18.01.2022 | A guest commentary by Christoph Brand in the NZZ

Those who make sure electricity flows

The federal government is responsible for the security of electricity supply in Switzerland. However, that does not mean electricity companies avoid taking responsibility.

If the expansion of renewable energies continues at the current slow pace, reliable supply is questionable after the gradual shutdown of nuclear power plants. In principle, security of supply is possible with a good technology mix. Hydropower and photovoltaic must play a key role, supported by CO2-neutral gas-fired power plants, wind and biomass.

However, the current business and regulatory framework is too unattractive for potential investors in new plants. For example, rigid water usage levies, year-long approval processes and the lack of subsidies create enormous obstacles for large-scale power plants. It needs to become more attractive for home-owners to install solar panels over the entire roof surface rather than small systems that are designed for self-consumption only. This framework has been put in place by policy-makers.

The legal situation is clear

Since the business and regulatory framework is crucial, the government has the main responsibility for the security of electricity supply. The legal situation is clear. According to Article 6 of the Energy Act, the energy industry is responsible for energy supply, while the federal government and cantons ensure the business and regulatory framework is in place to enable the energy industry to fulfil this task.

This division of responsibility makes sense. If the companies had sole responsibility, the entire industry would have to coordinate which, in view of the numerous players, would hardly be practical. In addition, agreements regarding volumes and prices of power production and consumption would be necessary, which would be highly problematic in terms of antitrust laws. Ultimately, this would not be possible in an international market like energy. We would be returning to the old national monopolistic situation, with extensive protectionism at the borders. One must not forget that for companies like Axpo which are fully exposed to the market, the wholesale price, which is decisive for every investment budget, is determined abroad, not in Switzerland.

The responsibility for security of supply for a given country does not lie with individual companies like Axpo, just as the security of supply for vaccines does not rest with a specific pharmaceutical company. All the same, as the largest power company, Axpo invests significant amounts in Switzerland's security of supply. In previous years, we have invested nearly three times more domestically than internationally. Several billion francs went into maintaining hydropower, the power grids, and the safety of nuclear power plants.

In contrast, the current business and regulatory framework is simply not attractive for investments in new projects. We certainly see the necessity for an acceleration in the development of new capacity. However, we cannot expose our owners – the cantons and their residents – to losses in the millions because of unprofitable projects. That would also be incompatible with the duty of good faith and care towards the shareholders, and fundamentally endanger the company in the long term.

Better business and regulatory framework necessary

What needs to be done? To minimise the likelihood of critical situations in the future, the business and regulatory framework for the rapid expansion of climate-friendly power production must be urgently improved. This requires much speedier approval processes, as well as suitable instruments and financial means, in particular more incentives for winter power production. The question of which technology should be developed for weather-independent baseload production during the winter may be a technical and economic one, but it is also a question for society and politics.

If we work together, we are convinced that a reliable CO2-free power supply is possible.

This text was published as a guest commentary in the Neue Zürcher Zeitung on 17 January. 

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