Transformation of the electricity market: Switzerland only in midfield

Although a considerable proportion of Switzerland's electricity already comes from renewables, it needs to take a more centralized approach to electricity market flexibility if it is to achieve 100 percent in this regard, according to the findings of the second Energy Transition Readiness Index (ETRI). Published by the U.K.-based Association for Renewable Energy and Clean Technology (REA) in collaboration with energy management company Eaton, the index looks at how far twelve European countries have progressed in transforming their electricity markets. Switzerland receives only a three on the scale of one to five, while the three Nordic countries Finland, Norway and Sweden top the list with a five.

Hydropower alone cannot cover the additional electricity demand

The report shows that Switzerland already obtains a large part of its electricity consumption (74%) from renewable energies. This gives it the highest percentage share behind Norway, which already produces more electricity than it needs. In addition, Switzerland relies heavily on hydropower for electricity generation, and thus on an energy source that, unlike solar and wind power, does not depend on weather conditions. As a result, electricity systems are able to respond flexibly to demand, which can fluctuate by the minute, and provide sufficient power at all times.

However, due to depleted resources and for environmental reasons, it will be difficult to further increase the share of electricity from hydropower in order to produce 100 percent of electricity from renewable energy sources by 2030, as Eaton writes. Accordingly, the share from wind and solar energy must increase, but so far this has only amounted to four percent of total electricity consumption. To achieve the set target, Switzerland would therefore have to generate an additional 15 terawatt hours (TWh) from solar and wind energy, which corresponds to a growth rate of 645 percent, it further states.

Consumers must be able to participate in the electricity market

However, according to Eaton, the flexibility of the electricity market can also be increased by giving consumers access to it with the help of decentralized flexibility technologies. Smart meters are a critical means to this end, he says: they make it possible to monitor electricity production from behind-the-meter (BTM) energy resources such as solar rooftops and simplify accurate billing of electricity revenues and costs. But while smart meters are considered a key component, they are not yet installed in even one-fifth of the population (17%), he said. Of the other countries surveyed, only Ireland has a lower figure, at four percent, while Sweden and Spain have already equipped all households with smart meters, according to the study.

In the future, electric cars may also offer consumers the opportunity to feed electricity from their traction batteries into the public grid. The existing grid is capable of enabling bidirectional power flows, but concepts such as vehicle-to-grid (V2G) are still in their infancy, he said. In addition, only 0.9 percent of vehicles registered in Switzerland are electric, and they account for only about eight percent of new registrations.

The energy turnaround is proceeding at different speeds in the cantons

In principle, the study sees broad social support for the energy transition in Switzerland. However, since decisions are often made at the cantonal level, this process has so far taken place at different speeds from region to region. In addition, the rapid changes in the energy industry mean that the regulatory environment is currently uncertain. A more centralized approach, on the other hand, could contribute to more stability and faster transformation. To encourage new innovations and create new flexibility options, policymakers should also consider providing incentives for existing and new market players, it is stressed.

"The will for the energy transition is basically there in Switzerland, but we need more flexibility in the electricity market to be able to achieve our goals," explains Kimberly Schweizer, Business Development and Marketing Manager at Eaton in Austria and Switzerland. "We have already laid a good foundation for this, but now we need to expand other renewable energy sources, because we cannot meet the demand through hydropower alone. In addition, decentralized flexibility technologies will play an important role in the future to serve the electricity market from many different sources, including from the consumer side. For this to succeed, however, we need clear guidelines from policymakers to centrally manage the energy transition."

Source: Eaton

About the study

The Energy Transition Readiness Index of the Association for Renewable Energy and Clean Technology (REA) from the United Kingdom in collaboration with Eaton examines in twelve European countries (in the first edition still nine countries) to what extent the transformation of their electricity market is advanced in order to achieve their climate targets by 2030. Three aspects are examined: socio-political factors, market access, and innovation and technological factors. The countries studied are: Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom.

You can find the full report here: www.eaton.ch/ETRI

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