Alpiq in: Europe

Hydropower in Switzerland

Grande Dixence dam

The Grande Dixence dam in the Valais

More than half of Switzerland’s electricity production comes from hydroelectric power generation. This situation will also not change with the turnaround in the energy policy. On the contrary: In order to facilitate the planned phase-out of nuclear power, the Federal Council wants to expand hydropower within the context of its Energy Strategy 2050. However, the available potential is really quite limited, and even in the best-case scenario will not be more than 3.2 TWh or around 10% of the current hydropower generation. Whereby, one third of this will come from the upgrading of existing power stations, and one third each from the construction of new small and new large hydroelectric power stations.

Hydropower and the energy turnaround

The upgrading potential of hydropower is closely linked to the social and legal framework conditions within which the upgrading takes place. During the last decade in Switzerland a balanced, fundamentally practicable relationship between the protection of nature and the use of hydropower has been developed that is well supported by the direct democracy. This even permitted the implementation of large energy-economic projects such as Nant de Drance, Linth-Limmern or Lago Bianco. Within the context of the consultation process on its Energy Strategy 2050, the Federal Council intends to put more weight on the interests of the user than was the case to date. The Federal Council has thus suggested restricting the nature conservation, landscape protection and water pollution protection regulations, as well as the previous rights of the public to have a say in the planning approval procedure (Articles 11-16 of the Federal Energy Act that has been proposed for review and Art. 83 of the Federal Supreme Court Act). Whether the Swiss population, which in various referendums have always placed great weight on nature conservation, will agree with this new balancing of interests is still completely open. 

Economic factor hydropower

Hydropower is not only a central pillar of the Swiss electricity supply, but is also an important economic factor, particularly in the mountainous cantons. The cantons and the communities as holders of the sovereignty over the water, lease the raw material water for an agreed period, usually 80 years, for use by the electricity companies. In return they receive concession fees, water rates and tax revenues.

This system, whereby the state regulates and levies the taxes and industry produces, makes sense and is reasonable. But it is increasingly coming under pressure. The cantons and municipalities no longer want to renew the water concessions and wish to take over the direct generation of the electricity themselves. At the same time, federal legislation is causing a rapid increase in the burden placed on hydropower through duties and taxes. The latest examples are the progressive increase in the water rates and the introduction of a renaturation tax. On the other hand, as part of the turnaround in the energy strategy, the federal government is attempting to centralise the expansion planning and to restrict the freedom of action by the cantons and municipalities.

In this area of tension within the energy policy, Alpiq is committed to supporting the maintenance of the most favourable underlying conditions for its annual hydropower production of around 5 TWh (= one quarter of its total production). Whereby its primary concerns are the adherence to market principles, the clear division of responsibilities between the state and industry and a moderate burden of charges on hydropower.

Pumped storage power stations as batteries for Switzerland

The restructuring of the electricity supply infrastructure with increasingly irregular and distributed sources of supply, leads to a European-wide increase in the requirement for storage.  Pumped storage power stations allow spontaneous compensation for the over-production or under-production from wind and solar energy sources and if necessary permit the temporary storage of the electricity for days or weeks. Crucial to the flexibility of these power stations is the size of the available reservoirs. At present a number of pumped storage power stations are under construction in Switzerland, amongst them Nant de Drance. This joint venture, under the management of Alpiq and with the participation of the Swiss Railways (SBB), IWB and FMV, should go on line in 2017.

The Federal Council believes that the pumped storage capacity in Switzerland can be expanded from its current 1700 MW to around 4000 MW by 2020. However, this represents just a fraction of the capacity necessary for the European-wide compensation of the wind and solar generated electricity. With the partial re-definition of the role of pumped storage power stations from being the suppliers of peak-load electricity to becoming guarantors for the turnaround in the energy policy, their business base is also changed. However, the concrete implications of this shift cannot be accurately predicted. They are also dependent on the future political conditions underlying the energy policy.