Switzerland

1. Overview of the renewables sector

For many decades Switzerland has used hydro-electric power as one of its main renewable energy sources. Today, more than 55% of domestic electricity production comes from hydro-power sources.

In 2018, more than 650 hydropower plants producing an average of approx. 36,448 GWh per year, are being operated within Switzerland. More than 85% of these hydropower plants are run-of-river power plants; the other 15% consist of storage power plants, with around 2% in pumped storage plants. The Swiss government intends to continue promoting hydropower, in particular by supporting the renovation and expansion of existing plants in order to increase their efficiency. However, the construction of new hydropower plants is rather unlikely in view of the current number of existing plants and restrictions from environmental laws, nature and landscape protection regulations, and other factors.

In recent years, other renewable energies such as solar, wood, biomass, wind, geothermal energy and ambient heat have gained an increasing share of Switzerland’s energy supply – in 2018, 4% of the annual domestic electricity production originated from such other renewable energies. However, it would take many years for most of these renewable energies to become economically competitive without supporting measures. In particular, the substantial potential of photovoltaic (PV) and geothermal energy will only become fully exploitable in the coming decades.

2. Recent developments in the renewables sector

Following the Fukushima nuclear disaster in 2011, the Swiss Federal Council and Parliament decided on Switzerland’s staggered withdrawal from nuclear energy. This decision, as well as other far-reaching changes in the international energy environment, required a restructuring of the Swiss energy sector.  For that purpose, the Federal Council has drawn up the Energy Strategy 2050, which has to be implemented gradually.

On 21 May 2017, Switzerland voted in favour of the first step of the Energy Strategy 2050 and adopted the revised Energy Act as proposed by the Swiss Federal Council and the Parliament. The revised Energy Act aims to reduce energy consumption, increase energy efficiency and promote renewable energies.  In addition, the construction of new nuclear power plants shall be prohibited. Further, the revised Energy Act includes the aim of reducing Switzerland’s dependence on imported fossil energy sources and of strengthening domestic renewable energies. 

The revised Energy Act and the corresponding ordinances entered into force at the beginning of 2018.

3. Forthcoming developments / opportunities in the renewables sector

In accordance with the Energy Strategy 2050, the following four main pillars have been defined as the first set of implementation measures:

Increasing energy efficiency

Recent studies have shown that more than 40% of energy consumption and climate-damaging CO2 emissions are attributable to the building industry. Accordingly, measures have and will be put in place to subsidise the energy-saving renovation of buildings. Further, investments to improve energy efficiency are tax deductible, including the cost of demolition of existing buildings to make way for new buildings. Motorised vehicles are another focus – their CO2 emissions will become subject to further restrictions by the year 2020, to meet a required reduction to an average of 95g CO2 / km. 

Development of renewable energies

Operators of solar and wind energy production facilities are eligible to apply for feed-in remuneration (of up to 2.3 centimes per kWh) to promote the construction of these facilities and contribute to the (still high) production cost. This subsidy system is, however, limited to five years after the enactment of the new law. Further, provided certain criteria are met, operators of PV installations and large new hydro-electric power plants may apply for investment subsidies. In the past, only operators of small PV installations (i.e. production capacity of less than 30kW) were eligible; today, operators of large PV installations may apply. Given the importance of hydro-electric power plants for Switzerland and current low market prices, the Swiss government has decided to grant financial support to operators of hydro-power production facilities, both new and existing ones. This support is, however, limited to a period of five years. The procedures for the approval of new renewable energy production facilities will be shortened and simplified. In this context, the production of renewable energy will be granted the status of national interest – particularly important where the protection of nature and the landscape could limit the construction of new facilities. 

Nuclear energy

The construction of new nuclear plants is prohibited – no permits for the construction of new nuclear plants will be granted anymore. Existing nuclear plants may continue to operate as long as they are safe. The export of spent fuel rods for reprocessing has also been prohibited.  It is currently expected that the existing nuclear plants (there are four nuclear plants operating in Switzerland) will have to be demolished and dismantled by around 2034. The first nuclear plant will be shut down in December 2019. 

Electricity grids

The current electricity power grids need substantial upgrading to meet new requirements. Under the current legal system, the process for upgrading and renewing existing electricity power grids is burdensome and time consuming. The Energy Strategy 2050 will simplify and accelerate the processes for upgrading and renewal.

Dr Stephan Werlen, LL.M.
Partner
Zurich