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Energy bills in Switzerland are lower than the rest of Europe - but there's a downside

Energy Minister Simonetta Sommaruga calls hydropower "the backbone" of Switzerland's electricity production.
Energy Minister Simonetta Sommaruga calls hydropower "the backbone" of Switzerland's electricity production.   -   Copyright  REUTERS/Arnd Wiegmann   -  
By Angela Symons  with Reuters

Thanks to its focus on hydropower, Switzerland has largely managed to avoid the soaring oil and gas prices plaguing Europe. 

However, the country is far from immune.

Across Europe, other nations are turning to coal-fired power plants and firewood to prevent blackouts this winter, putting the EU’s commitment to achieving carbon neutrality by 2050 in jeopardy.

Switzerland, meanwhile, is taking a greener approach to achieving energy security.

Energy Minister Simonetta Sommaruga wants to the Alpine confederation's unique geography to develop solar power and expand hydropower.

Switzerland wants to develop a clean, independent energy supply

"If we can use solar power and hydropower together, this I think is really the 'dream team' of Swiss energy production," says Sommaruga.

A successful pivot to a clean, independent energy supply, which the government is pursuing under its 'Energy Strategy 2050', promises to underpin Switzerland's position as a high-end economy at the heart of Europe with a safe-haven currency.

Sommaruga says Europe's energy crisis has made the Swiss "much more aware that we have to have more production and more storage in our country. We have to expand renewable energy."

There are still calls for moderation though, so as not to disrupt biodiversity or blight the picture postcard Swiss Alps.

REUTERS/Denis Balibouse
Some argue green energy projects disrupt biodiversity and blight the picture postcard Swiss Alps.REUTERS/Denis Balibouse

Switzerland faces roadblocks in implementing green energy plans

"My heart bleeds when I think of photovoltaic modules in a nature park," said lawmaker Stefan Mueller-Altermatt of centrist party Die Mitte.

Opposition to green energy projects due to their landscape or ecological impact does not go unheard in Switzerland. 

The country's system of direct democracy means projects can be blocked at a local level, so implementing change is not easy. It has taken years just to get approval to raise the wall of one existing dam, for example.

Last week, Sommaruga achieved some success. Parliament passed legislation on the compulsory construction of solar panels on new buildings. But it was so full of caveats that Sommaruga expects about 70 per cent of buildings will be exempt.

The legislation also facilitates the approval of large solar projects in the mountains, which can qualify for state funding, though it is up to the cantons to approve them.

Nils Epprecht, managing director at the SES Swiss energy foundation, wants solar power to be pursued within limits that protect nature. He is worried that in its push to replace fossil fuels with renewables, parliament will neglect biodiversity.

"The risk is they throw the baby out with the bath water," he says. But he describes last week's package as "acceptable".

Hydropower is the backbone of Switzerland's energy production

Switzerland's focus on hydropower, which Energy Minister Simonetta Sommaruga calls "the backbone" of its electricity production, has so far helped the country dodge most of the fuel-driven surge in inflation plaguing its neighbours.

Hydropower accounts for some 60 per cent of domestic electricity production, but electricity accounts for only a quarter of all Swiss energy sources, with petroleum products the biggest.

In the southwestern canton of Valais, Switzerland's potential to harness energy from its own resources is demonstrated by the imposing 285-metre-high Grande Dixence dam, which holds some 400 million cubic metres of water.

"That's enough to supply around 400,000 houses with electricity for a year," Amédée Murisier, head of hydropower production at energy company Alpiq, says ahead of what he expects to be a "pretty tense" winter.

"We are going to store water in the dams for late in the winter to make sure we are not in a tight spot," adds Murisier.

Nearby glaciers melted during the hot summer, helping fill the dam's reservoir, "which environmentally speaking is bad news but for energy supply it's good news", Murisier reasons.

REUTERS/Arnd Wiegmann
A dam construction site on Lake Grimsel near Guttannen, Switzerland.REUTERS/Arnd Wiegmann

Measures are being taking to maintain energy security in Switzerland

To get through winter, the government is temporarily easing water-use rules to let some hydropower plants boost capacity and is releasing petrol, diesel, heating oil and kerosene from its strategic reserves.

The upshot is that while Switzerland's share of renewables - about a quarter of the total energy supply - puts it ahead of leading European economies like Germany and France, it lags behind Norway and Iceland, data from the Paris-based OECD show.

Looking beyond the winter, Sommaruga wants to try to keep power prices down, but her priority is clear: "The most important thing is to have security of supply."

The Swiss have so far dodged much of the cost of living crisis endured by their European neighbours, with inflation running at just 3.3 per cent compared with 10.0 per cent in the euro zone.

This is partly thanks to its energy mix, in which gas only accounts for about 15 per cent of total consumption. But Sommaruga stresses there is "no certainty at all" about power supplies this winter.

High incomes and a strong currency also help Switzerland weather the energy crisis

Relatively high incomes and the low weight of energy in the consumer price index (CPI) - just 5 per cent in the Swiss CPI basket compared with over 10 per cent in Germany, according to OECD data - also explain the difference.

Another factor is the strong franc, which gives Switzerland some protection against higher import costs, and which Swiss National Bank Governing Board member Andrea Maechler has described as "very strong". The SNB is on inflation's case.

"We are paid to be worried and to make sure that inflation stays in check," Maechler says.

Christian Schaffner, executive director of the Energy Science Center at the Federal Institute of Technology, would like Swiss politicians to show the same zeal in pushing renewables.

Wind and solar power could help Switzerland achieve energy independence

"We have been too slow, way too slow," says Schaffner, who coordinated researchers in drawing up a policy brief on moving towards Swiss energy independence.

As well as more hydropower, Schaffner would like a boost in wind and solar power. The snow's reflection in the Alps could allow double-sided photovoltaic units to harvest more energy.

"Photovoltaics and wind are among the cheapest ways to produce electricity in the future, especially if we assume natural gas prices stay higher. In that regard, having more photovoltaics in the system should bring down costs," he says.

Hydropower adds flexibility, which allows Murisier to keep the water held by the Grande Dixence dam in reserve.

Murisier is also seeking permission to build a new dam below a retreating glacier near Zermatt - a project he describes as part of a broader discussion in Switzerland about "landscape protection versus additional green energy."

"I think that discussion will, as always in Switzerland, need compromises from both sides," he says.

"It's not possible to cover all remaining Alps with hydropower schemes. That would be too much. But certainly in a few selected spots, there is potential. And we need that."