- Jump to section
- The old regime: A two-sided penalty
- The new regime: One price, one signal
- What the data so far shows
- Price spread: Before and after
- How the Swiss market is likely to evolve
- Further market changes
- What this means in practice
On January 1st, 2026, Switzerland moved from dual to single imbalance pricing. The reform, which is part of a broader effort to align with European market design, arrives at an interesting time. Switzerland is liberalizing its retail electricity market, solar capacity is expanding rapidly – a single solar surge caused a 1.4 GW imbalance event in April 2024, and the pressure on balancing groups has been building for some time.
The pricing reform changes the underlying logic of how short-term power traders should think about that exposure. Three months in, we have early data to start drawing the first conclusions. This article covers what changed, what the numbers show, and what it means for renewable short-term traders and asset owners in Switzerland.
The old regime: A two-sided penalty
Under dual pricing, Switzerland used separate feed-in and take-off prices to settle imbalances. When you were long – feeding more into the grid than your schedule – you were paid the feed-in price. When you were short, you paid the take-off price.
The spread between the two reflected both the system state and a structural penalty for being out of balance. In 2025, that spread reached 40 €/MWh at peak, as we will show below. The direction of your imbalance relative to the system’s compounded the effect: being wrong in the same direction as the system was expensive in both cases, but the spread itself added a second layer of cost.
Dual pricing takes different forms across Europe. In the Netherlands, the settlement price is settled at the cost of activated reserves, which can diverge significantly from the day-ahead price. This creates conditions in which BRPs can deliberately hold an imbalance position as a trading instrument, known as passive imbalancing. In Spain, imbalance is settled based on day-ahead prices, meaning there is no gainable upside and no difference to being in balance. In France, a k-factor is applied to imbalance settlement, making deviations structurally expensive and pushing BRPs to minimize their position regardless of the system state.
Switzerland’s regime sat closer to the punitive end of this spectrum. The incentive structure was to minimize imbalance, regardless of whether helping the system was financially rational in a given moment.
The new regime: One price, one signal
Single imbalance pricing replaces the two-sided structure with a single price that directly reflects the system state. When the system is long, prices tend to fall; when it is short, they rise. Settlement becomes linear: imbalance volume multiplied by a single price.
The penalty logic is thus replaced by a directional signal: if you can anticipate the system state and position accordingly, you get rewarded for it.
This aligns the financial incentive with the physical reality of the grid, and it places forecasting accuracy – of both the system state and the imbalance price itself – at the center of any balancing strategy.
What the data so far shows
To quantify the impact of the market change, we simulated a 1 MW balancing group across the same calendar window in 2025 and 2026 under three position scenarios. The curtailment strategy zeroes out delivery in intervals where Swissgrid’s total system imbalance (TSI) is at or below zero.
It is worth noting that these Q1 figures are conservative, as solar output is low in January–March. The summer case is expected to be significantly stronger.
Always long
Holding a persistent long position – for example, a renewable asset producing above schedule – looked very different under each regime.
- 2025 (dual pricing): −€11,605
- 2026 (single pricing): +€28,651
Under dual pricing, the spread penalty eroded and reversed value even when the system needed your excess generation. Under single pricing, the same position generates positive returns when the system is long and your position aligns with it.
Curtailment when the system is long
The more instructive scenario is curtailment. Under dual pricing, curtailing during system-long periods was costly: you were giving up generation while the feed-in price was depressed by the spread.
- 2025 (dual pricing): +€1,995
- 2026 (single pricing): +€24,514 – 12x (assuming perfect foresight of system state)
The jump reflects a fundamental shift in curtailment economics: from avoiding low prices to avoiding exposure to negative prices. What was previously a cost-minimization trade-off is now, under the right conditions, a revenue-generating action.
Short positions
For traders holding short imbalance positions, the dynamics are symmetric in direction but different in magnitude.
Under dual pricing, being short when the system was also short triggered both the take-off price and the spread penalty.
Under single pricing, being short when the system is short is simply settled at a high price – still painful, but predictable and proportional. Subsequently, short positions are now easier to hedge and model because the price signal is unambiguous.
Price spread: Before and after
One of the clearest ways to see the reform’s impact is in the spread between dual and single pricing.
Under dual pricing, the distribution was effectively bimodal: shaped by the structural spread between feed-in and take-off prices, with a gap between the two groups. Extreme values in either direction were amplified.
Under single pricing, the distribution compresses around the system marginal price. The extreme tail events are still present – when the system is severely long or short, prices still move sharply – but the spread-driven floor and ceiling are gone. The distribution is tighter, more informative, and more directly linked to physical conditions.
As a result, a practical implication of the reform may be for forecasting. The forecast error that costs you under single pricing is the error in anticipating the system state, not the compounded error of both system state and spread dynamics. That is a tighter, more signal-rich distribution to model.
How the Swiss market is likely to evolve
Three months of data is a starting point. Market design reforms tend to have second-order effects that take time to become visible. Based on patterns we’ve seen elsewhere, three dynamics stand out:
Solar growth
Swiss PV capacity has doubled since 2022, reaching ~8.2 GW by the end of 2024, with annual additions projected to reach 1.8–2.7 GW by 2030. Flexibility is not keeping pace.
Swissgrid’s Balancing Roadmap indicates that the country’s primary flexible resource – pumped storage – retreats during peak PV hours due to low prices. With only some large-scale BESS operational in 2028, large-scale BESS will likely not be able to absorb the rapid solar growth in the coming years. Switzerland curtailed 172.7 GWh in 2025, a signal of how often the system is long.
The pattern of solar growth outpacing flexibility and the resulting volatility is well established in Northern Europe. Switzerland is on the same trajectory.
Market impact
Switzerland remains outside SDAC and SIDC for the foreseeable future, with integration dependent on a pending electricity agreement with the EU. The combination of growing renewable oversupply and limited cross-border coupling mirrors the pre-PICASSO situation in the Netherlands and Germany, namely deeper price dips, more frequent system-long periods, more curtailment value.
As more participants identify and act on the same imbalance signal, strategies that exploit system-long or system-short conditions will face increasing competition. We’ve written about market impact in the Netherlands: when enough players adopt the same approach, the signal degrades and the opportunity narrows. Switzerland’s market is smaller and thinner, so this effect could materialize faster.
Intraday implications
Single pricing also changes the calculus around intraday trading. Under dual pricing, the spread penalty suppressed intraday activity; there was limited incentive to correct your position if the spread would penalize you either way.
Now, there is a clearer case for using intraday to close out imbalance before settlement. The imbalance price is also more correlated with intraday, which opens up speculative positioning across the two markets.
Further market changes
A near-term development is Italy’s temporary export mechanism toward Switzerland. Until the end of August, Terna can procure additional cross-border capacity two days ahead of delivery to manage periods of high renewable generation and domestic congestion.
In parallel, Switzerland is working toward introducing 15-minute products at its borders (CH–IT by 2027, CH–FR by 2029). More significantly, the country is planning to join PICASSO, enabling cross-border aFRR capacity and further aligning with European balancing markets.
A broader Switzerland–EU package of agreements, including participation in the European internal electricity market, was signed on March 2nd, but remains subject to ratification by the Swiss parliament and a public referendum expected in 2027.
We will cover these developments as they progress.
What this means in practice
For short-term traders, imbalance price forecasting in Switzerland now has a direct PnL impact. The signal is cleaner and the reward structure is more transparent.
For asset owners, curtailment is now a strategic decision. Under the right conditions, curtailing an asset when the system is long is a revenue-generating action. That requires knowing, in advance, when those conditions hold.
If you’re managing exposure in Switzerland and want to talk through how imbalance price forecasting can support your strategy, we’re happy to go into the specifics.