Europe has an electricity problem. A massive one. German solar panels pump out too much at noon and nothing at night. Danish wind turbines go crazy in storms, then fall silent when the air is still. The result is a grid on permanent mood swings, an energy mess desperately looking for someone to store the surplus and fill the gaps. That someone is us. Nant de Drance can swallow 900 MW, the equivalent of 900,000 households, and spit it back out in five minutes. Our dams are the continent’s giant power banks. And in the Switzerland–EU agreements negotiated at the end of 2024, there is an energy chapter that would turn us into the official stabilizers of this chaos. Our golden ticket to the energy game.

So what does the deal actually say? First, Switzerland finally joins the European electricity market. No more of that absurd situation where German power sold to Italy flows through Swiss territory without us being part of the game. We become players: we buy when it is cheap (Germany’s midday surplus), store it in our reservoirs, then sell when it is expensive (the evening peak). It is trading, but with water and gravity. The municipalities and cantons that own the utilities will feast. Then comes regulation. Europe pays us to keep the grid stable. With our 220 dams and perfect alpine geography, we become the central stabilizer of the system. In plain English: we turn our landscape into a money machine.

The best part? We already have everything. The infrastructure is there, the expertise has been here for over a century. No need to spend billions, just connect what we have to the European market. Without the deal, Switzerland loses between 500 million and 1 billion francs per year, according to the Swiss electricity association. That is the cost of stabilizing flows we do not control. With the deal, that loss flips into profit. No new plants, no imported labor, just smart use of our mountains and our water. It is the perfect business model: zero extra investment, instant returns.

And of course, there are Swiss-style safeguards. Households keep the choice: a regulated market for stability, or a free market if they want to gamble. Companies can optimize costs, families stay protected. Tailor-made, Swiss edition. The timing could not be better. Europe is investing 600 billion euros into renewables by 2030, but has almost no storage capacity. Meanwhile, 60 percent of Swiss power already comes from hydro. We are the solution to their problem. Ten years from now, either Switzerland will be the kingpin of European grid regulation or we will be watching Austria and Norway take the spot that should have been ours. The choice is ours.

Have a good week,
M. Hantale 🧀

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Top stories

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• 🇨🇭 Rates. The SNB chief called a return to negative interest rates “highly unlikely.”
• 🇺🇸 Fed. The Federal Reserve is expected to cut rates by 25bps.
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World

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The Euro: The Shield That Prevents France From Healing

Fifth French Prime Minister appointed in two years. A record that would make any stable democracy blush. And as always, commentators are buzzing: why is the country paralyzed? Explanations abound, but curiously, no one mentions the elephant in the room: this single currency acting as an anesthetic shield, suppressing pain but also any desire for recovery.

Don’t see the connection? Take Sweden, Finland, or Norway in the 1990s. These countries went through budget crises far more severe than France’s current situation, with public deficits exceeding 10% of GDP. Except they didn’t have the euro to protect them. Result: brutal devaluation, draconian austerity plans, painful budget adjustments. The kind of medicine that hurts at first but which, within a few years, allowed them to regain sound public finances and solid growth. Today, they’re held up as models. Funny, isn’t it?

France itself knew this discipline. During the EMS crises of 1992-93, it had to devalue several times to defend its currency. Painful, certainly, but it forced adaptation. Since the euro? Game over. No more markets immediately sanctioning budget excesses through soaring rates, no more forced correction through devaluation, no more austerity plans imposed by economic reality. A cozy comfort that lulls any reformist will to sleep.

And what about the ECB’s protection? Since the 2011-2012 crisis, it has equipped itself with an arsenal allowing it to massively purchase public debt. The figures are staggering: between late 2019 and late 2023, French public debt increased by 12 percentage points of GDP. During the same period, the Bank of France increased its holdings of French debt by 10 points within the Eurosystem framework. In plain terms, almost the entire increase in debt was absorbed by European monetary policy. A discreet sleight of hand that protects the country from rate sanctions. Convenient for avoiding difficult decisions.

France’s real tragedy isn’t that it might fall. It’s precisely that it never falls. No shock, no awareness. No acute crisis, no consensus for reform. The euro acts like those safety nets so comfortable that you end up settling in permanently, transforming temporary protection into a permanent hammock. France floats, on monetary life support, in a torpor increasingly resembling a slow agony.

Seen from Switzerland, this situation has something surreal about it. In 1992, we said no to the European Union with 77% voting against the single currency. Since then, we’ve never needed to beg for our central bank’s protection or rely on any monetary solidarity mechanism. We built our credibility the old-fashioned way: with a constitutional debt brake that, crucial detail, has been scrupulously respected year after year. Sure, we’re dealing with a strong franc that complicates life for our exporters. But between us, it’s the kind of « rich country problem » that many nations would gladly trade for their chronic instability and abysmal deficits.

— Mourtaza Asad-Syed

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Diversify your assets in Switzerland
Find out why nearly 2 million Europeans already keep a Swiss account.