Swiss Federal Council adopts message on Renewable Energy Supply Act – Commentary

Background
Main aspects of the Renewable Energy Supply Act
Comment

The Federal Council recently adopted the Federal Law on the Security of Electricity Supply by Renewable Energies (Renewable Energy Supply Act). As requested by the participants in the consultation process, the law combines a revised version of the Electricity Supply Law and a revised version of the Energy Law, aimed at enhancing the expansion of domestic renewable energies and at securing supplies to Switzerland.

Background

Economic and technological developments as well as political decisions in Switzerland and abroad are causing fundamental changes in the energy market. To prepare for these changes, the Federal Council has drawn up the Energy Strategy 2050, with the aim of enabling Switzerland to maintain its high level of supply and to reduce Switzerland’s environmental impact in terms of energy. To this end, Swiss national production of renewable energies will be developed rapidly and consistently, and the security of the grid and of electricity supply will be enhanced by specific new measures. In the Renewable Energy Supply Act, the Federal Council proposes a legal framework that provides planning security and investment incentives for the expansion of renewable electricity production and its market integration.

Main aspects of the Renewable Energy Supply Act

Binding target values
The proposed legislation contains binding target values ​​for 2035 and 2050 that specify the expansion of hydropower and other renewables and the reduction of energy consumption per capita. These binding target values ​​will align legislation with security of supply and climate policy objectives, thus providing planning security and investment incentives.

Tools
The existing tools supporting renewable energies are limited until the end of 2022 and 2030. These will be extended until 2035 and designed in a more market-oriented way, namely:

  • large photovoltaic installations will be acquired through calls for tenders;
  • more financial resources will be available for large hydropower plants; and
  • the feed-in tariff system will be replaced by direct investment contributions, in order to reduce the administrative burden associated with feed-in tariffs and to increase the efficiency of subsidies.

The tools will continue to be funded through a network surcharge, which will not be increased, but taken over a longer period.

Liberalization of the electricity market
Consumers who produce electricity themselves (prosumers), producers and suppliers of electricity will benefit from greater economic freedom. In particular, by opening up the electricity market, end consumers can freely choose their electricity supplier. This measure will strengthen decentralized renewable energy production and support innovative business models (e.g. energy communities) that are currently not allowed to operate in areas subject to monopoly legislation, such as direct selling. electricity produced locally via “neighborhood” platforms or innovative offers linked to e-mobility and home automation. This will further integrate renewable energies into the market. However, in order to protect small end users (i.e. households) from abusive practices, a basic supply regime will be maintained, which will provide renewable energy.

Longer-term security of electricity supply in winter
Switzerland’s current self-sufficiency will be maintained. To achieve this, additional climate-neutral power generation capacity will be added by 2040, in addition to the targeted increase in renewables, which can be reliably supplied in winter. The Federal Council intends to finance power plants (mainly large storage) via a “winter surcharge”, which is already included in the law on electricity supply as a precautionary measure against possible security deficits. Since the planning, approval and construction processes of the corresponding power plants are lengthy, the Federal Council intends to prioritize the expansion of storage hydropower on a large scale. In particular, projects meeting the adequacy and contribution criteria set out in the Electricity Supply Law will receive financial support in the form of investment contribution upon request. A prequalification process involving several interested parties (eg cantons, operators and environmental associations) will determine eligible projects. If it becomes clear by 2030 that the expansion target cannot be achieved solely by focusing on large-scale hydropower, technologically neutral tenders will be organized for additional capacities with lead times. shorter delivery.

In addition, a strategic energy reserve will be established to provide additional assurance that sufficient energy is also available towards the end of the winter seasons. Swissgrid will conduct a tender procedure for the acquisition of the strategic energy reserve. Successful bidders will undertake to retain a certain minimum amount of energy in the storage facility for a specified period, or to refrain from using such an amount.

Datahub and data protection
Strong competition and innovative business models in the electricity market require efficient exchange and access to digital data and information. In this regard, the Federal Council has proposed two revisions to the law on electricity supply; the act:

  • define the regulatory framework for the exchange and protection of data. A national energy data infrastructure with a data center will be established to support the various measures. This data hub ensures efficient data exchanges and allows uniform access to data, while guaranteeing data security and protection.
  • clarify certain aspects relating to counting. In particular, large end consumers, electricity producers and storage operators will be free to choose their metering service provider. In addition, the right to choose the metering service provider will be granted to self-consuming market players and certain end-user groups, regardless of their annual electricity consumption, if they need access to electricity. their metering services for consumption flexibility or energy savings. measures.

Ensure short-term security of supply
As negotiations for an institutional agreement between Switzerland and the European Union have been halted, it is unlikely that the envisaged electricity agreement with the European Union will be concluded, at least in the short term. The Federal Council has instructed several authorities and Swissgrid to analyze the short- and medium-term effects on grid security, security of supply and any additional measures that may be necessary to ensure security of supply in the short term. It is expected that a corresponding report will be submitted to the Federal Council by the end of 2021.

Comment

The Council of States will discuss the law on the supply of renewable energies proposed by the Federal Council in the last months of 2021. However, the Commission for the Environment, Spatial Planning and Energy of the National Council considers the Federal Council’s proposal to be “illusory in terms of timing” and the committee is concerned about the emergence of a funding gap for certain renewable energies, as the renewable energy support tools currently in force will expire at the end 2022. Therefore, the commission has prepared a separate proposal as an interim solution, which aims to replace the expiration feed -in the tariff system with investment contributions for the respective technologies (which will expire at the end of 2030). This interim solution is currently being debated in Parliament and the remaining differences between the Council of States and the National Council are being resolved. In general, it seems that this interim solution will receive the necessary support for Parliament to adopt it. Therefore, renewables are expected to receive a new regulatory boost and they will likely be integrated into the energy market on a broader basis.

for more information please contact Marcel Meinhardt or Patrick Sattler at Lenz & Staehelin by phone (+41 58 450 80 00) or by e-mail ([email protected] Where [email protected]). The Lenz & Staehelin website can be accessed at www.lenzstaehelin.com.

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