State intervenes Electricity customers pay 90 million more - without any benefit

Swiss electricity customers had to pay at least CHF 90 million more than expected in 2024. These four measures are intended to curb costs.

In 2024, solar installations in Switzerland generated roughly as much electricity as the Beznau nuclear power plant. In other words, more than ever before.

With the increasing share of solar energy in the Swiss electricity grid, precise weather forecasts are becoming increasingly important for grid stability. One example of this is April 22, 2024, when the forecasts were so wrong that there was a threat of a blackout in Switzerland. Due to unexpected snowfall, numerous photovoltaic systems supplied zero energy.

As there was so much power missing, Swissgrid, the national grid company, had to procure balancing energy to stabilize the electricity grid. Control energy can be used to balance out an imbalance in the electricity grid.

In the end, the electricity customers pay

And Swissgrid paid three million francs on 22 April 2024, from 2 p.m. to 3 p.m., to keep the grid stable. The price was over CHF 2,000 per megawatt hour, writes theBeobachter. By comparison, the short-term normal price in that hour was around 70 francs per megawatt hour. In the end, electricity customers have to pay for this.

Control energy is a lucrative business for electricity companies such as Axpo, Alpiq and BKW. This lucrative business is also getting bigger and bigger. And the system is increasingly reaching its limits, warned a Swissgrid executive in November 2024.

There are said to have been eight incidents in the summer of 2024 alone in which the grid could only be kept in balance with great difficulty. The costs for control energy have therefore exploded over the past year, according to a comprehensive presentation made available to the magazine.

Costs are to be reduced with four measures

This is why countermeasures are now coming into force. Because nobody wants the expansion of solar power to become unaffordable, the electricity industry's profits are being cut and the wrong financial incentives are being provided. With four measures:

Measure 1: Improved weather forecasts. Electricity companies are now obliged to use daily updated forecasts. Swissgrid hopes this will solve the problem.

Measure 2: The supervisory authority Elcom will introduce a price cap in March 2025. For a certain type of control energy, known as secondary control energy. This may only cost 1000 euros per megawatt hour. Secondary control energy must be available on the grid no later than five minutes after it is called up.

Elcom sees the high prices as a "possible consequence of a lack of competition". With only 14 providers, the market is limited. And according to one expert, it is relatively easy to keep prices high by legal means, writes the "Beobachter".

The new "Picasso" procurement regime is also to blame. In the last nine months of 2024, this led to additional costs of around CHF 90 million. In total, electricity customers paid around CHF 100 million more than under the old system, without any additional benefits.

Measure 3: In Switzerland, the costs for grid energy are rising sharply, while they are falling in Germany. A study shows that Germany requires less balancing energy despite the expansion of solar power. In Switzerland, false incentives for electricity companies lead to higher costs. Swissgrid is planning a new pricing model from 2026 which, according to analyses, could reduce the balancing energy required and thus relieve consumers.

Measure 4: Swissgrid's internal industry presentation states that Switzerland will experience a "significant overproduction" of solar radiation in the summer months in future. There are major challenges in integrating photovoltaic systems into the electricity grid.

The Federal Council will therefore adopt a new ordinance in the spring, as confirmed by the Swiss Federal Office of Energy to the "Beobachter". From January 1, 2026, grid operators are expected to be allowed to curtail three percent of the annual production of a solar installation.

This means that grid operators will be allowed to remotely pull the plug on systems at any time if the electricity grid is overloaded on sunny summer days. The new forced shutdowns do not require the consent of photovoltaic system owners and will not be compensated.