Swiss government sets up hydropower reserve in case of need

The government is setting up reserves of energy supply as an insurance policy against possible shortages at the end of the winter. © Gian Ehrenzeller

Switzerland is to set up a hydropower reserve at the cost of consumers to insure against possible electricity shortages at the end of the winter, according to a decree adopted on Wednesday by the government.

Power plants will have to store a certain amount of water in return for payment from December 1 to May 15. The idea is not to be able to ensure supply during this period, only to cope with a possible shortage of a few weeks, the government said in a statementExternal link.

Energy Minister Simonetta Sommaruga told a press conference in Bern that the hydropower reserve is likely to cost between CHF650 ($662 million) and CHF700 million. This charge for security of supply is also intended to compensate the power plants for lost electricity sales.

Sommaruga considers the costs to be justifiable compared to the potential damage caused by a power shortage. Consumer grid costs will rise by around 1.2 centimes per kilowatt hour (KWh).

The reserve is to function as an insurance policy outside the market, the government stressed, to be used only in the event of critical shortages. Its use will be coordinated with the gas, oil and hydrogen reserve power plants that are currently being set up. The government has already taken steps to strengthen the supply of electricity in the face of rising prices and supply problems, due particularly to the war in Ukraine.

A call for tenders will be issued in October. If there are too few proposals or if they are too expensive, the Federal Department of Energy will be able to force power plant operators to set up a reserve against a fee set by the authorities.