Target agreements help save energy

Since 2009, electricity-intensive companies in Switzerland have been able to have the grid surcharge for the promotion of renewable energies reimbursed in full or in part. As a result of a revision of the Energy Act passed by parliament, more companies have been able to benefit from the refund since January 2014, but to do so they must conclude a binding, ten-year target agreement with the federal government to increase their energy efficiency. In 2014, 61 companies and in 2015 104 companies made use of this. The reimbursement amount was 21.1 million Swiss francs in 2014 and 45.4 million Swiss francs in 2015. The figures for 2016 are still incomplete; the reimbursement sum is expected to be between 54 and 68 million francs. In the target agreements agreed by the end of 2016, 174 companies have committed to increasing their energy efficiency to 104 percent. This is according to a report adopted by the Federal Council at its meeting on June 2, 2017.

With Postulate 15.4085 "Effects of the reimbursement of the surcharge on the transmission costs of the high-voltage grids" of November 3, 2015, the UREK-N requested the Federal Council to show in a report what effects the reimbursement of the grid surcharge has on the economy, how many companies receive the grid surcharge reimbursed, how high the reimbursements were, and what efficiency improvements are achieved with the target agreements concluded.

Network surcharge

Since 2009, the expansion of electricity production plants from renewable energies (photovoltaics, biomass, wind power, small-scale hydropower, geothermal energy) has been subsidized by the state in Switzerland. Electricity consumers pay a surcharge on each kilowatt hour of electricity consumed. This so-called grid surcharge was previously limited to a maximum of 1.5 cents per kWh. With the new Energy Act, which was approved by Swiss voters on May 21, 2017 and is scheduled to come into force in 2018, the grid surcharge will rise to a maximum of 2.3 cents per kWh.

Refund for electricity-intensive companies

Electricity-intensive companies can have the grid surcharge reimbursed: A full refund can be claimed by companies whose electricity costs amount to at least 10% of their gross value added. For electricity costs between at least 5% and less than 10% of gross value added, the paid grid surcharge is partially refunded.

Target agreement for increasing energy efficiency

The refund must be applied for by application to the Swiss Federal Office of Energy (SFOE) within six months of the end of the fiscal year. The conditions are that the reimbursement amount is at least CHF 20,000 per year and that the company commits to increasing its energy efficiency in a binding target agreement with the federal government.

The condition that a target agreement must be concluded for reimbursement was only introduced at the beginning of 2014 with the implementation of Parliamentary Initiative 12.400 (revision of the Energy Act of June 21, 2013).

With a target agreement, the companies commit to implementing economical energy efficiency measures. In the process area, these are measures with a payback period of less than four years and in the infrastructure area of less than eight years. In addition, under the current Energy Act, the end consumer must invest at least 20% of the refund amount in additional, barely uneconomical measures within three years of the application being approved. This obligation will cease to apply under the new Energy Act from 2018.

Number of companies and refund amounts

The report in fulfillment of postulate 15.4085 shows the status as of February 7, 2017.

The refund is calculated for each fiscal year. The decisive factor in each case is the amount of the grid surcharge that applied in the fiscal year in question. The grid surcharge was 0.6 cents/kWh in 2014 and 1.1 cents/kWh in 2015. For companies whose fiscal year is not the same as the calendar year, the refund amount is calculated pro rata temporis from the grid surcharge for two calendar years.

Fiscal Year 2014: For the financial years ended 2014, the total amount of reimbursements was approximately 21.1 million Swiss francs*. A total of 61 companies received a refund, of which 39 companies received a full refund (totaling 17.9 million Swiss francs) and 22 companies received a partial refund (3.2 million Swiss francs).

Fiscal year 2015: For the fiscal years ended in 2015, the total amount of reimbursements was approximately 45.4 million Swiss francs*. A total of 104 companies received a refund, of which 61 companies received a full refund (totaling 39 million Swiss francs) and 43 companies received a partial refund (6.4 million Swiss francs).

Fiscal year 2016: For the fiscal years that ended in 2016, little data was still available as of February 2017. Companies can only submit applications after the annual financial statements have been approved and audited (no later than six months after the end of the fiscal year; i.e., for financial statements as of December 31, 2016, by June 30, 2017). The total reimbursement amounts for the 2016 financial year are expected to be between CHF 54 million and a maximum of CHF 68 million. More precise information on the reimbursement amounts will only be possible towards the end of 2017, when the majority of the reimbursement requests will have been reviewed.

*A few reimbursement cases for fiscal years 2014 and 2015 are still pending due to ongoing clarifications or legal proceedings. Accordingly, the figures may still change slightly.

Energetic effects of the target agreements

As of the end of 2016, 174 companies had concluded one or more target agreements. The target agreements are each concluded for a term of 10 years. The key figures for forecast energy efficiency and forecast energy consumption relate to the target year at the end of the 10 years.

The sum of the predicted weighted total energy consumption (energy consumption is weighted for comparability) and the sum of the predicted weighted impact of measures of all target agreements results in an increase of the total energy efficiency from 100 to 103.7 percent during the 10-year term. This value represents the actual agreed increase in energy performance across all target agreements. By the end of the term of the target agreements, the 174 companies have thus committed themselves to energy efficiency measures (anticipated savings of primary energy) amounting to 881.9 gigawatt hours. Accordingly, the anticipated final energy consumption of these companies in the target year totals around 23,590 gigawatt hours. This includes electricity, fossil and biogenic fuels, and district heating.

The strict sanction mechanism - if the efficiency target is not achieved, the entire reimbursement sum must be paid back - means that the targets tend to be set low. However, experience shows that the agreed efficiency targets are usually exceeded in practice. The companies therefore save more energy than they should according to the agreement. However, since the target agreements are concluded over ten years, the time span of two years is too short to make verifiable statements on this.

Obligation to invest in additional measures

According to the current law, there is an obligation to invest 20% of the reimbursement amount in additional measures. These are measures with a payback period of four to eight years for process measures and eight to twelve years for infrastructure measures. The investments must be made no later than three years after the reimbursement request is approved. Since reimbursement applications were first approved in 2014, companies have until 2017 to make the corresponding investments. Therefore, it is not yet possible to make any statements on the investment obligation and its effect.

Source: Confederation