The decline of wholesale electricity prices in the last years has initiated a cascade of effects within the Swiss energy landscape: companies’ books were in the red and concepts for selling HP assets were issued, calls for subsidies emerged with the Confederation granting support for vulnerable HP installations for the next five years, water fee reduction and adjustments were put on the agenda, and overall the envisioned role of Swiss HP for the Energy Strategy 2050 was questioned. Even though the discussion has slowed down a bit, the ‘crisis’ highlighted the main challenges Swiss HP needs to address: market and political, legal and social aspects. The importance of those drivers has also been identified by Swiss HP stakeholders in a project workshop conducted in 2015 and the relation between market challenges and the Swiss regulatory and policy framework forms the basis of our assessment.
Water fees have taken a center stage in the discussion on Swiss HP in recent years. The main challenge is aligning the different interests of the paying companies and receiving cantons and municipalities. Our assessment of net profits under different potential market developments and water fee systems shows that the market dimension dominates the water fee impact. The fee design is mostly relevant for a subset of firms and within a specific electricity market price range of around 40 to 60 CHF/MWh in which the impact of the fee can make a difference between profit and loss as well as investment and no investment. The revenues generated by the fees and the differences caused by different designs are important for cantons and municipalities and can cause indirect feedback effects that complicate a general assessment of winners, losers and potential for trade-offs.
With the water fee adjustment postponed until 2024, resolving the conflict between paying and receiving parties will be the central element calling for a stakeholder process to bridge the real and perceived gaps and find a compromise all sides can agree upon.
Publication about this research work
Hannes Weigt et al. (2019): The Future of Swiss Hydropower. Realities, Options and Open Questions
Contact
Prof. Dr. Hannes Weigt
Wirtschaftswissenschaftliche Fakultät / Energieökonomie
Universität Basel
Peter Merian-Weg 6
Büro 4.34
4002 Basel
+41 61 207 32 59
hannes.weigt@unibas.ch
All information provided on these pages corresponds to the status of knowledge as of 31.03.2019.