25.01.2024 | Momentum for increased regulation continues

What does 2024 have in store for the Swiss electricity market?

The momentum for increased regulation seen in recent years looks set to continue in 2024. As well as the work of implementing the ‘consolidation bill’, we can expect other important bills aimed at increasing renewable energies and security of supply. While these changes are moving in the right direction, security of supply is an issue that requires high-level coordination. An overview. 

To safeguard long-term security of supply, politicians at the federal level are working on a range of changes to framework conditions and the regulatory foundations. Many of the bills put forward in recent years are being advanced. 

Consolidation bill – better framework conditions for expansion of renewable energy

In autumn 2023, parliament passed the ‘consolidation bill’ – a comprehensive set of legislation that introduced revisions to the Electricity Supply Act and the Energy Act. These amendments set ambitious expansion targets and improved framework conditions for renewable energy. Among the numerous other amendments were provisions in areas such as procurement in basic supply and a mandatory efficiency system. The changes are set to come into effect in early 2025. First, though, they will be put to the electorate, following the referendum against the consolidation bill that was introduced on 18 January. The corresponding vote is expected in early June. 

Despite the referendum, preparations for implementation of the planned legal provisions are powering ahead, and they will require numerous rulings at the ordinance level. These will define all outstanding details, such as the future arrangements for funding instruments, and the new mandatory efficiency system. The draft of this highly comprehensive package of ordinance revisions will be the subject of a three-month consultation period beginning in mid-to-late February. 

Acceleration bill – tightening approval procedures

In December 2023, the National Council decided on the acceleration bill as the first chamber. The bill seeks to tighten approval procedures for large-scale plants for the production of renewable energy. The heart of the bill is a condensed planning approval procedure at the cantonal level along with quicker appeals (more details here). The National Council undertook minimal changes to the Federal Council’s draft. Nonetheless it dampened the impact of the bill by introducing the option of making approval contingent on consent by the relevant local authority. Now, in the new year, the Council of States’ Energy Committee is turning its attention to the bill. 

This does not include approval procedures for the expansion of electricity grids. The Federal Council has scheduled consultation on a further bill aimed at simplifying and accelerating approvals for grid expansion for March/April. This additional bill is a welcome step. It is essential that the expansion of production plants and grids be planned in unison.

Winter reserves – additional emergency electricity

The consolidation bill will create the legal basis for an energy reserve consisting of storage for hydropower and other energy sources. However, the consolidation bill does not cover fossil reserve capacities, which were temporarily established during the energy crisis by emergency ordinance (which included the Birr reserve power plant). To establish a legal basis for future fossil reserve capacities, last autumn the Federal Council carried out a consultation on a bill that would amend the Electricity Supply Act. This bill is expected to be up for discussion in parliament in the course of this year, and it would replace the existing emergency ordinance from 2026 onwards. 

Electricity agreement – securing import capability

With negotiations for a framework agreement concluding in May 2021, the Federal Council is now returning to the issue. The Federal Council has been conducting exploratory talks with the EU since 2022, and on 15 December 2023 it published a draft negotiating mandate for an electricity agreement, including negotiating guidelines. An electricity agreement would have a significant influence on Switzerland’s future regulatory framework conditions. Among other things, the guidelines are seeking complete market liberalisation with optional basic supply, which parliament excluded from the consolidation bill. The mandate is set to be adopted in spring following consultation with politicians and stakeholders before negotiations with the EU get under way. 

Necessary steps – but it’s still not enough

In conceptual terms, the bills both current and planned are targeting the right issues. To safeguard security of supply, Switzerland needs to rapidly expand renewable energy, keep pace with its electricity grids, and maintain good cooperation with neighbouring countries, as well as reserves for emergency situations. But whether or not the bills have the desired impact depends on numerous details of their implementation. It requires not just amended framework conditions, but also a corresponding change of mindset among all stakeholders.

One challenge that will remain is the lack of high-level coordination of security of supply as a public good. Even with the planned improvements to the framework conditions for large-scale installations, there will still be numerous opportunities for delaying or preventing projects on the basis of local or special interests. Current examples include the recent objection to the Trift project (which was to be part of the consolidation bill) and the numerous proposals at the local authority level for minimum distance between wind turbines and occupied buildings. Under the consolidation bill, it is up to the cantons to earmark suitable areas for large-scale installations. However, there is no coordination mechanism for defining adequate areas across Switzerland. The only thing hope for countering these challenges is an overarching planning function which considers the whole of Switzerland, weighs up conflicting interests in their entirety and can issue binding provisions. It is up to the government and society to find solutions that ensure planning that works in harmony with the federalist values of Switzerland.

Schedule for developments 2024

 

January

  • Acceleration bill for production plants up before the Council of States’ Energy Committee
  • Federal Law on Oversight and Transparency in Wholesale Energy Markets up before the National Council’s Energy Committee

February

  • Deadline for tender of 400 MW reserve power plants for post-2026
  • Start of consultation for consolidation bill ordinances
  • Start of consultation for planned regulation of system-critical electricity companies 

March/April

  • Start of consultation for electricity grids acceleration bill
  • Adoption of Swiss negotiating mandate for Switzerland-EU electricity agreement

June

  • Referendum on consolidation bill

August

  • Gas Supply Act submitted to parliament

Autumn

  • Publication of national hydrogen strategy

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