With the revision of the Energy Act (EA), the Federal Council plans to extend the support for renewable energies and to structure such support in a more market-oriented manner. BKW supports the Federal Council’s efforts, especially with respect to the model of the investment contributions. This creates effective incentives to operate production systems efficiently and in line with market requirements.
BKW wants to make a contribution to sustainability with its production park. The goal is to make 75% of the installed capacity of the production park renewable by 2023. Various factors influence the investment decisions of electricity supply companies with respect to renewable energy projects: in addition to overall conditions in terms of production capacity as a result of topography and the social acceptance of individual technologies (e.g. wind energy), regulatory conditions are especially important.
Investment incentives for renewable energies
If there is a broad social and political consensus in favour of the further expansion of renewable energies in Switzerland, then support measures will continue to be necessary. BKW supports the market-oriented and competitive promotion of renewable energies. However, such support should not be permanent. It should merely provide initial financing during the transitional phase.
In this context, BKW also supports the model for investment contributions proposed by the Federal Council. This model does not guarantee a fixed purchase or a fixed purchase price for renewable electricity. Instead, it creates strong incentives for investors to operate their systems efficiently and in line with market needs. BKW therefore definitively prefers this support model to other support models, such as feed-in remuneration or the so-called “sliding market premium”.
Contributions for hydropower, wind power and biomass
BKW also welcomes the Federal Council’s plan to award investment contributions through competitive tenders to promote large photovoltaic (PV) systems. However, it recommends that this tool not be limited to large PV systems. If there are sufficient projects, the tenders should also be applied to other technologies, such as hydropower, wind power and biomass.
Frequently asked questions
With the adoption of the Energy Strategy 2050, in 2017 the Swiss population voted in favour of a sustainable energy future with more renewable energies and greater energy efficiency. However, the support measures for domestic renewable energies (hydroelectric power, sun, wood, biomass, wind and geothermal energy) expire at the end of 2022 or the end of 2030. An extension of the support measures is therefore necessary to ensure the further expansion of renewable production. These measures must be structured in a manner that is as market-oriented and competitive as possible and be time-limited and capped. BKW therefore welcomes the Federal Council’s proposals, especially extension of the support with the help of investment contributions, not increasing the maximum network surcharge and limiting the measures to 2035.
The market premium for existing large hydroelectric power plants does not create any incentives for investments in the maintenance and expansion of hydroelectric power. The Federal Council therefore correctly intends to do away with it. The resources that are freed up as a result can more sensibly be used as investment contributions to expand renewable energies. Nor is the market premium compatible with a potential electricity agreement with the EU, as it represents prohibited assistance. An electricity agreement is of great importance to Switzerland – not least because of the physical network – both for reliability of supply and for efficient electricity trade.
BKW is committed to the market-oriented and competitive promotion of renewable energies. This can be achieved most efficiently through investment contributions. The model does not guarantee a fixed purchase or a fixed purchase price for renewable electricity. Thus, the investor continues to be an entrepreneur – with the market offering both opportunities and risks. At the same time, strong incentives are created for investors to operate their systems efficiently and in line with market needs.
In contrast to other support models, such as feed-in remuneration or the so-called “sliding market premium”, the state does not assume most of the market price risk here. This enables a faster and easier transition to a purely market-oriented system, as the state does not have to undertake any long-term payment obligations with its one-off investment contributions.
The experience of other countries shows that the use of tenders can further reduce the funding contributions per kilowatt hour. Thus, more renewable energies can be promoted using the limited funding. Furthermore, the definition of the contributions is easier than with the administered investment contributions, the amount of which must be calculated on the basis of the individual costs and income of each system. The tendering of investment contributions should therefore not be limited to large photovoltaic systems. If there are sufficient projects, tenders should also be applied to other technologies, such as hydropower, wind power and biomass.
The promotion of renewable energies has been financed through a network surcharge since 2009. This surcharge is paid by all electricity consumers based on usage. However, the current system promotes an unfair and inefficient cross-subsidisation that results in multiple subsidies. Producers with own consumption benefit from lower network usage fees and lower levies. However, this is not associated with lower costs for network expansion and operation. The financial advantages for own consumers is cross-subsidised by all consumers through higher network rates. Network rates based on usage are required to prevent this. This means the network rate should not be calculated on the basis of electricity consumption (kWh), but rather on the basis of the maximum installed load (centimes/kW). This would also create incentives to permanently reduce the maximum installed load through own consumption – which could effectively enable lower network costs.
No. A critical supply situation is most likely to occur in Switzerland towards the end of winter when storage systems are empty and imports may be limited. Additional photovoltaic systems can only make limited contributions to the reliability of supply, as their production potential is too low during the (late) winter months. Thus, the promotion of renewable energies alone is no guarantee of reliability of supply. It is necessary to have a complementary tool that specifically addresses the promotion of reliability of supply. In addition, investment contributions can be tendered specifically for power plants to contribute to reliability of supply. The Federal Council envisages such tenders as part of the revision of the Electricity Supply Act.