Is the supplement levied on each kWh of electricity for the promotion of renewable energies sufficient?

Since 2009, Swiss consumers have been paying a surcharge on every kWh consumed. This surcharge currently amounts to 2.3 centimes per kilowatt hour (ct/kWh). In the long term, this is expected to bring in more than CHF 1.3 billion a year for the federal government. This sum alone will not be sufficient to enable the rapid replacement of all nuclear power by renewable energy. However, it is an indispensable stimulus for the start-up of the renewable energy market.

Since renewable energies are generally not yet competitive [→ Q64], they must be supported financially to ensure their development and widespread adoption. The federal government has set up a support mechanism that pays for green electricity fed into the grid. It is a feed-in tariff remuneration system, a mechanism better known by its acronym “RPC”. In practice, a producer of renewable electricity (solar, wind, biogas, etc.) receives a guarantee that its green electricity will be purchased by the grid as a priority, and at a tariff that covers the difference between the market price (4-7 ct/kWh) and its actual production cost (10-50 ct/kWh). These rates may be adjusted by the Swiss Federal Office of Energy (SFOE) on the basis of technological progress, market maturity and actual production.

The RPC is financed through a surcharge levied on consumers for each kWh of electricity. This surcharge goes into a fund which, in addition to the RPC, also finances other measures such as public tenders to promote energy efficiency, risk coverage for geothermal projects, measures to clean up watercourses, one-off payments for small photovoltaic installations, and investment contributions for biomass and hydropower. The maximum amount of the supplement was set in the Energy Act at 1.5 ct/kWh, but this ceiling was raised to 2.3 ct/kWh with the Energy Strategy 2050. This would amount to more than CHF 100 per household per year. In 2019, however, the actual surcharge levied was only 1 ct/kWh, as not all installations that have been given a positive decision to receive the RPC have yet been completed. The RPC is granted only if the plants actually feed electricity into the grid. The surcharge was increased to 1.1 ct/kWh at the beginning of 2015. It appears explicitly on our electricity bill and amounts to around CHF 50 per household per year. RPC has made it possible to produce almost 1.4 TWh of green electricity in 2013, and in general more than 2.5% of our electricity consumption. The RPC has undergone various changes (value of the supplement, type of eligible installations, duration of payment) and expires at the end of 2022, which means that new installations will no longer be able to use this financial scheme.

The setting of the amount of the surcharge has given rise to heated left-right debates in the Federal Parliament. In addition to the fact that it should remain financially sustainable for households and, above all, industry, two other arguments have been put forward in favour of moderate support for renewable energies.

On the one hand, it was estimated that the costs of these technologies will continue to fall over the next few years due to their increasing technological and market maturity. Therefore, subsidising green electricity producers heavily today, by committing to buy back their green electricity for 20 or 25 years, would cost more overall than supporting them gradually. On the other hand, it is also necessary to ensure that the infrastructure of the electricity grid can evolve in conjunction with the deployment of renewable energies and allow a massive injection of green power into the grid without the risk of destabilising it [→ Q67].

As it stands, the amount of this supplement is still insufficient to hope to make up the electricity deficit left by the shutdown of nuclear power plants with renewable electricity. According to the scenarios developed by the federal government as part of its Energy Strategy 2050 [→ Q86], it should make it possible to exploit around one-third of the potential for wind and solar power by the time our last nuclear power plant is decommissioned. However, the primary and essential purpose of this funding is to contribute to the development of the still young renewable energy sector.

Moreover, too much support for renewable energy can be very costly. Germany is well aware of this, with electricity prices for end consumers having risen by 9 ct/kWh since 2008 and stabilised at around 35 ct/kWh by the end of 2013 (compared with 18-28 cents for most households in Switzerland) [→ Q64]. This increase is certainly not entirely the result of subsidies for renewable energy. Nevertheless, the support in Germany far exceeds our modest 1.5 ct/kWh surcharge. Germany now produces almost 20% of its electricity from new renewable energies, compared to 2% in Switzerland.