16.05.2023 | Only the right regulatory conditions will ensure rapid expansion
Electricity imports will continue to play an important role for Switzerland in the future, but we have to ensure we are not overly dependent. That means that Switzerland needs additional winter electricity. Unfortunately there is no quick solution. But it’s important that we have the right regulatory conditions as soon as possible, so we can create more of the right plants. This is how a suitable approach might look.
Switzerland desperately needs more winter electricity. With nuclear power plants deactivated and decarbonisation leading to an increase in electricity demand, there is a threat of high import dependency in the colder half of the year. At the same time, the lack of an electricity agreement means that Switzerland is losing connections to the European electricity market, which makes an import strategy all the more risky. But how will Switzerland come by this winter electricity? There are various approaches.
The strained situation on the energy markets led the federal government to establish various winter reserves by ordinance in winter 2022/23. That includes hydropower reserves, temporary reserve fossil power plants and emergency power generators aggregated in ‘poolers’. In future these reserves are set to be stabilised under law. Reserves have an important yet very specific role – they don’t participate in the market, instead they arm Switzerland against short-term supply bottlenecks, in the event of widespread outages, for instance, or temporary import restrictions. But reserves are not suitable for generating additional winter electricity in the face of increased import volumes. Hydropower reserves generally deprive the market of electricity, as the water is withheld in expectation of possible bottlenecks and not used to generate electricity. While reserve fossil power plants supply additional electricity, their purpose dictates that they only do so when there is an acute market failure. Deploying them too early or too late comes with a risk of distorting the market, and would significantly aggravate Switzerland’s carbon footprint.
This second idea seems appealing: you take the excess electricity from solar plants in summer and store it for the winter. But there are enormous barriers to storing electricity in sufficient volumes.
Existing storage technologies such as large-scale battery storage systems and pump hydropower plants are primarily suited to offsetting shortfall on a daily or weekly basis. Their strength is short-term flexibility, while the storage volume is limited. Large-scale storage hydropower plants generally have greater volume, but they tend to store their own water inflow rather than electricity from the grid. And their expansion capacity is already largely exhausted.
One future solution for seasonal offsetting could be converting electricity into hydrogen with subsequent re-conversion. But it will be some time until this kind of process becomes economically viable. First, at present only continuous operations would make amortisation of investment in hydrogen production realistic. At the same time you need to be investing in hydrogen storage and associated power plants for re-conversion. Second, conversion losses mean that only around 25% of the original energy returns to the grid in the process of hydrogen production and subsequent re-conversion. The grid fee exemption for re-conversion and pilot projects foreseen by the National Council’s consolidation bill will hardly suffice in this respect. At the same time, Switzerland would do well to rapidly create the appropriate framework in light of the key role of hydrogen in the long term. The EU is showing the way, for example with the revision of the gas directive and funding of hydrogen production through the Hydrogen Bank.
The consolidation bill provides for a range of improvements in expansion of renewable energies (see Axpo’s assessment of the current situation). But for winter electricity, there are two issues in particular that offer room for improvement.
First, funding instruments need to make greater allowance for proportions of winter electricity. One-off compensation is set on the basis of peak output and as such doesn’t take seasonal fluctuation of plant production into account. At the ordinance level there are broad-stroke approaches such as a ‘peak bonus’ for solar plants. But that doesn’t adequately reflect the majority of large-scale plants with a high proportion of winter electricity. In relation to the funding instrument of the floating market premium, the National Council opposed the winter bonus proposed by the Council of States in deliberations on the consolidation bill. But it’s important that we have a political signal for winter electricity and corresponding statutory provisions.
Second, the approval capability of plants with high proportions of winter electricity needs to be secured. However, political developments have failed to come up with an appropriate replacement for the emergency law for alpine PV plants and significant improvements for wind turbines, which is set to lapse at the end of 2025. In contrast to small rooftop solar plants, both types of plant would not just produce a lot of electricity, but 50% of it would be in the colder half of the year (instead of around 25–30%).
It’s not just a question of where winter electricity will come from, but also whether it comes quickly enough. Approval processes for larger installations still take up to 15 years, which is too slow in light of the medium-term risks. The Federal Council’s announcement of an acceleration bill for the summer might help get the configuration right (e.g. forward planning by federal and cantonal authorities, concentrated procedures, short deadlines, short appeals), but probably in the long term rather than short term.
With the emergency federal act for Alpine solar plants, parliament demonstrated an approach for short-term acceleration. Where there was once a de facto ban, corresponding provisions mean that expedient Alpine solar projects are being developed in record time. And it is thanks to this easing that Axpo was able to launch its solar offensive. A further approach is the ‘Hydropower Round Table’ which brings together federal and cantonal authorities, the electricity sector and environmental association to agree on projects on the basis of environmental and production criteria. However, this evaluation doesn’t consider the economic feasibility of projects, which is particularly challenging in the case of raising dam levels without additional annual production.
With these experiences in mind, one meaningful mechanism for more rapid winter electricity could look like this: the federal authorities could issue a tender (or hold a round table) for large-scale winter electricity. The selection of projects would be carried out under both economic and environmental criteria. Selected projects would profit not just from funding, but also from greatly streamlined and accelerated approval processes.