Overview of the current energy mix, and the place in the market of different energy sources
Switzerland's final energy consumption totalled 854,300 Terajoules (TJ) in 2016. The energy mix consisted of motor fuels (34.2%), stationary fuels (16.1%), electricity (24.5%), gas (13.7%) and other (11.5%). The final sectoral consumption was split between transport (36.0%), households (28.2%), industry (18.2%) and services (16.6%).
While electricity demand in Switzerland can be met by domestic production, Swiss oil and gas demands fully depend on imports. This is due to the fact that Switzerland has no domestic production of crude oil and natural gas. Therefore, energy-related regulations in Switzerland are mainly focused on the electricity sector.
Electricity consumption reached 58.5 billion kWh (or 62.9 billion kWh, taking into account the losses due to transport and pumping for pump storage plants) in 2017. On the supply side, national production amounted to 57.3 billion kWh. The main source for electricity production is hydropower, which represented 59.0% of production in Switzerland. Moreover, electricity production in Switzerland consists of nuclear power (32.8%), non-renewable conventional thermal power (3.1%) and renewable energy other than hydropower (5.1%). Switzerland aims to phase out nuclear power and to increase its electricity production from renewable energy sources, in particular from solar power. This process is known as the "Energy Strategy 2050". Renewable energy sources therefore benefit from state support. The main instrument for the promotion of electricity production from renewable energy sources is a feed-in tariff system, which has been revised recently as described below. The government's intention to "green" the national electricity production has led to a significant increase of electricity production from solar power since 2012. Today, solar power is the most important renewable energy source other than hydropower. However, solar power accounts for only 2.2% of the total electricity production in Switzerland and therefore still plays a minor role.
Changes in the energy situation in the last 12 months which are likely to have an impact on future direction or policy
In general, Switzerland has a stable energy mix and the shares of oil, electricity and gas alter only slightly from year to year. With regard to electricity production, however, hydropower is under increasing pressure. There are external and internal reasons for the increasing pressure on hydropower.
Externally, overcapacities due to subsidies for renewable energy sources in several EU Member States (in particular, Germany), as well as faltering demand, have led to low prices in European electricity trading. The low electricity prices in the European electricity market have put Swiss hydropower producers in financial difficulties, as they are no longer able to cover their production costs. Since hydropower is a mainstay of Swiss electricity supply, the financial difficulties of hydropower producers calls for state support, which has been granted as described below.
Internally, the proposal of a temporary reduction of the "water royalty" (i.e. a compensation paid to the communities for the use of water), which accounts for up to 25% of production costs, did not receive majority backing in the consultation phase. Moreover, duties and taxes such as a 'renaturation tax' have been increased or newly introduced through federal legislation, which increases the financial burden for hydropower producers. Lastly, some cantons and communities have refused to renew water concessions and intend to take over electricity production from hydropower from private producers.
These developments in the field of hydropower may have various policy impacts in the future, in particular in the fi eld of trade policy. Internally, it is generally agreed that hydropower shall remain the mainstay of Swiss electricity supply and shall be supported accordingly. However, there is disagreement on which measures suit best, as e.g., the revision of the "water royalty" shows. With regard to the external perspective, it remains open, to what extent Switzerland may keep up with the subsidy race in Europe, as EU Member States have been increasing subsidies for renewable energy sources (in...