Power policy

The Swiss Federal Council announced plans for renewable energy auctions at the end of 2019, but has yet to clarify timelines or the technologies that will be included. Switzerland provides a feed-in premium for renewables, which is financed by a special fund raised through a consumer surcharge of up to 23 Swiss francs ($23) per megawatt-hour. Historically, this program has mostly been used for solar project support. It is due to expire at the end of 2022 and no new systems will be included in the funding system thereafter.

The Swiss Federal Council in June 2021 adopted a new law that set bidding rules to raise new renewable power generation to at least 17 terawatt-hours in 2035 and 39 terawatt-hours in 2050 and hydropower generation to at least 37.4 terawatt-hours in 2035 and 38.6 terawatt-hours in 2050. Moreover, the country wants to add 2 terawatt-hours of hydropower storage production available in winter by 2040 to be funded by a surcharge of 0.20 Swiss francs per kilowatt-hour. The law also aims to cut annual per capita energy consumption by 43% through 2035 compared with 2000 and by 53% through 2050.

Net-metering has not been implemented centrally as the small-scale feed-in tariff has been subsidizing rooftop solar since 2009. However, some distribution system operators (DSOs) or utilities voluntarily offer virtual storage or net billing solutions.

Power prices and costs

The time-based tariffs approach has become less popular in recent years. Industrial, residential and commercial electricity prices decreased slightly from 2020 to 2021. Meanwhile, wholesale electricity prices increased from 33.92 Swiss francs per megawatt-hour to 107.67 Swiss francs per megawatt-hour in the same period.

Power market

Swiss power is traded on the European Energy Exchange (EEX), though it does not have its own power exchange. As of end-2021, hydro accounts for more than 67% of Switzerland's installed capacity, with solar accounting for the next biggest segment.

The shift away from nuclear, which makes up a fourth of total generation, will create a substantial gap in the mix. However, the gradual transition has been underway since 2011 when the federal government decided to phase out nuclear power. An amendment to the Swiss Nuclear Energy Act came into effect in January 2018, which ceased the issuing of new general licenses for nuclear plants.

In 2021, there was one solar corporate power purchase agreement signed in Switzerland. However, almost 90% of the Swiss electricity utilities are owned by the public sector, such as cantons and municipalities. The remaining 8% are privately owned by Swiss investors and 2% by foreign investors.

Doing business and barriers

The phasing out of nuclear power creates a capacity gap that renewables can fill. Switzerland's renewables policy is stable, but delayed implementation of auctions substituting feed-in tariffs is a barrier for development going forward.

EV market

Switzerland has a very developed electric-vehicle market. Electric cars accounted for 21% of vehicle sales in Switzerland in 2021, an increase from 13% in 2020. In 2003, Switzerland introduced a system of fuel economy labels, based on grades ranging from A to G, to assist consumers in making decisions that improve the fleet’s fuel economy and lower emissions.

Importers of light commercial vehicles have to limit the average emissions of the imported fleet to 147 grams of carbon dioxide per kilometer from 2020. If they exceed this 147-gram limit, they pay a penalty. This policy, together with the Swiss petroleum tax, is in line with the European Union’s emission standards and incentivize the development of the EV market.

EV policy

Switzerland has extensive policies in place to support EV sales. The Swiss government, as part of a public-private initiative under its Electric Mobility Roadmap, aims to raise the share of electric and hybrid vehicles on the roads to 50% by 2025. With that in mind, cantons have varying levels of EV purchase incentives. Since 2019, the canton of Thurgau has been subsidizing the purchase of electric cars to the tune of 4,000 francs, provided they run on green electricity. In St. Gallen, there is a 5,000-franc subsidy and in Basel, a subsidy of 10,000 francs is available to taxi drivers using electric cars. At the national level, fully electric cars are exempt from the 4% automobile tax.

Switzerland aims to build 12,850 charging stations by 2025, from 7,150 at the start of 2022. Various cantons have policies in place that facilitate this goal. For example, the Energie 2021 support program in Thurgau funds the development costs for charging infrastructure in apartment buildings. Meanwhile, in Zurich, the Aktion program provides 1,000 francs in funding for the installation of each charging station in apartments with three or more residential units.

Buildings market

Heat pump sales increase every year in Switzerland. From 2020 to 2021, the number of units sold grew from 28,064 to 33,704. Energy efficiency regulations are most detailed at the canton level, as with heat pump purchase incentive programs. Further, Switzerland’s latest energy policy, Energy Strategy 2050, includes an energy efficiency segment that aims to halve the energy consumption of the Swiss building fleet to 55 terawatt-hours by 2050.

Buildings policy

Heating is frequently mentioned as a key sector in the country’s net-zero long-term strategies, since buildings account for 40% of the country’s total energy consumption. The CO2 levy on fossil-based heating fuels intended as an incentive tax encourages the economical use of fossil energies and greater conversion to low-CO2 and CO2-free energies.

Tax deductions are also available for energy efficiency measures, including heat pumps. The tax deduction can even be considered a boiler scrappage scheme: if the renovations increase the energy efficiency of a house, the homeowner can deduct it from their taxable income. These include changing windows to improve insulation or switching to a heat pump.