Despite reform, the future of feed-in tariffs for renewable energies re-mains uncertain

During its autumn session, Parliament readjusted the feed-in tariffs for renewable energies created by the Electricity Act. The amendment corrects significant misguided incentives with regard to system stability. However, not all conflicting objectives have been resolved. Further reforms are necessary, and the electricity agreement could also play a decisive role in this. An assessment.

Solar producers usually feed their electricity into the local distribution network operator, who is legally obliged to purchase it. However, the feed-in tariffs paid for this have been inconsistent up to now, with rates varying significantly depending on the network area. The Electricity Act will therefore introduce a harmonised remuneration system throughout Switzerland from 2026. This will be based on the average quarterly market price that a reference plant would have achieved. For small plants, there will also be a minimum remuneration, which will be set by the Federal Council according to plant type. This is to ensure that production costs are covered in all cases, even when market prices are low. However, before this regulation comes into force, Parliament decided on an adjustment in its autumn session in 2025.

Version of the Electricity Act: Misguided incentives and subsidies at the expense of basic supply

The feed-in tariff provided for in the Electricity Act has two fundamental weaknesses. Firstly, the remuneration rate is set quarterly and remains fixed for that period. It does not change within a single day. This means that solar system owners have no incentive to time their feed-in – for example, to the hours when electricity is in greater demand on the market and more expensive. This could be achieved, for example, by shifting their own consumption or storage. The misguided incentives of fixed remuneration rates can increase stress on the system: even in phases with negative market prices, when there is no demand for electricity and the local grid is under particular strain, it is still worthwhile to feed electricity into the grid.

Secondly, the minimum remuneration for small installations is an implicit subsidy – and this needs to be financed. The logic of the Electricity Act stipulates that the electricity remunerated in this way is included in the basic supply. When market prices are low, captive customers effectively pay more for their electricity than the market situation would justify. To make matters worse, if distribution network operators are unable to guarantee sufficient demand at certain times due to a lack of demand in the basic supply, they have to sell the electricity on the market at a loss. Especially in smaller network areas with a lot of solar feed-in, these systematic losses can very quickly become a problem.

Parliament corrects: From fixed quarterly prices to hourly signals

In the 2025 autumn session, Parliament made improvements to the feed-in tariff as part of the so-called acceleration decree in order to mitigate the obvious disincentives. In future, the tariff will be based on the hourly market price instead of the quarterly price as was previously the case. This means that short-term price signals are better received by producers and it is worthwhile – as far as technically possible – to shift feed-in to hours with higher demand and higher prices. The minimum remuneration remains in place, but is converted into a monthly compensation premium. At the end of the month, the monthly reference market price is compared with the minimum remuneration. If the reference value is lower, producers receive a premium equal to the difference for each kilowatt hour fed into the grid – in addition to the hourly market price. Finally, the Federal Council may also lay down a different rule in the event of negative market prices, for example suspending payment of the premium.

The misguided incentives have now been largely corrected by Parliament, but the implicit promotion of the minimum remuneration remains in place. These costs will continue to be borne by captive customers in the basic supply system or by distribution network operators via losses.

However, it is still unclear whether and when this regulation will come into force. This will depend on a possible referendum against the acceleration decree and a corresponding vote.

Electricity agreement: framework conditions are changing

In recent weeks, there has been widespread discussion about how an electricity agreement with the EU would affect the (minimum) feed-in tariff. At first glance, two points appear to be sensitive: firstly, the misguided incentives to feed electricity into the grid at negative prices, and secondly, the minimum remuneration as an implicit subsidy. On closer inspection, however, it becomes apparent that the EU regulations provide for exceptions in both areas for small-scale installations.

Nevertheless, there will be a significant change in the framework conditions. With the electricity agreement, Switzerland would completely open up the electricity market; basic supply would be voluntary and households could switch to other providers at any time. Costs that are currently distributed via regulated basic supply tariffs can no longer simply be passed on to a captive customer group in an open market. The result would be that the minimum feed-in tariff would de facto be increasingly financed by losses incurred by distribution network operators – a model that would quickly become unsustainable as the number of solar installations continues to grow. The Federal Council therefore outlines the abolition of the minimum feed-in tariff in the context of the agreement; future remuneration is to be based purely on hourly market prices and the minimum remuneration is to be abolished. Investment incentives would come exclusively from other instruments such as one-off payments and own consumption.

The future: uncertainties remain

The Parliament's reform is an important step towards eliminating misguided incentives and making feed-in tariffs fit for the future. However, the future of minimum remuneration remains uncertain, even without an electricity agreement. With the expansion of photovoltaics, the rising additional costs will be distributed among a shrinking group of captive customers – and more heavily in some supply areas than in others. This is neither fair nor sustainable in the long term. If the minimum remuneration is to be maintained, an alternative, sustainable financing mechanism outside the basic supply system is needed. One possibility would be a central purchasing agency, which would in turn compensate for the systematic losses via the grid surcharge fund. In any case, a long-term stable solution is needed as soon as possible in order to create the desired predictability for new investments.