Power policy

The Swiss Federal Council announced plans for renewable energy auctions at the end of 2019, but there is no clarity yet on timelines or technologies. Switzerland provides a feed-in premium for renewables, which is financed by a special fund raised through a consumer surcharge of up to 23 Swiss francs ($25) per megawatt hour. Historically, this program has mostly been used for solar project support. The Energy Strategy 2050 aims at further boosting renewable energy in order to reach the following indicative electricity generation targets: 4,400 gigawatt hours (excluding hydro) by 2020, 11,400 GWh (excluding hydro) by 2035 and 37,400 GWh average yearly hydro production by 2035. The Swiss Energy Act includes the target of adding 5,400GWh of additional renewable electricity on an annual basis by 2030 compared to 2000. Some 2,000GWh of the aforementioned 5,400GWh are to come from hydropower. In case the target is missed, quota obligations for renewable electricity may be imposed upon electricity suppliers. Net-metering has not been implemented centrally as small-scale feed-in tariff was already subsidizing rooftop solar from 2009, but some distribution system operators (DSOs) or utilities voluntarily offer virtual storage or net billing solutions.

Power prices and costs

Industrial and residential electricity prices increased by 3% each between 2019 and 2020 in Switzerland, while commercial prices were up only 1%. Wholesale electricity prices fell by more than 25% in the same period. Abundant hydro generation means that wholesale power prices in Switzerland are generally low relative to the EU average. The difference between residential peak and off-peak prices varies between 50 and 100%. There are also utilities that price differently in winter and summer. But this approach has been losing popularity in recent years.

Power market

Swiss power is traded on the EEX, though it does not have its own power exchange. Hydro accounts for more than 60% of Switzerland's installed capacity, with nuclear accounting for the next biggest slice, followed by solar. The shift away from nuclear, which makes up a third of total generation, will create a substantial gap in the mix, although the transition will not happen immediately. In 2017, voters rejected a scenario that would have had three of the country's five nuclear power plants close from 2017-2018. Instead, the Swiss Federal Nuclear Safety Inspectorate will determine how long the plants can operate safely. No new nuclear plants are to be built.

Investment in renewable energy in Switzerland peaked in 2013, at $1.2 billion. Almost $4 billion has been funneled to renewable energy projects in the country between 2014 and 2020. The bulk of this investment is in solar. The Swiss Federal Council has earmarked 470 million francs ($521 million) for solar rebates in 2021. Of this, 270 million francs will be available for small systems with an output of less than 100 kW and 200 million francs for large systems exceeding 100 kW in size. Three companies each own more than 94MW of renewable projects. These are BKW, Elektrizitaetswerk der Stadt Zuerich and Tridal. In 2021, there was one solar corporate power purchase agreement signed in Switzerland.

Doing business and barriers

The government is phasing out nuclear power, leaving open a capacity gap for renewables. Switzerland's renewables policy is stable, but the feed-in premium was oversubscribed until 2020, when Switzerland allocated another $513 million for solar incentives. These new funds eliminated the waiting list for old feed-in tariff contracts.

EV market

In 2003, Switzerland introduced a system of fuel economy labels, based on grades ranging from A to G, to assist consumers in making decisions that improve the fleet’s fuel economy and lower emissions. Importers of light commercial vehicles have to limit the average emissions of the imported fleet to 147 g CO2/km from 2020. For every gram over 147g, they pay a penalty. This policy together with Swiss petroleum tax are in line with the EU emission standards and incentivize the EV market that grew 87% from 2019 to 2020.

EV policy

Switzerland aims for 15% of new vehicle registrations to be electric by 2022. With that in mind, different cantons have varying levels of EV purchase incentives. Since 2019, the canton of Thurgau has been subsidizing the purchase of electric cars to the tune of 4,000 francs, provided they run on green electricity. In St. Gallen there are 5,000 francs on offer and in Basel, taxi drivers using electric cars can even collect a subsidy of 10,000 francs. At the national level, fully electric cars are exempt from the 4% automobile tax.

The development costs for charging infrastructure in apartment buildings are funded in some cantons as well, like Thurgau. This includes the creation of the electrical infrastructure that is permanently connected to the building for the power supply of an electric vehicle. The charging stations are not included in the development costs.

Buildings market

Energy efficiency regulation is mostly detailed at canton level, just like heat pump purchase incentive programs. Apart from that, the 2050 Energy Act has an energy efficiency segment that aims to reduce the energy consumption of the Swiss buildings park to 55 TWh by 2050.

Buildings policy

Heat is frequently mentioned in long term strategy as being a key sector for attaining the net-zero target, since 40% of the total energy consumed in Switzerland is for buildings. The CO2 levy on fossil-based heating fuels intended as an incentive tax encourages the economical use of fossil energies and greater conversion to low-CO2 and CO2-free energies. Tax deduction is also available for energy efficiency measures, including heat pumps.