Local energy communities

The Swiss energy landscape is undergoing a fundamental decarbonisation and decentralisation. With the acceptance of the Federal Act on a Secure Electricity Supply with Renewable Energies – commonly referred to as the umbrella decree ("Mantelerlass") – on 9 June 2024, the Swiss electorate paved the way for a profound revision of the Energy Act (EnA) and the Electricity Supply Act (ESA).1 To allow players in the energy sector sufficient time for technical and organisational adaptation, the Federal Council has decreed the implementation in staggered packages.1 While the first package entered into force on 1 January 2025 and, among other things, legitimised the virtual association for self-consumption (vZEV), the official introduction of the Local Electricity Community (LEC) followed on 1 January 2026 with the second package.1 These new models aim to maximise the local use of decentrally generated solar power, increase the profitability of photovoltaic systems and, at the same time, relieve pressure on the distribution grids.3

The regulatory evolution of solar self-consumption

The legal framework for sharing solar power in Switzerland was liberalised step by step in order to accommodate different geographical and grid-technical conditions.2 Prior to the umbrella decree, community use was essentially limited to the classic association for self-consumption (ZEV).2

Association for self-consumption

Legally anchored since 2018, the classic ZEV allows multiple parties – for example, in a multi-family house or on a contiguous development – to share the solar power produced on site.2 The prerequisite for this is that all participants are connected to the public distribution grid via a single physical grid connection point.2 Internal metering and billing are the responsibility of the ZEV community, while the distribution grid operator (DGO) only issues a single total invoice for the entire property.2

Virtual association for self-consumption

The virtual ZEV (vZEV) introduced on 1 January 2025 removed the restriction of the shared physical grid connection point.2 By using the smart meter infrastructure of the distribution grid operator, several properties in the immediate vicinity can be virtually grouped together in order to bill the produced solar power metrologically with each other.2 This allows, for example, the energy coupling of a multi-family house with a solar system and neighbouring single-family houses without the need to lay private power lines.3 However, the legal initiation remains primarily at the level of the property owners.2

Local Electricity Community

With effect from 1 January 2026, the Local Electricity Community (LEC) was established as the most far-reaching model.2 In contrast to the ZEV and vZEV, the LEC is not limited to immediately adjacent properties, but can extend over the entire territory of a political municipality.5 Furthermore, the initiation of an LEC is open to all players: end consumers, producers, and storage operators can join forces.2 Tenants and condominium owners can also join an LEC without the explicit consent of the property owner in order to purchase solar power from the neighbourhood.4

Legal requirements and measurement constraints for LECs

The operation of an LEC is subject to strict regulatory requirements defined in the Electricity Supply Act (Art. 17d ESA) as well as in the Electricity Supply Ordinance (Art. 19e ESO).7 In deviation from the standard regulations of the Network Code Switzerland and the Metering Code Switzerland, the energy flow is defined in line with the Self-Consumption Regulation Manual ("Handbuch Eigenverbrauchsregelung", HER) from the perspective of the end consumer.7 Power consumption therefore represents the flow of energy from the grid to the consumer, while feeding-in describes the flow from generation plants or storage units into the distribution grid.7

The main criteria for the constitution of an LEC include the following aspects:

• Grid topology limits: Participants must be connected to the grid of the same distribution grid operator and at the same grid level (low-voltage level NL7 or medium-voltage level NL5).6 The physical energy exchange must not exceed a voltage of 36 kV; the use of the transmission level NL3 is explicitly excluded for the marketing of LEC power.6

• Capacity ratio: The installed production capacity of the renewable generation plants within the LEC must be at least 5% of the cumulative connection capacity of all participating end consumers.6

• Exclusion of multiple participations: According to Art. 19e para. 4 ESO, each end consumer may only participate in a single LEC per consumption site (metering point) at any given time.7

• Mandatory smart meter equipment: All consumption, generation, and storage facilities within the LEC must be equipped with intelligent metering systems from the distribution grid operator.6 According to Art. 17d para. 4 ESA, the DGO is obliged to install these smart meters within three months of the legally valid registration of the LEC, if they are not already present.6

• Data provision and transparency: To facilitate LEC planning, distribution grid operators are obliged to publish anonymised 15-minute load profile data of electricity consumption as well as grid feed-in by generation technology per municipality and canton on the internet.8 End consumers, producers, and storage operators also have the right to access their own measurement and master data recorded during the last five years.8

Economic incentives and mathematical electricity allocation

A key economic driver for founding an LEC is the reduced grid usage fee for internally exchanged electricity.6 Since the power is consumed locally and higher grid levels are therefore not utilised, the legislator grants significant discounts on standard grid usage tariffs6:

• 40% discount: If the physical transport of the solar power takes place on a single grid level without transformation, which usually corresponds to the area of the same transformer circuit.6

• 20% discount: If transport takes place over several grid levels, but a maximum of one transformation level is used (area of the same substation).6

The remaining electricity shares that the LEC participants cannot cover internally are supplied as residual power by the local distribution grid operator at the standard tariff and billed separately.6 The sharing of the jointly produced power takes place simultaneously on the basis of the 15-minute load profile data according to a standardised mathematical key laid down in the industry manual of the Association of Swiss Electrical Companies (VSE).7

The official calculation example from the VSE serves to illustrate this mechanism.7 In a hypothetical LEC, there are four parties (House A to D), two of which operate their own photovoltaic systems.7 The total simultaneous production is 90 units, while the total consumption is 180 units.7 The allocation key determines that each consumption point is assigned exactly the same percentage of local LEC power proportional to its current consumption, which in this interval is 90/180 = 50%.7

The internal tariffing of the LEC power is regulated autonomously on a contractual basis by the LEC representation.6 The LEC representation or an commissioned external billing service provider takes care of the internal invoicing for the traded solar power, while the DGO issues a separate invoice for each party for the residual power drawn.5

The media response: The Kassensturz analysis and grid dynamics

The social and economic relevance of Local Energy Communities was highlighted in May 2026 in a detailed report by the SRF consumer programme Kassensturz.11 The broadcast illustrates the opportunities of the model for the general public and shows how legal innovations can accelerate the energy transition at the grassroots level.4

The full video of the broadcast is available on the Swiss Radio and Television portal:

(https://www.srf.ch/sendungen/kassensturz-espresso/kassensturz/sendungsvorschau-strom-aus-dem-quartier-solarenergie-vom-nachbarn).4

Using concrete practical examples, the feature shows how both sides – producers and consumers – can benefit equally from an LEC.4 Dominic Wyler, a homeowner in the Basel region, describes how he achieves a higher margin by selling surplus solar power directly to his neighbours than via the minimal grid feed-in tariff of the local electricity utility.4 This allows him to amortise the considerable investment costs for his photovoltaic system much more quickly.4 On the other hand, the model allows consumers like Andreas Winzeler from Schaffhausen, who cannot install solar panels themselves, to specifically purchase cheap solar energy from the neighbourhood, for example to charge his electric vehicle in the local district.4 The physical electricity thus remains directly in the local cycle.4

The grid-technical challenge

Despite the obvious benefits, uncontrolled feed-in of solar power poses significant risks to grid stability.4 The Swiss energy and grid path envisages that from 2033, existing nuclear power plants will step-by-step leave the grid and their production will primarily be compensated by photovoltaic systems.4 However, when hundreds of thousands of solar systems feed in electricity simultaneously on sunny summer days, the distribution grid reaches its capacity limits.4 Conversely, solar production drops to near zero in the evening hours and in winter, forcing a costly provision of conventional grid capacities.6

Photovoltaics Professor Christof Bucher from the Bern University of Applied Sciences (BFH) emphasises in the Kassensturz contribution that LECs have the potential to provide cheap electricity and at the same time relieve the supra-regional grid, as the electricity is consumed where it is generated.4 However, he qualifies that the actual savings potential depends heavily on the temporal congruence between generation and consumption.6 Furthermore, implementation in some regions faces resistance from established power plants, which are often reluctant to support LECs, as the model reduces their classic electricity sales in the profitable basic supply.11

The historical predecessor: The Walenstadt grid district power pioneer project

The pioneering pilot project "Quartierstrom" in Walenstadt proved long before the legal introduction of the LEC that local power trading in the neighbourhood is not only a theoretical option, but technically feasible.15 The project, supported by the Swiss Federal Office of Energy (SFOE) as a flagship project, provided valuable insights for drafting today's legislation.15

Quartierstrom 1.0 (2018–2020)

Starting in September 2018, Switzerland's first local electricity market was implemented in the Schwemmiweg district in Walenstadt.16 A total of 37 households, of which 28 had their own photovoltaic system, joined forces.18 The total installed capacity was 290 kW, generating around 300,000 kWh of electricity annually.18 As the local grid operator, the Walenstadt water and electricity utility (WEW) provided its distribution grid and acted as a balancing and residual power supplier.16

The special feature of Quartierstrom 1.0 was its information technology handling: power trading and pricing took place fully automatically and decentrally via a blockchain technology, with participants able to configure their buy and sell limits individually.16 The project was successfully completed in January 2020.15

Quartierstrom 2.0

As part of the subsequent Smart City Innovation Challenge by Energy Switzerland, the project was further developed into "Quartierstrom 2.0".15 The aim was to transform the trading platform into a marketable product for the wider energy sector.15 This involved a technological paradigm shift: the complex and computationally intensive blockchain technology was replaced by a leaner, scalable web application.15 In addition, the proprietary hardware was replaced by standard, commercial smart meters in cooperation with Theben AG.15 The project impressively demonstrated that local electricity trading can be handled for the mass market and without IT overhead using conventional metering systems.15

The systemic key role of modual battery storage systems

Although an LEC increases the incentive to shift loads through financial incentives, pure behaviour control reaches physical limits.6 The key to real, grid-supportive relief and a maximisation of local added value lies in the integration of decentralised storage systems.4 In this context, the technological solutions of the Swiss manufacturer modual make a decisive contribution.20

Sustainability through the second-life process

A dominant criticism of modern battery storage systems is their resource consumption during manufacture.20 Modual consistently solves this problem by implementing a circular industrial design.20 For its storage systems, the company uses second-hand lithium-ion cells from electric vehicles (traction batteries), which were decommissioned for automotive use due to minimal capacity losses, but still have an excellent residual capacity and a service life of several thousand cycles for stationary operation.21

Every single cell is subjected to comprehensive testing at the modual factory in Switzerland.20 The proprietary battery management system (BMS) developed specifically for second-life applications continuously monitors each cell around the clock.20 This guarantees the highest level of operational safety and longevity, backed by a comprehensive 10-year warranty and direct Swiss support.20 A concrete example of the scalability of this technology is a major project for grid stabilisation, in which modual combined eight used traction batteries from an electric truck project into a large stationary storage unit with a nominal capacity of 560 kWh.24 Another practical example is the installation of a modual storage system in Grosswangen by partner Benetz, showing how second-life systems are successfully established in the Swiss electricity grid.22

Maximising efficiency through DC coupling

For new photovoltaic systems, modual offers the Series Basic DC, a highly efficient, directly coupled storage system.24 Since the storage unit is connected directly to the PV generator, the usual double conversion losses from direct current (DC) to alternating current (AC) and back to direct current are eliminated.24 This significantly increases the overall efficiency of the system and ensures that a maximum of the solar energy generated remains in the local district.24 For existing solar installations, the Series Basic AC also offers an uncomplicated way to retrofit via plug-and-play.21

Intelligent control and Solarmanager integration

A battery storage system can only develop its grid-supportive function within an LEC if it is controlled intelligently.24 Modual storage systems are fully compatible with the leading Swiss energy management system Solarmanager.24 Via the Solarmanager, not only is the charge state of the storage unit monitored, but large consumers such as heat pumps and electric car charging stations are also controlled dynamically and fully automatically.24

When the PV systems of an LEC produce surplus power at midday, the modual storage units in the neighbourhood are charged as a priority.20 As soon as the storage capacity is exhausted, the Solarmanager controls the consumers to maximise self-consumption within the LEC.24 In the evening hours, when solar generation drops, the modual batteries feed the stored energy back into the local grid in a controlled manner in order to minimise external residual power consumption.6 This massively relieves the local grid infrastructure of the DGO and stabilises the electricity grid precisely during critical peak load times.4

Economic and systemic interactions

Bringing together the LEC model with intelligent second-life storage systems from modual generates far-reaching microeconomic and macroeconomic effects that go beyond the simple reduction of the electricity bill.

Reduction of the payback period of PV systems

Due to local trading within the LEC, producers achieve significantly higher revenues for their solar power than via the standard feed-in tariff, which is increasingly being reduced by electricity utilities due to summer overproduction.4 A modual battery storage system buffers this electricity and makes it possible to market the valuable solar power within the LEC even during high-tariff evening times, which maximises the revenues of the production community and drastically shortens the payback period of the overall system.4

Avoidance of grid expansion costs

At the macroeconomic level, decentralised storage leads to a smoothing of feed-in peaks.4 For distribution grid operators, this reduces the need to overdimension transformer stations and line networks for expensive peak loads.6 These savings in turn justify the legal grid usage discount for LECs and, in the long term, relieve all grid customers in Switzerland.4

True emergency power capability and resilience

Many standard solar installations switch off automatically during a power cut for safety reasons, as they depend on the grid voltage from the DGO.6 However, by combining modual storage units with compatible hybrid inverters such as the Studer next3, the system is enabled to build up an autonomous island grid during a grid failure (emergency power function).23 This secures critical infrastructures and commercial enterprises in the neighborhood from costly business interruptions.20

Strategic conclusions and outlook

The introduction of Local Electricity Communities in conjunction with advanced second-life storage technology from modual marks the beginning of a new era of decentralised Swiss energy management.2 LECs democratise access to clean solar electricity and generate strong economic incentives for the expansion of renewable energies directly on site.4

However, for an LEC to operate stably, economically, and grid-supportively in the long term, it must not be understood purely as an administrative billing model.6 Only the integration of physical storage solves the inherent volatility problem of solar energy.4 The battery storage units from modual act as the decisive link here.20 They not only offer a tech-compatible, highly efficient, and scalable storage solution for private homes and commercial enterprises 20, but through the consistent second-life process make an invaluable contribution to resource efficiency and CO₂ reduction in Switzerland.20

For planners, investors, and municipalities wishing to initiate an LEC, a holistic approach is recommended: early coupling of photovoltaics, intelligent load management via systems like the Solarmanager, and sustainable storage systems from modual ensures maximum self-supply, minimises dependency on external price fluctuations, and makes a measurable contribution to Switzerland's energy future.20

Works cited

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