience with liberalized electricity markets has demonstrated that both the regulated and merchant approaches for supporting transmission investment have a number of difficulties that can lead to problems such as suboptimal investment, productive inefficiencies and market power exploitation. The aim of this report is to review the key economic issues, problems and potential solutions that the SFOE and any future Swiss regulator may face as Switzerland embarks on its reforms of the electricity sector and the EU takes further measures to create the Single Electricity Market. This report is part of a potentially larger project, the key output to be a framework and toolkit to address the different means of encouraging appropriate transmission infrastructure development.
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