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Joint project "The future of Swiss hydropower"

 

This project combined assessments of operational options and market developments, investment and long-term uncertainty management, and regional impact and sustainability aspects of Swiss hydropower.

 News

 

 

The future of Swiss hydropowerThe future of Swiss hydropowerhttp://www.pnr70.ch/en/News/Pages/190612-news-nfp70-the-future-of-swiss-hydropower.aspx6/11/2019 10:00:00 PM
Interim report on the future of Swiss hydropowerInterim report on the future of Swiss hydropowerhttp://www.pnr70.ch/en/News/Pages/170620-news-nfp70-interim-report-hydropower.aspx6/19/2017 10:00:00 PM

Project description (completed research project)

Hydropower (HP), representing about 60% of the electricity mix in Switzerland, is a pillar of the Energy Strategy 2050, and an important industry of the Swiss economy, in particular in mountain regions, where it also provides an important source of public revenue. However, in recent years the Swiss hydropower industry has suffered from decreasing market prices for electric energy and faced new market dynamics induced by an increasing share of renewable generation and overall European market developments. It is also challenged by new storage technologies and climate change, while the end of water concessions and the ongoing debate about water fees pose regulatory challenges.

Aim

The main aim of this joint project was to provide a comprehensive economic framework for the evaluation of threats to Swiss Hydropower and develop solutions for the challenges at hand.

Results

The joint project provides insights along the three research dimensions. With respect to market developments the results highlight the significance of European market developments for Swiss HP; companies need to adjust – but their moving space is limited. With respect to the long term uncertainty the assessments highlight the importance of a more flexible investment approach (managerial flexibility) to counter the capital intensive and long term character of HP. With respect to regional, regulatory and political challenges the analysis of institutional aspects shows the importance of a close and early stakeholder process to foster successful HP projects and the challenges embedded in altering the water fee structure from a cantonal and municipality perspective.

Overall the results call for a continued adjustment of the existing regulatory hydro framework in Switzerland to the ongoing transformation processes on the electricity markets.

Relevance

Implications for research

Beside the individual sub-projects’ insights the joint assessment highlights the importance for cross-topical and comprehensive approaches. With the impact of multiple drivers along different spatial and temporal as well as political dimensions a singular focus on sub-topics is insufficient. Future assessments should follow the approach presented in this joint project to provide comprehensive insights.

Implications for practice

The insight from the project highlights the importance of both adjusting company strategies and the political framing in the coming years to ensure a sustainable future for Swiss HP. Companies need to adjust their operation and management to the new market realities. Even if the current payoff for flexibility is low, a prolonged reliance on old decision structures can jeopardise company performance in the volatile market environment. Similarly, the regulatory framing needs to acknowledge the new realities. Given that the current system of water concessions and water fees has been tailored to regulated electricity systems, this process will require negotiations and compromises between the involved parties to obtain an adjustment that is suitable for all parties concerned.

Original title

The Future of Swiss Hydropower: An Integrated Economic Assessment of Chances, Threats and Solutions

Principal Investigators

Leader of the joint project

  • Prof. Hannes Weigt, Wirtschaftswissenschaftliche Fakultät, Universität Basel

Deputy leader of the joint project

  • Dr. Franco Romerio-Giudici, Institut des sciences de l'environnement, Université de Genève

Sub-projects

The joint project consists of three research projects

Hydro Power Operation and Economic Performance in a Changing Market Environment

  • Prof. René Schumann, Institut Informatique de gestion, HES-SO Valais; Prof. Hannes Weigt

Hydropower investments in the perspective of a new energy paradigm (HP Investment)

  • Dr. Franco Romerio-Giudici, Institut des sciences de l'environnement, Université de Genève; Prof. Werner Hediger

Regional Impact Analysis and Sustainability Assessment of Hydropower

  • Prof. Werner Hediger, Zentum für wirtschaftspolitische Forschung, HTW Chur; Prof. Lutz E. Schlange, Dr. Franco Romerio-Giudici

Cooperation with other projects from NRP 70

Joint project "Supply of electricity for 2050: hydropower and geo-energies" Prof. Domenico Giardini, Institut für Geophysik, ETH Zürich

 

 

Further information on this content

 Contact

Prof. Hannes Weigt Wirtschaftswissenschaftliche Fakultät
Universität Basel
Peter Merian-Weg 6 4002 Basel +41 61 207 32 59 hannes.weigt@unibas.ch

Products of the project