Electricity law and regulation in Switzerland

1. Overview

1.1 Introduction

1.1.1 Although Switzerland is a non EU-member state, Switzerland and the EU have been closely cooperating for many years. Since 2007 Switzerland has been negotiating a bilateral agreement with the European Union in order to achieve full compatibility between Swiss and EU electricity regulations. In 2010, the Federal Council expanded the scope of these negotiations to the most recent legal developments in the European Union, which include the Third Energy Package. The negotiations are, however, currently stayed.

1.1.2 In May 2013, the EU and Switzerland signed a cooperation agreement in the field of competition law that governs the exchange of information in the relevant area. This cooperation agreement entered into force on 1 December 2014 and allows the European Commission and the Swiss Competition Commission to exchange information they have obtained in their investigations.

1.1.3 As a result of the ever-growing integration between the Swiss economy and that of the EU member states, many areas of Swiss law already closely follow the developments of EU law. When drafting the Federal Electricity Supply Act (Electricity Supply Act), the key national legislation on electricity, the Swiss Federal Council considered both EU Directive 2003/54 and 2003/55 (on the internal markets in electricity and gas respectively) and EU Regulation 1228/2003 1 All three are dated 26 June 2003.  on the conditions for access to the network for cross-border exchanges in electricity.

1.2 Structure of electricity market

1.2.1 A first attempt to liberalise the Swiss electricity market failed in a referendum in 2002. In March 2007, the Parliament passed the Electricity Supply Act and the Federal Council adopted the Ordinance on Electricity Supply and approved the revised Ordinance on Energy. Most sections of the Electricity Supply Act came into force on 1 January 2008. The Act provides for a fair, non-discriminatory access to the network, and rules on vertical separation of electricity networks from generation and retail. Influenced by the European electricity market liberalisation, Switzerland opted for a stepwise market opening. From 2009, end consumers with annual electricity consumption of more than 100MW/h have, in principle, free access to the market. As of October 2014, about 27% of all large consumers which combine about 50% of the total electricity consumption in Switzerland have already switched to the free market. Under the Electricity Supply Act, households and other small-scale power consumers will be able to choose their electricity suppliers at a later stage (see section 2.4.3 below).

1.2.2 The purpose of unbundling network operations from the other activities of electricity utilities is to secure clear and non-discriminatory network access based on the principle of regulated third-party access 2 See Electricity Supply Act, art 13. . Article 10(1) of the Electricity Supply Act states that “electric utilities shall secure the independence of network operations. Cross subsidisation between network operation and other areas of activity is prohibited.”

1.2.3 In order to prevent electricity utilities from gaining market advantages over potential competitors through the use of their knowledge on network operation, article 10(2) of the Electricity Supply Act provides that “electric utilities shall treat all economically sensitive information they may obtain from the operation of electricity networks as strictly confidential – subject to any legal disclosure obligations – and may not use such information for other purposes.”

1.2.4 Finally, article 10(3) of the Electricity Supply Act regulates unbundling in the area of distribution networks by stipulating a requirement of unbundled accounting. The requirement of accounting unbundling is based on article 11(1) of the Electricity Supply Act. Operators and proprietors of distribution and transmission networks are obliged to compile an annual financial statement for each network, as well as a statement of costs, both of which have to be clearly unbundled from their other business activities.

1.3 Key players

1.3.1 The Swiss electricity market is very fragmented. There are approximately 900 utility companies in Switzerland that differ in size, geographical coverage, quantity of electricity supplied, operating structure (generation, distribution) and legal form (subdivisions of public bodies, local cooperatives and private corporations).

1.3.2 Thirty cantonal utilities and regional distributors are responsible for the power supply in Switzerland. Certain regions and cities are supplied by one single vertically-integrated utility whereas, in other parts of the country, the generation and distribution of electricity is carried out by different companies.

1.3.3 Swissgrid operates the Swiss high-voltage transmission network 3 Electricity Supply Act, art 33(4). . Swissgrid is a stock corporation owned by Swiss electricity companies (as set out in Figure 1). These companies are directly or indirectly majority-owned by the cantons and the municipalities. Alpiq is the largest shareholder (owning 30.67%) followed by Axpo and BKW (which own 29.47% and 10.91% of the company respectively). By the end of 2012, all electricity transmission companies had transferred ownership in their transmission assets (relating to the transmission system) to Swissgrid. Swissgrid has a legal mandate to ensure the non-discriminatory, reliable, and efficient operation of the transmission system.

1.3.4 Swissgrid is a member of the European Network of Transmission System Operators for Electricity (ENTSO-E). One of Swissgrid’s key tasks is to ensure the balance between power consumption and power generation. As Swissgrid does not own generating stations, ancillary services are purchased on the electricity market. By far the majority of costs for ancillary services are related to control energy. This is a kind of insurance against power outages that Swissgrid takes out with electricity producers and consumers in order to cope with critical grid situations if unforeseen events occur.

Figure 1: Swissgrid ownership structure 4 Source: Swissgrid, Shareholders, 2015 (accessed 19 May 2015).
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1.3.5 The three largest utility companies are Axpo, Alpiq, BKW (all public limited companies) and among the local and municipal utility companies the three largest are ewz, ewb, IWB (all public-law institutions), the six of which together hold more than 80% of Switzerland’s generating station capacity.

1.4 Current issues and drivers

The key points on the Swiss energy agenda are the energy negotiations between Switzerland and the EU, full market liberalisation, Energy Strategy 2050 and the revision of the Federal Electricity Supply Act. These are described under section 3.5 below.

2. Sector analysis

2.1 Generation

Structure of generation sector

2.1.1 Besides the large utilities active in production, transmission and distribution, the production capacity is concentrated to a large extent in partner plants owned by companies entitled to electricity generated in proportion to their stake held in the partner plant.

2.1.2 Swiss national electricity infrastructure comprises major hydroelectric power stations (556 facilities), as well as five nuclear generating stations (Beznau I and II, Mühleberg, Gösgen and Leibstadt). Together, they account for around 95% of domestic power generation. 45% of hydropower is produced in run-of-river generating stations and 55% in storage generating stations.

Energy mix

2.1.3 Most of electricity in Switzerland is generated by hydro and nuclear generating stations. In 2013, hydropower plants contributed 57.9% of overall electricity production, nuclear generating stations contributed 36.4% and the remainder of electricity used in Switzerland came from conventional thermal and other generating stations (5.7%) 5 Swiss Federal Office of Energy, Energy Consumption in Switzerland 2013, Diagrams, p 2. . Electricity generated by conventional thermal and other generating stations is mostly imported.

2.2 Transmission

Structure of transmission sector

2.2.1 With the introduction of the Electricity Supply Act as of 3 January 2013, Swissgrid became the operator of the Swiss transmission system with responsibility for the operation of the 6,700km long high-voltage grid (voltage levels of 380kV and 220kV) 6 Electricity Supply Act, art 18 ff. . Swissgrid has the responsibility to transport electricity from the producing generating station to the regional and local distribution system via the transmission system.

2.2.2 Swissgrid is a stock corporation actually owned by over 20 Swiss electricity companies (see section 1.3.3 above). The Board of Directors of Swissgrid comprises at least three elected members (currently nine). The majority of the members and the Chairman must meet independence requirements in accordance with article 18(7) of the Electricity Supply Act. All cantons together have the right to delegate two members to the Board of Directors of the company 7 Electricity Supply Act, art 18(8). .  Swissgrid guarantees non-discriminatory access to the grid for all companies.

2.2.3 The technical principles and requirements governing operation and use of the Swiss transmission system and the associated roles of the players involved are defined in the Swiss Transmission Code 2010.

Cross-border issues

2.2.4 The transmission system is linked to the rest of Europe by some 40 connections. This cross-border transmission capacity is primarily used as a transit route for electricity from Germany and France to Italy.

2.2.5 Cross-border electricity trading is of major significance for Switzerland, economically and in terms of security of supply. In 2013, electricity imports amounted to 36’208 GWh and electricity exports amounted to 38’604 GWh 8 Swiss Federal Office of Energy, Energy Consumption in Switzerland [Gesamtenergiestatistik], 2013, p 5. .

2.2.6 The Electricity Supply Act provides for regulation of cross-border power grid access. The remuneration for cross-border use of the transmission grid is based on the costs of actual use of the grid and the capital costs, including long run average incremental costs. These costs must be calculated separately and cannot be charged to domestic end consumers 9 Electricity Supply Act, art 16. . If the demand for cross-border transmission capacity exceeds the available supply, Swissgrid distributes the available capacities according to market-based procedures such as auctions 10 Electricity Supply Act, art 17(1). .

2.2.7 Swissgrid functions as official contact point for foreign and Swiss electricity traders. Switzerland’s most important trading partners are its neighbouring countries, i.e. Germany, France, Italy and Austria (see table 1 below). They use the Swissgrid transmission system to dispatch their energy. After a Swiss and a foreign electricity trader have agreed to the amount of electricity to be transmitted to a partner and the time of transaction, they submit their schedules to Swissgrid. Schedules are submitted on a daily basis to Swissgrid. Subsequently, Swissgrid compiles aggregated schedules. Other transmission system operators involved bear the responsibility for ensuring that the agreed energy volumes are properly processed. Swissgrid has agreed a uniform, cross-border schedule management with its Austrian, German, French and Italian partners.

Technological developments and system upgrades

2.2.8 The transmission of electrical power via alternating current (AC) overhead lines continues to be one of the most important components of power transmission systems around the world. For the moment, high-voltage direct current (DC) grids are not yet in use in Switzerland. Their development and their operation parallel to AC grids are in a research and development stage. The technology of 380kV underground cabling has been greatly developed in recent years. However, since it has been little tested in practice it continues to be employed with caution in Switzerland.

2.2.9 The Swiss transmission system is on average 40 – 50 years old. Since it was not planned from a nationwide perspective it no longer meets all the requirements of a modern grid. Rising electricity consumption, new generating stations and the need to feed in electricity from renewable energies, such as wind and solar power, put additional stress on the grid. As a result the expansion of the grid is of high importance to ensure security of supply in Switzerland. The required investment volume is estimated at around CHF 4.5b for modernisation and around CHF 1.5b for expansion of the Swiss transmission system 11 Swissgrid, Energizing the future, 2011, p 19. . Currently, Swissgrid is developing the 2035 target grid that aims to eliminate existing bottlenecks and to bolster implementation of the Swiss federal government’s energy strategy.

2.2.10 Switzerland supports the development of smart grids and the concept of a super grid.

2.3 Distribution

Structure of distribution sector

2.3.1 As regards electricity distribution, the national electricity infrastructure is made up of high-voltage transmission networks for the general power supply (380/220kV, 50Hz) and for rail network power (132kV, 16.7Hz).

2.3.2 Electricity distribution is provided by approximately 900 local or regional distribution utilities operating in Switzerland which are, for the most part, vertically integrated. A Distribution Code regulates the technical aspects relating to the connection and use of the distribution network. Distribution network operators are obliged to grant third parties access to the network without discriminating against certain groups of consumers (see section 2.4 below).

2.4 Supply

Structure of supply sector

2.4.1 Under the Electricity Supply Act, large-scale customers with an annual consumption of more than 100MW/h can choose their electricity supplier. As of October 2014, about 27% who account for about 50% of the electricity consumption in Switzerland have made use of this option.

2.4.2 Small-scale consumers do not have the option of choosing their electricity supplier until prior to full market liberalisation. The Swiss Federal Government started a public consultation procedure in October 2014 with respect to the full market liberalisation. In the best case, small-scale consumers may choose their electricity supplier as from January 2018. Until then, they must be supplied by their local electricity utility. Usually, there is one contract comprising the generation, transmission and distribution of electricity for a single, non-negotiable (regulated) fee.

Key issues

2.4.3 Since 2009, large business customers with an annual consumption of more than 100MW/h have been free to choose their energy supplier. In its landmark judgement in 2010 (Stahl Gerlafingen AG), the Swiss Federal Administrative Court found that all end users have a right to basic supply. As a result large business customers with power consumption in excess of 100MW/h can choose between free market competition and basic service provision. As of October 2014, about 27% of the large scale customers who account for about 50% of the electricity consumption in Switzerland decided to buy their electricity in the open market. Whereas initially, network access for households and other small-scale consumers had been scheduled for 2014, this date has been rescheduled various times. It is now envisaged for January 2018. Full market liberalisation will be introduced by federal decree, which will be subject to an optional referendum. From that date, large-scale consumers will be obliged to buy their electricity on the market, while small-scale consumers will have the option to choose between free market competition and basic service provision. In the transition period (2009 to full market liberalisation) there are two different markets: a regulated market (households and other small-scale consumers) and a liberalised market for large-scale consumers who decided to no longer benefit from basic service provision, but to buy electricity on the market.

2.4.4 As illustrated by the EEF/WATT case decided in 2001, competition law and rules have played an important role in the opening of the electricity market. In this case, the Competition Commission ruled that the refusal of EEF (Entreprises Electriques Fribourgeoises) to grant access to its grid to another company (Watt) for the supply of a client (Swiss retailer Migros) was an abuse of a dominant position under the Cartel law.

2.4.5 According to the Electricity Supply Act everyone (i.e. consumers and generators) is entitled to regulated third party access. The tariff for using the transmission grid is defined by Swissgrid. The Electricity Supply Act provides that the remuneration for using the grid shall not exceed the chargeable costs and duties and contributions to local authorities 12 Electricity Supply Act, art 14(1). . Costs are generally handed down on a user-pays basis. Swissgrid submits the cost calculation to the Electricity Commission on an annual basis.

2.4.6 The tariffs for the use of distribution grid are determined by the network operators according to the same legal criteria and are subject to the control of the Electricity Commission.  Furthermore, the grid usage tariffs must have a simple structure and reflect the costs incurred by end users, be independent of the distance between power generation and power consumption, and be uniform per voltage level and client group within each network 13 Electricity Supply Act, art 14(3). .

2.4.7 There is no ex ante control of electricity tariffs. Consumers who do not participate in the market are entitled to receive electricity “at a reasonable price” 14 Electricity Supply Act, art 6(1). . According to the Ordinance on Electricity Supply, the tariff for energy supply to end consumers who are not part of the open market is based on the production costs and/or on long-term purchase agreements with the distribution network operator. Electricity tariffs are under the control of the Electricity Commission (see section 3.1 below). The Electricity Commission may prohibit unjustified increases in electricity prices, or order the reduction of excessively high tariffs. In contrast, prices for electricity for large-scale consumers who participate in the open market are not monitored since in a liberalised market, the electricity price is determined by supply and demand. However, excessive or discriminatory prices may violate the Federal Act on Cartels and the Federal Act on the Supervision of Prices.

2.5 Energy exchange / trading

Structure of trading market

2.5.1 Under the Electricity Supply Act, the transmission network operator (i.e. Swissgrid) is required to grant third parties the right to use the network for the purpose of cross-border electricity trading on a contractual basis, in accordance with objective criteria and without discrimination.   Access may only be denied if the operator is able to show that the proper operation of the network would be at risk, no capacities are free, or that in case of cross-border electricity trading the foreign state does not grant reciprocity 15 Electricity Supply Act, art 13. . The Swiss Transmission Code 2010 contains general principles regarding energy trading and access to the Swiss transmission system. These principles are described in more detail in the respective implementation documents of Swissgrid. Regulations concerning the cross-border agreement of schedules between Swissgrid and foreign transmission systems comply with international guidelines and agreements (e.g. ENTSO-E).

2.5.2 The amount of energy exported from Switzerland has to be reported periodically to the Federal Office of Energy for statistical and fiscal purposes.

2.5.3 Pursuant to article 10(4) of the Federal Act on Stock Exchange and Securities Trading of 24 March 1995 and article 39 of the Ordinance on Stock Exchange and Securities Trading of 2 December 1996 a security dealer licence may be required if a transaction is purely financially settled and the following conditions are met:

  • qualification of the transaction as securities trading pursuant to the Federal Act on Stock Exchange and Securities Trading; and
  • physical presence of the foreign company in Switzerland through a subsidiary, a branch, a representative office or even through contractual arrangements.

EEX and EPEX SPOT

2.5.4 There is no power exchange in Switzerland. Swiss trading companies trade on the Leipzig-based European Energy Exchange (EEX) and on EPEX SPOT. The Swiss segment at the EEX has been active since 2006. Since Feburary 2015, EEX also introduced trading for financially settled Swiss Power Futures (Month, Quarter and Year).
The European Power Exchange EPEX SPOT (a 50:50 joint venture between EEX and Powernext) and Swissgrid started cooperating in November 2013 with the aim to launch day-ahead market coupling projects in cooperation with other neighboring Transmission System Operators (TSOs). Switzerland is technically ready for market coupling since early 2015. However, the EU Commission subjects the actual participation in the market coupling to the conclusion of a bilateral treaty.

Data on traded volumes

2.5.5 International electricity trading between Switzerland and its neighbouring countries is continuous. Switzerland acts as a transit country between Italy and France (also because of the limited physical interconnection between those two countries).

2.5.6 In 2013, electricity imports amounted to 36’208 GWh and electricity exports amounted to 38’604 GWh 16 Swiss Federal Office of Energy, Energy Consumption in Switzerland [Gesamtenergiestatistik], 2013, p 5. .

Table 1: Electricity imports and exports, 19502011 (GWh) 17 Source: Swiss Federal Office of Energy, Swiss Electricity Statistics [Schweizerische Elektrizitätsstatistik], 2013, p 36.

Calendar year 

Exports

Imports

1950

948

306

1960

3822

1306

1970

9619

3594

1980

18128

9947

1990

24907

22799

2000

46990 

39920

2002

51620

47112

2003

45464

42352

2004

38393

37690

2005

40734

47084

2006

46085

48788

2007

50603

48568

2008

51408

50273

2009

54159 

52002

2010

66314

66834

2011

80711

83298

2012

89025

86825

2013

38604

36208

Of which in 2013

Gernany

7867

7236

France

6916

23534

Italy

22491

2079

Austria

1140

3267

Other

190

92

Price differentials

2.5.7 The liberalisation of the electricity markets in the EU and in Switzerland may have an impact on cross-border electricity transactions. Long-term delivery contracts are in the process of being replaced by auctioning of transmission rights.

2.5.8 As the price for German and Austrian electricity is quasi equal, the price pattern for auctions at the German-Swiss and Austrian-Swiss border is very similar. Due to the dependency of Switzerland on electricity imports from Germany and Austria in the winter, the electricity prices in Switzerland increase during this period. In the period from 2007 to 2010, the transfer of one MW/h from Germany to Switzerland during the winter period (January – April, November – December) cost EUR 10.9 on average, while in the summer the transfer only costs EUR 1.7 per MW/h (May – October) on average. The transfer of one MW/h from Austria to Switzerland during the winter months (January – April, November – December) was EUR 12.1 on average, while during the summer months the transfer was EUR 1.4 per MW/h (May – October) on average. Electricity prices in Switzerland and Italy are similar in the winters, while Italian prices are higher in summers. The transfer of one MW/h from Switzerland to Italy during the winter months (January – April, November – December) was EUR 4.1 on average, while during the summer months the transfer was EUR 15.4 per MW/h (May – October) on average 18 J. Allet, Cross-border auction mechanisms in electricity markets. Analysis of the functioning of cross-border auction mechanisms between Switzerland and its neighbouring countries (2011), 2011, pp 16–21. .

Cooperation with other exchanges

2.5.9 Swiss trading companies trade also on the Powernext in Paris and the Energy Exchange in Austria (EXAA).

The Federal Act on Cartels of 6 October 1995

2.5.10 Please note that as per the Act on Cartels, the Swiss Competition Commission may impose sanctions against undertakings infringing the law of up to 10% of the turnover realised in Switzerland in the last three business years 19 Act on Cartels, art 49a. . In addition, any individual who intentionally violates the terms of an agreement or a final decision of the Competition Commission faces a fine of up to CHF 100,000 20 Act on Cartels, art 54. .

3. Regulation

3.1 Authorities

3.1.1 The Swiss Federal Electricity Commission, the Swiss Federal Office of Energy, and the Swiss Federal Inspectorate for High Voltage Installations are the three most important authorities at federal level in charge of the electricity sector.

3.1.2 The Electricity Commission is Switzerland’s independent national electricity regulator. It comprises seven independent members appointed by the Federal Council for a term of office until the end of 2015, plus the technical secretariat. The members are not actively involved in the electricity sector, and perform their duties on a part-time basis.

3.1.3 It is responsible for monitoring the compliance with the Electricity Supply Act and the Ordinance on Electricity Supply and it is thus responsible for securing the smooth transition from a monopoly to an open market and competition. The Electricity Commission has to ensure that the liberalisation of the market does not result in excessive tariff increases – a duty it took over from the Office of the Price Supervisor on 1 January 2008. The Electricity Commission also has to ensure that the network infrastructure is properly maintained and expanded as necessary in order to guarantee an adequate supply of electricity. The Electricity Commission has been entrusted with extensive judicial powers so that it can effectively perform its various duties. It can act through legally binding decisions and rulings as necessary.

3.1.4 The Federal Office of Energy is part of the Federal Department of Environment, Transport, Energy and Communications. It prepares and implements the regulatory policies in the electricity sector. It is the competent authority for the approval of installation plants for the transport of energy that do not fall under the responsibility of the Federal Inspectorate for High Voltage Installations, pipeline systems, and in the area of nuclear power.

3.1.5 The Federal Inspectorate for High Voltage Installations is the body responsible for monitoring low and high-voltage installations. Its competences include:

  • Project approvals: all public and private electricity supply projects and all high and low voltage equipment must be submitted for approval.
  • Inspections: supervisions of network operators and periodic inspection of low and high-voltage installations.
  • Technical surveillance regarding electrical equipment.

3.1.6 Decisions of the Electricity Commission, of the Federal Office of Energy and of the Federal Inspectorate for High Current Installations can be appealed to the Federal Administrative Tribunal. The procedure is regulated by the Federal Act on Administrative Proceedings and the Federal Act regarding the Administrative Tribunal. Certain decisions of the Federal Administrative Tribunal may be challenged before the Federal Supreme Court.

3.2 Key legislation

3.2.1 The relevant Acts and Ordinances at federal level regulating the electricity sector are the following:

  • Swiss Federal Act on Energy (Energy Act)
  • Ordinance on Energy
  • Electricity Supply Act
  • Ordinance on Electricity Supply
  • Act on Nuclear Energy
  • Ordinance on Nuclear Energy
  • Act on Low and High-voltage Electricity Utilities
  • Ordinance on Low Current Electricity Utilities
  • Ordinance on High Voltage Electricity Utilities
  • Ordinance on the Authorisation Procedure for High-voltage Utilities
  • Ordinance on Electric Low Voltage Equipment
  • Ordinance on Electric Low Voltage Installations
  • Ordinance on Electric Lines
  • Act on Utilisation of Water Power
  • Act on CO2 Emission Reductions
  • Ordinance on CO2 Emission Reductions

3.3 Regulatory framework

3.3.1 The legislative framework for the Swiss energy policy is laid down in article 89 of the Swiss Federal Constitution. Pursuant to this article, the Swiss Confederation and the cantons must endeavour to ensure a sufficient, diverse, reliable, economic and environmentally sustainable energy supply and efficient energy consumption. This comprehensive list of requirements places high demands on energy policy at federal and cantonal level. On a national level, article 89 of the Federal Constitution is to a large extent implemented by the Swiss Federal Act on Energy of 26 June 1998, the Electricity Supply Act, the Act on CO2 Emission Reductions and the Act on Nuclear Energy. In addition, since 1990, all cantons have drawn up their own energy legislation and regulations.

3.3.2 The Act on CO2 Emission Reductions entered into effect on 1 May 2000 and aimed at a reduction of carbon dioxide emissions to reach a level in 2010 that is 90% of the 1990 emission level (Emission Goal) and promoted private initiative. However, since the voluntary measure failed to achieve the desired effect, a regulatory tax on the consumption of fossil combustibles (CO2 tax) was introduced in 2008. A revision of the Act on CO2 Emission Reductions was necessary in order to introduce measures for the reduction of greenhouse gases covering the period from 2013 onwards. The revised Act came into force on 1 January 2013 and has set a national target to reduce greenhouse gas emissions by 20% from 1990 to 2020. Measures to meet this target include:

  • maintaining a CO2 tax of CHF36 per tonne of CO2 with the possibility of increasing it up to CHF120 per tonne;
  • subsidies of up to CHF300m per year to fund CO2 reduction measures in buildings;
  • possibility of introduction of a CO2 fee on motor fuels;
  • introduction of CO2 output limitations for all new cars sold;
  • introduction of a duty for manufacturers and importers of fossil fuel motors to compensate for the emissions caused by these motors;
  • continuation and improvement of the existing emissions trading scheme.

3.3.3 The legal framework for emissions trading in Switzerland is set by the Kyoto Protocol, the revised Act on CO2 Emission Reductions, the CO2 Ordinance, and the Ordinance on the Crediting of Emission Reductions Achieved Abroad. Companies that undertake to limit their carbon dioxide emissions will receive allowances according to the Emission Goal. Allowances which are not exhausted may be traded inside and outside of Switzerland. Switzerland keeps a national register of allowances.

3.3.4 Besides the legal instruments, the energy policies of the federal government and the cantons are also based on the presentation of energy perspectives as well as on strategies.

3.3.5 Following the Fukushima Daiichi nuclear disaster in March 2011, the Swiss Government adopted an energy strategy for 2050 with the aim to increase energy efficiency and to further the use of renewable energy (see section 3.5.3 below for more information about Switzerland’s Energy Strategy 2050) and reflecting the decision of the Federal Council, in May 2011, to phase out nuclear power, as approved by both chambers of parliament. In effect, this means that no new nuclear capacity may be built.

3.4 Support schemes

3.4.1 A main pillar of the Swiss energy policy concerns the promotion of efficient use of energy, waste heat and renewable energy.

3.4.2 Remuneration of feed-in at cost: One of the goals of the Swiss energy policy is to increase the proportion of electricity produced from renewable energy by 5,400GW/h (or 10% of the country’s current consumption) by 2030. This is promoted by feed-in tariffs. Feed-in tariffs are available for the following technologies: hydropower (up to 10MW), solar PVs, wind energy, geothermal energy, biomass and biological waste. The tariffs have been specified on the basis of reference facilities for each technology and output category. Depending on the technology, the tariffs will apply for a period of up to 20 – 25 years.

3.4.3 Buildings programme: Subsidies of up to CHF300m per year to fund CO2 reduction measures in buildings aim to reduce greenhouse gas emissions by 20% from 1990 to 2020 (see section 3.3.2 above).

3.4.4 One-off investment grants are a new instrument that has been developed by the Confederation to encourage electricity production in small photovoltaic systems. One-off investment grants cover a maximum of 30 percent of the investment costs of reference systems.

3.4.5 As of 1 January 2014, the Swiss Federal Act on Energy regulates the reimbursement of the network supplement. Electricity-intensive companies can request reimbursement of the network supplement for the support of electricity from renewable energy sources. As of 1 April 2014, further provisions in the Swiss Energy Ordinance regulate the reimbursement.

3.5 Upcoming regulatory changes

Bilateral electricity agreement with the EU

3.5.1 In the wake of the blackout in Italy in September 2003, the European Commission put forward a proposal to Switzerland for the contractual regulation of electricity transit. Negotiations between Switzerland and the EU started in 2007 and are still ongoing. The main focus is on mutual access to the market, guaranteed security of supply, and maximum legal certainty for all actors on the market. In 2010, the Federal Council extended the scope of the negotiating mandate. The mandate now also includes the latest developments in EU legislation, such as the Third Energy Package, and aims at a comprehensive energy agreement with the EU. Thus, the signing of an agreement with the EU would necessitate a further liberalisation of the Swiss electricity market. In February 2012, negotiations were suspended by the European Commission.

Full market liberalisation

3.5.2 The Swiss electricity market was partially liberalised on 1 January 2009, when large-scale customers with a consumption volume of more than 100,000kW/h were granted free-market access. Since then, they have the right to choose between free-market competition and basic service provision. This means that they can opt either to switch to another electricity supplier and negotiate the terms of delivery or remain with their existing provider and have electricity delivered at production cost. While initially, full market liberalisation has been scheduled for 2014, this date has been rescheduled to 2017 (and to 2018 for small customers). Full liberalisation of the market will be introduced by federal decree, which will be subject to an optional referendum.

Energy Strategy 2050

3.5.3 After the Fukushima Daiichi nuclear disaster in March 2011, the Federal Council decided to abandon plans to build new nuclear reactors. The country’s five existing reactors are allowed to continue operating, but will not be replaced at the end of their life span. The first nuclear power station to stop production is Muehleberg which will go offline as from 2019; the last will go offline in 2034. In order to cover the shortfall in the electricity supply due to this decision, the Federal Council adopted an energy strategy for 2050. Priorities will be set on increased energy savings, expansion of hydropower and use of new renewable energy, and, if necessary, on gas production and imports. Furthermore, Switzerland’s power grid should be expanded and energy research strengthened. On 4 September 2013, the Federal Council adopted a message including an initial package of measures aimed at securing the country’s energy supply over long term. The draft bill is currently debated in the Swiss Parliament.

Revision of the Federal Electricity Supply Act

3.5.4 The main objective of market liberalisation – the creation of a competitive and secure electricity supply with transparent pricing – has not been achieved so far. According to the authorities, a lack of market transparency, non-competitive behaviour by the involved players and the continued threat of sharply raising electricity tariffs indicated that a thorough analysis of the applicable legislation was necessary. Furthermore, the Swiss Federal Administrative Court put a break on liberalisation with its landmark judgment on basic service provision (Stahl Gerlafingen AG). It held that large-scale consumers are not compelled to buy their electricity in the open market, but can still stay in the regulated market and benefit from regulated tariffs. Electricity was then delivered at the lower of market or production cost 21 Prior wording of Ordinance on Electricity Supply, art 4(1). . The respective sentence of the Ordinance on Electricity Supply was deleted as from 1 March 2013. Since then, several large-scale consumers switched to the free market. A revision of the Federal Electricity Supply Act started at the end of 2009. Following the incident in Fukushima, work on the revision was suspended. The initial aim of the revised Electricity Supply Act to enter into force in 2014 to coincide with the second stage of the market liberalisation has been postponed various times, not least due to the Energy Strategy 2050. The consultation process of the revised Electricity Supply Act leading to a full liberalisation started in 2014 and the entering into force could take place in 2017 (with full liberalisation for small customers as from 1 January 2018).

3.5.5 The EU established rules protecting transparency and integrity of the energy wholesale trading in 2011. The Federal Council has commissioned the Federal Department for the Environment, Transports, Energy and Telecommunications to examine if and how the rules should be incorporated into national legislation.

3.5.6 Based on a parliamentary initiative, a partial amendment of the Federal Electricity Supply Act was decided in advance of the general revision of the Federal Electricity Supply Act in December 2014. The bill aims to provide legal certainty with regard to the cost allocation for balancing energy and to assure a secure supply of electricity and entered into force on 1 June 2015.

4. Country Statistics

Generation technologies and production

4.1.1 As shown in Figure 2, the supply of electricity in Switzerland is mostly based on hydro power and nuclear power. In 2013, hydropower plants contributed to 57.9% of overall electricity production, followed by nuclear generating stations (36.4%) and conventional thermal and other generating stations (5.7%). Electricity generated by conventional thermal and other generating stations is mostly imported.

Figure 2: Evolution of the different generation technologies since 1950 22 Source: Swiss Federal Office of Energy, Overall Energy Statistics, Diagrams, 2013, p 10.

Demand and consumption

4.1.2 As of 2013, the largest consumers were industry and households (both 31.6%), services and commerce (27%), transport (8.1%) and agriculture (1.7%) (see Figure 3).

 Figure 3: Electricity consumption by category in 2013 23 Source: Swiss Federal Office of Energy, Overall Energy Statistics, Diagrams 2013, p 3.

4.1.3 Electricity consumption has risen slowly but steadily over the last couple of decades (see Figure 4). The main factor behind this trend is demographic growth, together with economic activity.

Figure 4: Electricity demand growth (1986 to 2013) 24 Source: Swiss Federal Office of Energy, Overall Energy Statistics, Diagrams 2013, p 15.

Import and export

4.1.4 As Figure 5 25 Source: Swissgrid, Import and export (accessed 19 May 2015).  shows, Switzerland imports more electricity during the winter months and exports more during the summer months.

Figure 5a: Import(GWh)

Figure 5b: Exports (GWh)

4.1.5 Import refers to the total energy volume arriving into Switzerland from abroad via all cross-border lines. Export refers to the total flowing in the opposite direction. Transit power is the energy fed in from abroad every 15 minutes that is not consumed during the same 15 minutes in Switzerland.