The extra-high-voltage grid forms the backbone of a secure electricity supply. Swissgrid works around the clock to ensure that it runs stably, safely and securely at all times. We operate cost efficiently and with consideration for people and the environment. We are already planning and building the Contact online >>
The extra-high-voltage grid forms the backbone of a secure electricity supply. Swissgrid works around the clock to ensure that it runs stably, safely and securely at all times. We operate cost efficiently and with consideration for people and the environment. We are already planning and building the grid of the future and making an important contribution to the energy transition.
Helps clients navigate the opportunities and challenges resulting from energy transitions with a focus on scenario thinking and value pools across the energy value chain
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Industry forecasts show that the Swiss energy system is expected to face a growing energy-supply gap in the decades to come. Given the dynamics of the country''s energy-producing industries, utilities and power providers will likely need to increase imports from other countries, such as France. While this may be easy in theory—Switzerland acts as a major hub of power flows—it will not be easy in practice. All matter of hurdles, from evolving regulations to changing energy sources, must first be overcome.
Switzerland currently relies on hydro and nuclear power to meet the bulk of its energy demand. However, it''s unlikely that a reduction in expected energy consumption and a buildup of domestic renewables would suffice to fill the energy-supply gap, which could potentially begin as early as 2030. The gap could be further widened by an accelerated decarbonization agenda, which would see higher shares of electric vehicles (EVs) on the road and increased production of hydrogen by electrolysis. Additional challenges include the growth of renewables, a higher share of intermittent electricity, a limitation on imports, and a potential peak demand-supply gap.
On January 27, 2021, the Federal Council adopted Switzerland''s long-term climate strategy 20501, an energy act made up of ten strategic principles to guide the country''s climate policy in the years to come2. The act focuses on the energy sector and outlines four potential pathways for Switzerland to meet its increasing power-supply needs while achieving net-zero carbon emissions by 2050 and maintaining high energy security3.
The following article outlines four potential pathways that could enable Switzerland to meet its increasing power-supply needs by focusing on the role of the electric grid, factoring in the economic and regulatory feasibility and the time required for implementation.
The Swiss power sector—as well as the broader European energy system—features a relatively stable equilibrium, with loads having been mostly flat for the past ten years. While the energy production mix in Europe is slowly changing from fossil-fuel plants to renewable-power plants, the electricity mix in Switzerland has been nearly carbon-free for decades. In fact, more than 60 percent of Switzerland''s annual energy generation stems from hydropower, with the remaining share of the mix mostly generated by nuclear.
That said, the Swiss energy system is expected to change rapidly in the years to come. The country plans to phase out its remaining nuclear capacity by 2044. Further, Switzerland is a central European hub for power transmission and therefore highly interconnected with the electric grid. In 2019, the country imported, exported, and transitioned around 40 TWh of electricity, with up to 60 percent of total produced power exported in the summer and the same share imported in the winter4.
This high level of interconnection makes Switzerland dependent on power-market developments and regulations on a European level. On this point, the expected power-market evolution is likely to result in an increasing gap between supply and demand; electricity demand could increase by up to 30 percent by 2050 (46 percent if power demand for green hydrogen is included).
With the potential for increased reliance on hydropower somewhat limited, and the construction of nuclear power plants prohibited since 2016, it''s likely that additional capacity won''t close this gap—at least not in a trivial way. When the Swiss electorate voted in favor of Energy Strategy 2050, the correct approach to balancing supply and demand had not yet been determined5. Finding this correct approach is complicated by the ambitious Swiss decarbonization targets; the Swiss Federal Council targets net-zero emissions by 20506. While solar and wind can potentially help resolve this issue, imports are increasingly likely to play a key role.
However, an increase in imports comes with the following challenges:
The largest capacity addition will likely come from solar photovoltaics (PV), which could add approximately 14 gigawatts (GW) of additional capacity by 2050. This is due both to solar PV''s lower levelized cost of electricity (LCOE) compared with wind and the potential offered by Switzerland''s topography (Exhibit 3). While the current societal and political consensus presents regulatory challenges to the large-scale construction of utility-scale solar PV and wind turbines, there remains significant potential for rooftop solar PV.
Even with the anticipated net capacity additions, Switzerland will face a gap between demand and supply (Exhibit 4). This gap could become apparent as early as 2030 with the decrease of nuclear power and continue to increase as demand rises faster than electricity generation from new power sources.
All this said, becoming a net importer raises several questions for utilities and power providers and operators, such as what amount of capacity is feasible, both in terms of availability in the EU market and grid capacity. Determining this requires an understanding of the long-term plans of neighboring countries, as well as the EU in general. The economic implications must also be taken into consideration, such as the direct cost of power and the potential for job creation. There is also the question of security of supply and the associated challenges, both in terms of political implications in the broader EU context and the local determination across cantons (the states of the Swiss confederation).
Finally, an increased dependency on imports will in turn cause the generation model on a broader European level to become increasingly focused on specific countries, resulting in higher cross-border transmission flows (Exhibit 5). Both exports and imports are increasing in magnitude for most countries compared with 2020 as both intra- and interday fluctuations are balanced out.
As part of McKinsey''s work on decarbonizing global business, four scenarios were created to show the trade-offs in shifting power mixes (Exhibit 6).
Our outlooks on Switzerland''s energy future are primarily focused on the reference case, which includes a consensus view on the key drivers of electricity consumption, such as increasing living standards and consumption per capita, electrification across all sectors, and hydrogen uptake. As part of this scenario, EVs reach cost parity with ICE vehicles in the next decade, while hydrogen could become competitive for long-haul trucks in the 2030s. In addition, we also considered the accelerated transition scenario, in which we see a quicker development of the energy transition—for example, a quicker cost decline of renewables or a quicker uptake of heat pumps and EVs.
For more on McKinsey''s energy scenarios, see Kimberly Henderson, Dickon Pinner, Matt Rogers, Bram Smeets, Christer Tryggestad, and Daniela Varga, "Climate math: What a 1.5-degree pathway would take," McKinsey Quarterly, April 30, 2020, McKinsey .
A core concept of Switzerland''s long-term climate strategy for 2050 is that an increase in energy efficiency will enable the country to cope with an increasing domestic-supply shortage, underscoring the need to determine whether current plans and expectations are sufficient to meet the energy demand going forward. In prior instances, when countries faced similar situations (or even under unique circumstances, such as the one experienced in Texas during the 2021 winter storm10) the effects were focused on the short term, such as load shedding or a spike in power prices. However, as industries are allocated peak demand slots, the impact can be consequential on a country''s long-term economic stability.
With this in mind, the following four potential pathways can enable an emission-free Swiss power supply able to meet increasing future demand:
There are two fundamental elements to this pathway: ensuring the operational capacity of the electric grid and structuring a framework of operation for stakeholders.
To ensure the operational capacity to the grid, it will be crucial to accelerate the legal procedures to upgrade and renew the transmission and distribution grid to ensure grid stability. Those may be beyond what is currently considered in capital expansion plans and beyond that which is considered in the European Network for Transmission System Operators Electricity''s (ENTSO-E) ten-year network development plan. Next, to cope with a higher import ratio, the grid must also be updated to meet new requirements introduced by an increasing share of renewable and decentralized power generation.
In addition to the operational expansion required, there is a need for a structured framework for the key stakeholders to consider as they operate. Invariably, as countries consider the long-term plans around power supply and demand, a common solution is to become a larger importer. The primary challenge then becomes how to orchestrate the pathway to ensure that the solution is ultimately one that allows for increased imports.
As expanding nuclear power is prohibited by Energy Strategy 2050, increasing Switzerland''s power supply based on renewables is the only feasible option to close the gap and stay on track for successful decarbonization. Doing so can be achieved by adding hydropower or other renewables such as solar, wind, and biomass—which have some limited but tangible potential if regulation adjusts accordingly.
There is also limited potential for adding other renewable energies, such as solar PV, wind, and biomass. Overall, other than hydro, only 4 percent of current power production stems from new renewables. In 2019, solar PV (particularly rooftop solar) had the largest share in this category (53.0 percent) followed by power from waste (28.0 percent), biogas (9.0 percent), wood (7.5 percent), and wind (3.5 percent).
Last, Switzerland would also benefit from continuously scanning and understanding opportunities that may come from technology advancements over the next several decades. Although cost curves are well understood, the potential of heretofore unseen technologies is not; such technologies could lead to further opportunities to close the power gap.
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