Markets & Policies

Swiss new energy law: the bigger picture

With May 21st referendum Swiss voters endorsed the new Energy Law, backing the first set of measures of the Energy Strategy 2050 approved by parliament in 2016, which will entail long term huge changes in the Swiss energy system.

The disaster of Fukushima in 2011 sparked security concerns and anti-nuclear sentiments all over Europe, finally having a role in many European countries nuclear power policies. Three EU member states, Belgium, Germany and Switzerland set up long-run strategies to totally phase out nuclear power, while in 2015 France passed a law to reduce the share of nuclear electricity production to 50% by 2025, even though there is a lot of debate about economic and supply adequacy issues related with those policies.

European nuclear fears and Swiss referendum

The Fukushima accident and the far-reaching changes in the international energy environment were the reasons behind the Swiss Federal Council development and proposal of the Energy Strategy 2050. The Federal Council submitted to Parliament the first set of measures of the Energy Strategy 2050 on 4th September 2013. Those measures entail a total revision of the Energy Act as well as changes in various other Federal laws, by amending other related legislation.

Swiss Parliament approved the proposal on 30th September 2016. Following this the Swiss People’s Party requested a referendum on the revision of the Energy Act. The opponents claimed that implementing the Energy Strategy 2050 will be too expensive, will lead to more bureaucracy and restrictions, will place the energy supply at risk, and will spoil the landscape.

The referendum followed on 21st May 2017, and over 58% of voters came out in favour of the Energy Strategy 2050 programme, and on 1st January 2018 the new Energy Act will enter into force.

Although what is basically new in the Energy Strategy 2050 compared to the previous one (set up in 2007) is the planned nuclear phase out, and this long term policy was the most discussed, especially in the context of referendum debate, the new Energy Act is made up of a broader set of policy measures.

New Energy Act: three strategic pillars

Energy efficiency, renewable energy and the end of nuclear power era are the main pillars the Energy Strategy 2050[1]. Since a number of measures will be financed by the network supplement which electricity consumers pay, with the Energy Strategy 2050 the current maximum amount of 1.5 cents/kWh will be increased to a maximum of 2.3 cents/kWh.

Energy efficiency

In terms of energy consumptions the Strategy foresees an average per capita energy consumption reduction of 16% in 2020 and of 43% in 2035 with respect to 2000 level, while the average per capita electricity consumption should be 3% lower than 2000 level in 2020 and 13% lower than 2000 in 2035.

Main measures to increase energy efficiency are focused on buildings, with more than 40% of energy consumption and CO2 emissions attributable to the building industry in the country, mobility and industry:

  • Tax incentives for building renovation. With the new legislation it will also be possible to deduct the costs of demolition to make way for a new building, to encourage total renovation instead of partial renovation, since total renovation is more effective from the point of view of energy efficiency
  • Building Programme. Partially financed by revenues from the CO2 levy on fuels (levied since 2008, it is a Swiss key instrument to achieving CO2 emission targets, creating an incentive to use fossil fuels more economically and choose more carbon-neutral or low carbon energy sources), it subsidize the cost of the energy-saving renovation of buildings.
  • Emissions specifications for motorized vehicles. The accepted limit for CO2/km emissions for all new passenger vehicles on the road will be reduced to an average of 95 g CO2/km by the end of 2020 (measure taken in accordance with the EU law).
  • Competitive tenders. Subsidies awarded to support programmes and projects which contribute towards more economical energy consumption in industry, the services sector and households. The financing is covered by the network supplement that electricity consumers pay to promote renewable energies and energy efficiency.

Renewables

Today renewable energies represent more than 60% of Switzerland electricity generation, and existing large-scale hydroelectric power plants make up more than the 90% of this renewables quota (Table 1). Based on the Energy Strategy 2050 the average domestic production of renewable energy excluding hydropower should be equal to 4.4 TWh in 2020 and 11.4 TWh in 2035, while hydropower should be equal to 37.4 TWh in 2035.

To support the development of renewable energies The Energy Strategy 2050 encompasses a number of measures, ranging from direct incentives to the simplification of legal framework. Due to the current limited share of renewables different from hydropower, the pivotal role of hydropower plants in the national electricity mix, and the planned nuclear phase out, the strategy highlights the need to support both new installations and exiting ones.

  • Feed-in remuneration system. Most of the energy producers will have to sell their electricity directly on the market and subsidies for new installations will only be granted for up to five years. It will be financed by the network supplement which electricity consumers pay.
  • Investment subsidies. One-off investment grants financed by the network supplement that will be available until 2030 at the latest. Granted to small and large scale photovoltaic installations, and to large new hydroelectric power plants with a production capacity of more than 10 MW; large-scale renewals or extensions of hydro-electric power plants are also to receive investment subsidies.
  • Support for existing large-scale hydroelectric power plants. Needed because of the collapse of electricity market prices in order to support a mainstay of Swiss electricity supply, it will be valid for a period of five years and financed by the network supplement. Electricity which has to be sold for less than the cost of production will have the possibility to claim a capped premium (1.0 centime/kWh), with limited total available financial resources.
  • Approval procedures. For new installations for the production of electricity from renewable energies the procedures will be shortened and simplified (time limits for the submission of expert assessments).
  • National interest status for nature/land use for the production of renewable energies. In case of conflict of interests between the protection of nature and the landscape and their use for the production of renewable energies, both concerns – protection and use – should in future be granted the status of “national interest” and be given equal value when weighed against each other.

Nuclear power

Finally, with the new Energy Act no permits for the construction of new nuclear power plants or any basic changes to existing nuclear power plants will be delivered, and the existing five nuclear power plants (Table 2) are to be shut down at the end of their technically safe operating life, with the Federal Nuclear Safety Inspectorate (ENSI), an independent authority of the Confederation, in charge to decide whether conditions for safe operation are met.

Furthermore, with the advent of Energy Strategy 2050 the 2003 Parliament moratorium on the export of spent fuel rods for the purposes of reprocessing will not expire in 2020, so that the export of spent fuel rods for reprocessing will be banned indefinitely.

As shown in Table 3 the five existing nuclear power plants have a total yearly average electricity generation around 25 TWh, and in the future, according to the policy directions provided by the first set of measures of the Energy Strategy 2050, mainly renewables and electricity consumptions reductions will take the place of this nuclear power generation.

Nuclear phase out, not a straight pathway

Policies aimed at supporting energy efficiency measures and renewable energies are becoming more and more widespread and socially and economically accepted all over the world. Being “against” those policies or against renewables and green solutions per se is seen as anachronistic and as nonsense under the socio-economic perspective.

Setting aside for a while the environmental benefits, those technologies are progressively proving to be economically viable and profitable, effectively integrated in the traditional energy systems and extremely important for diversification and security of supply reasons.The question is no more if we want greener technologies, but it is how, when and where we want them.

With nuclear power the question is if we want it, and then maybe it is how, when and where we want it. In many long term decarbonisation scenarios (think about the European 2050 Energy strategy) nuclear is deemed to be one of the core technologies to achieve substantial emission reductions, coupled with renewables, efficiency and, sometimes, Carbon Capture and Storage. The level of public and governments acceptance of nuclear varies according to the geographical area or the historical moment (severe accidents usually strengthen all the possible concerns), but in any case the decisions or proposals regarding nuclear power plants are always much less straightforward than efficiency and renewable policies, entailing much more intense debate, with completely different views confronting each other.

The Swiss referendum highlighted the different approaches to renewables&efficiency versus nuclear: the former are largely accepted, while the latter is aim of discussion, so that the referendum debate and media attention was mainly focused on nuclear. The good news is that Swiss citizens seem to have seen the bigger picture: the same people who few months ago voted against an early nuclear phase-out, in May endorsed the new Energy Act, a legislative package including long term nuclear phase-out as part of a comprehensive number of policies and measures to update and restructure the national energy system.

[1] The development of the electricity power grid is a further strategy element which will play a decisive role in the upgrading electricity power supply system supporting the energy transition

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