Electricity market and compensatory feed-in remuneration: Ordinance approved

Bern, 17.03.2008 - The Federal Council has approved the new Electricity Supply Ordinance and the revised Energy Ordinance. Both ordinances detail the implementation of the legal provisions for liberalisation of the electricity market for large consumers as well as the introduction of compensatory feed-in remuneration with effect from 1 January 2009. The Electricity Supply Ordinance sets out the conditions governing grid access and remuneration for grid usage. The revised Energy Ordinance contains the tariffs for the compensatory feed-in remuneration for electricity generated from renewable energies and defines stricter requirements for domestic light bulbs.

Parliament approved the Electricity Supply Act on 23 March 2007. Since no referendum had been called by the deadline of 12 July 2007, the Act largely came into force on 1 January 2008. The Electricity Supply Act creates the framework for phased liberalisation of the Swiss electricity market and enhancement of energy security. The amendment to the Energy Act contained in the annex to the Electricity Supply Act introduces compensatory feed-in remuneration to cover the cost of electricity from renewable energies.

Electricity Supply Ordinance (see Fact Sheet 1)

The criterion for electricity market liberalisation is an entitlement to use the electricity grid (grid access). The Electricity Supply Ordinance lays down concrete provisions for the conditions governing grid access and remuneration for grid usage contained in the Electricity Supply Act. End consumers with an annual electricity consumption of at least 100 megawatt hours (100,000 kilowatt hours) can enter the free market once a year in October. The rule is: once free, always free. Once the end consumer enters the free market, the supplier which has been delivering electricity to date is no longer under an obligation to supply to this end consumer.

Basic service provision remains assured for end consumers who do not participate in the free market (households, end consumers with an annual consumption of less than 100 MWh). These consumers benefit from a tariff which must be based on the electricity producer's actual costs and not on market prices.

The Electricity Supply Ordinance was deliberately restricted in scope and lays down only the essential principles, while grid operators are responsible for regulating the technical and administrative aspects (subsidiarity principle).

Revision of the Energy Ordinance

The revised Energy Ordinance covers a package of measures aimed at promoting renewable energies and energy efficiency.

1. Compensatory feed-in remuneration: Tariffs defined, registration possible from 1 May 2008 (see Fact Sheet 2)

The most important element is the compensatory feed-in remuneration for electricity generated from renewable energies (hydroelectricity up to 10 megawatts, photovoltaic energy, wind power, geothermal power, biomass and waste from biomass). From 1 January 2009 an annual charge of up to 0.6 cents per kilowatt hour will be levied on high-voltage grid transmission costs, resulting in up to CHF 320 million per year. The Energy Ordinance defines the principles governing the compensatory feed-in remuneration as well as the remuneration rates (cents per kilowatt hour) for various types of facilities.

New or upgraded facilities can register with the national grid company swissgrid as from 1 May 2008 (for registration details, see Fact Sheet 2).

Producers of electricity from renewable energies who opt out of the new feed-in remuneration can continue to sell their green energy on the free market.

2. Stricter requirements for household light bulbs, and additional regulations (see Fact Sheet 3)

The revised Energy Ordinance imposes stricter requirements on household light bulbs: With a few exceptions, from 1 January 2009 only light bulbs that comply with at least energy efficiency class E may be sold. This will force the poorest-category F and G bulbs off the market.

The amendments to the Energy Ordinance also contain regulations governing competitive invitations to bid for energy efficiency measures, building measures, risk guarantees for geothermal facilities, water heaters, and electricity accounting and labelling.

Electricity Commission (ElCom)

ElCom, the new regulator, is authorised to audit grid usage charges and electricity tariffs and order reductions in unjustified profits by way of compensation. From 2009 it will also arbitrate on disputes related to the compensatory feed-in remuneration.

Enactment

The Electricity Supply Act and the revised energy legislation will come into force in two phases. The first phase, containing all provisions aimed at preparations for market liberalisation and the compensatory feed-in remuneration, will be enacted in early 2008 (1 January/1 April/1 May). The second phase, covering entitlement to grid access (market liberalisation), the compensatory feed-in remuneration and provisions concerning household lighting, will be enacted on 1 January 2009.


Address for enquiries

Marianne Z√ľnd, Head of Communication SFOE, 031 322 56 75 / 079 763 86 11


Publisher

Swiss Federal Office of Energy
http://www.bfe.admin.ch

Last modification 05.01.2016

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