Trystan Casey
Switzerland's electricity market is unique in that it is not fully liberalized, meaning households cannot choose their energy provider and must sign up with their local supplier. The Swiss Federal Electricity Commission (ElCom) monitors electricity prices and can prohibit unjustified price increases. While Switzerland has been relatively protected from drastic energy price hikes, the future remains uncertain, especially with the ongoing war in Ukraine. As of September 2024, the residential electricity price in Switzerland is CHF 0.342 per kWh, with businesses paying CHF 0.277 kWh. This article will explore whether electricity is cheaper at night in Switzerland and discuss the potential benefits and drawbacks of time-based pricing for consumers.
| Characteristics | Values |
|---|---|
| Residential electricity price | CHF 0.342 per kWh or USD 0.407 |
| Business electricity price | CHF 0.277 per kWh or USD 0.330 |
| Residential electricity price as a percentage of the world average | 250.06% |
| Business electricity price as a percentage of the world average | 205.73% |
| Household electricity price as a percentage of business electricity price | 123.47% |
| Small business electricity price as a percentage of big business electricity price | 126.52% |
| Number of local and regional energy companies involved in electricity distribution | 900 |
| Ability of households to choose their energy provider | Unable to choose |
| Local supplier requirement | Yes |
| Electricity price regulator | ElCom |
| Electricity grid operator | Swissgrid |
| Regulator of Swissgrid | Swiss Federal Electricity Commission (ElCom) |
| Currency of tariffs and rates | Swiss francs |
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What You'll Learn
Switzerland's electricity market
Switzerland's electricity sector relies primarily on hydroelectricity, with the Alps providing an abundance of large mountain lakes and artificial reservoirs suitable for hydropower. In 2023, Switzerland's domestic electricity production reached a record 72.1 terawatt-hours (TWh), with hydropower contributing 56.6%. The country has approximately 650 hydroelectric power stations, along with numerous small hydroelectric power plants.
The price regulator in Switzerland's electricity sector is ElCom. It monitors fees for network use and intervenes to prevent unjustified price increases or reduce excessively high tariffs. ElCom supervises electricity tariffs for small-scale consumers who cannot choose their electricity supplier. On the other hand, ElCom does not regulate electricity tariffs for large-scale consumers who have the freedom to select their supplier in the free market.
Switzerland has experienced fluctuations in its electricity consumption and production over the years. In 2021, the country consumed 58.1 TWh of electricity, a 4.3% increase from the previous year. Switzerland typically produces enough electricity to meet domestic consumption and occasionally exports electricity. However, in the winter, Switzerland relies heavily on electricity imports, with the last instance of self-sufficiency during the winter of 2002/03.
The Swiss government has implemented measures to promote renewable energy sources. Feed-in tariffs, such as the feed-in remuneration at cost (KEV), offer cost-based compensation to renewable energy producers. KEV guarantees a price that covers production costs for electricity generated from distributed small hydro, solar photovoltaics, wind power, geothermal energy, biomass, and biogas. In 2021, 18.5% of electricity came from nuclear power plants, while 11.5% came from new renewable energy sources.
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Energy sources
Switzerland's energy economy has evolved similarly to the rest of Europe, but with some delay until 1850. The country can be divided into three distinct periods: an agrarian society, an industrial society, and a consumer society.
The first period, the agrarian society, lasted until the mid-19th century. During this time, Switzerland's small-scale energy economy relied primarily on renewable energy sources such as wood, biomass, wind power, and hydraulic power. The country also used indigenous coal starting in the 18th century.
The second period, the industrial society, spanned from 1860 to 1950. This era was marked by the importation of coal as a primary energy source, as it was not readily available within Switzerland. Water power, both at low and high pressure, also played a significant role during this time.
The third and current period, the consumer society, is characterized by the use of oil, natural gas, and, to a lesser extent, water power generated by turbines. Nuclear energy has also become a significant component of Switzerland's energy mix, with the country ranking eighth among International Energy Agency (IEA) countries in terms of the proportion of nuclear power in its electricity generation.
In recent years, there has been a growing focus on renewable energy sources in Switzerland. Hydroelectric power dominates, representing over 60% of the country's energy mix. Solar power is also gaining traction, with installations increasing in 2021 and 2022, and wind power is another important renewable energy source, although it currently accounts for a small percentage of total energy consumption. Biomass energy, while having some advantages, faces concerns over scarce raw materials, high production costs, and environmental impacts.
It is worth noting that Switzerland's electricity sector is unique in that households are generally unable to choose their energy provider and must sign up with their local supplier. The Swiss government has considered liberalizing the energy market, but previous attempts have failed in referendums.
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Price regulation
In Switzerland, the price regulator in the electricity sector is ElCom (the Swiss Federal Electricity Commission). It monitors the fees for network use and may prohibit unjustified electricity price increases or retroactively reduce excessively high tariffs. ElCom supervises electricity tariffs for small-scale consumers who do not have the option of choosing their electricity supplier. On their invoices, electricity supply companies must indicate the costs for energy, use of the electricity network, and any applicable fees and charges.
Large-scale consumers (those whose annual consumption exceeds 100 MWh) have been free to choose their electricity supplier since 2009. ElCom does not supervise the electricity tariff for these customers on the free market, as they are free to change suppliers if the prices charged by their present supplier are too high.
Swissgrid, which operates in a regulated market under the supervision of ElCom, sets the tariffs for grid usage in accordance with the legal and regulatory requirements. It calculates the grid usage and system service tariffs for its services, which include the operation, maintenance, and expansion of the transmission grid. The distribution of costs by Swissgrid takes place according to usage. Where this is not possible, the costs are passed on to the distribution system operators and the end consumers at the respective grid level based on meter data for services, energy, and corresponding tariffs and billing rates.
Since 2024, electricity consumers in Switzerland have also had to pay the costs for the federal government's power reserves, which include the hydropower reserve, reserve power plants, and emergency power groups.
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Tariffs for households
The Swiss electricity market has not been fully liberalized, meaning households cannot choose their energy provider and must sign up with their local supplier. These suppliers differ between cantons and cities. The price regulator in the electricity sector is ElCom (the Swiss Federal Electricity Commission), which serves as a "price monitor". It monitors the fees for network use and may prohibit unjustified electricity price increases or retroactively reduce excessively high tariffs.
Since 2009, large-scale consumers (those whose annual consumption exceeds 100 MWh) have been free to choose their electricity supplier. ElCom does not supervise the electricity tariff for these customers on the free market, as they are free to change suppliers if prices are too high.
Swissgrid, which operates in a regulated market under the supervision of ElCom, sets the tariffs for grid usage in accordance with the legal and regulatory requirements. The "Grid Usage Model for the Swiss Transmission System" (NNMÜ – CH) is a central electrical industry document for which Swissgrid is responsible. It governs the commercial aspects relating to the usage of the transmission grid and forms the basis for calculating grid usage tariffs. Every year, Swissgrid calculates the grid usage and system service tariffs for its services – the operation, maintenance and expansion of the transmission grid. The distribution of costs by Swissgrid takes place according to usage.
The residential electricity price in Switzerland is CHF 0.342 per kWh or USD 0.407. This includes the cost of power, distribution and transmission, and all taxes and fees.
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The future of energy security
Switzerland is facing significant challenges in terms of energy security. The country imports around 80% of its energy, and public opinion is divided on the best path forward. The Swiss government has long intended to liberalize the energy market, but previous attempts have failed in referendums.
Switzerland has an impressive carbon footprint, thanks to its high proportion of hydroelectric power and nuclear energy. However, the federal government's Energy Strategy 2050 aims to gradually phase out nuclear energy by 2050, which will impact the country's energy security.
The Swiss population has expressed uncertainty about the energy transition, with only 30% supporting the construction of new nuclear power stations and similar reticence towards wind energy. Large-scale solar panels on rooftops or similar surfaces are seen as the most important option, with 63% approval, followed by the expansion of existing reservoirs and hydroelectric power stations, supported by 53% of respondents.
To ensure a secure energy supply, Switzerland must consider the costs, risks, and technological diversity of its energy policy. The country must also address the challenges of decarbonization and reducing its dependence on energy imports. Switzerland is a leader in innovation and competitiveness in energy efficiency, and its cooperation with Massachusetts in research and development strengthens its ability to find smart and marketable solutions to energy challenges.
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Frequently asked questions
No, the price of electricity remains the same throughout the day and night in Switzerland.
The Swiss utilities market has not been fully liberalized, so households are generally unable to choose their energy provider. Since 2009, large-scale consumers have been free to choose their electricity supplier.
As of September 2024, the residential electricity price in Switzerland is CHF 0.342 per kWh or USD 0.407. This includes the cost of power, distribution and transmission, and all taxes and fees.
ElCom (the Swiss Federal Electricity Commission) serves as the "price monitor" in the electricity sector and checks the tariffs billed by Swissgrid, the operator of the transmission grid.
Electricity prices in Switzerland have been impacted by the war in Ukraine and the country's energy mix, which includes hydro, nuclear, solar, wind, fossil fuels, and geothermal sources. Additionally, concerns about future energy security and rising energy costs have put pressure on electricity prices.
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