Water power is the backbone of Alpine countries’ energy supply. Despite its important role in Europe’s energy shift, further development of hydroelectric infrastructure in Austria and Switzerland is on hold.
On sunny, windy summer days in Germany,
when millions of solar panels soak up the sun and wind turbines run at
full speed, the German electricity network can’t cope with the
overcapacity. Especially on Sundays, production often exceeds demand.
The result is low prices, at times even negative ones; which means
customers get paid for buying electricity.
Europe’s energy market is liberalised. What happens in Germany
affects all its neighbours. Swiss hydropower stations are unable to
compete under these conditions. The heyday of Swiss water power is over.
The energy source that covers 55 percent of the country’s energy
supply faces drastically reduced profitability, as electricity prices
have sunk 20 percent again compared to the preceding year.
In the light of this market environment, the biggest Swiss energy
producers Alpiq, Axpo, BKW and Repower are less willing to invest in
optimising and enlarging their infrastructure. Repower has announced a
35 percent cut in investments in the next 10 to 15 years.
Andreas Meyer, media person at Alpiq, told IPS that the massive
subsidies for renewable energy have destabilised the market, putting in
question the profitability of hydro and thermal power stations and
blocking further investments. Currently, Alpiq runs a divestment
programme. The company is worried that the price deterioration will
Further development potential of Swiss water power is disputed. While
the government estimated four to five terrawatt hours, the World
Wildlife Fund assessed only 1.5 terrawatt hours. In any case, the
potential is quite low.
Nevertheless, Switzerland subsidises small hydropower stations with a
capacity of less than 10 megawatt massively, irrespective of their
efficiency and the ecological damage they may cause.
Due to the subventions, small water power projects have become cash
cows. The WWF demands that these subsidies be stopped. “Building new
power stations at previously unspoilt waters is absolutely silly,” water
expert at WWF Switzerland Christoph Bonzi tells IPS. Today, 95 percent
of Swiss water is used for energy production.
For once, conservationists and the leading energy suppliers take a
common stand on the Swiss subsidy model that favours small hydropower
projects. “Isn’t it absurd that subsidising new renewable energy leads
to a situation where even other systemic technologies need to be
subsidised?” says Werner Steinmann, spokesperson for Repower.
The boom of solar and wind energy in Europe has lead to increased
demand for electricity storage, as both energy sources are unsteady.
Germany, Switzerland and Austria agreed last year to increase the
capacities of pumped-storage hydropower plants in a concerted effort.
Several such plants are currently being constructed in the Swiss
Alps. Whether these investments will finally pay off is more uncertain
Some Swiss energy companies don’t oppose all state subsidies for
renewable energy. Repower’s biggest shareholder is the Canton of
Grisons. Recently, the canton’s chief councillor Mario Cavigelli broke a
taboo when he demanded subsidies even for electricity produced in big
hydro power plants. Cavigelli asked for cutting money granted to small
Within the energy sector, that demand is disputed however. Axpo’s
media person Daniela Biedermann says that it can’t be a solution to
solve the mistakes of the current subsidies regulation with additional
subventions. “We need to discuss how to implement the new renewable
energies into a market-oriented system instead,” she told IPS.
The Swiss Association for Water Management (SWV), which represents
the industry, demands that subsidies for hydropower may no longer be
limited to small projects and that instead the relevant criteria would
have to be efficiency, an aspect that the current subsidy system
completely ignores. The SWV wants promotion for those projects that
produce the most electricity per subsidy-dollar.
Conservationists are less happy about the various further demands
voiced by the water power industry though. In the name of “national
interest”, water power companies have been trying to tap even nationally
protected waters. Instead of using even the last drop of water for
electricity production, the WWF prefers to increase energy efficiency.
Just across the border, the Austrian hydropower industry struggles
with similar problems. Currently, about 60 percent of the country’s
electricity supply is covered by domestic water power. The industry once
intended to increase its capacity by seven terrawatt hours until 2020.
“We surely won’t be able to meet up with our expectations,” says
Ernst Brandstetter, spokesperson of Oesterreichs Energie, which
represents the interests of the Austrian electricity industry. According
to Brandstetter, only an additional four terrawatt hours until 2025 are
realistic. “Unfortunately, many projects are on hold. The industry is
about five years behind its development plans.”
Brandstetter explains that regarding water power stations, the
current market situation is characterised by acute insecurity. “Many
planned projects are economically no longer justifiable.” Oesterreichs
Energie doesn’t demand subsidies. It however wants a more
“Most worrying is that even storage projects are about to become
unprofitable,” Brandstetter adds. “Along with the electricity networks,
pumped storage hydropower plants are the most important enablers of a
renewable energy future.”
Ernst Brandstetter demands a stop to market distortions by
introducing a European market design with rules granting all energy
sources fair competitive conditions.
For Switzerland’s and Austria’s hydro power industry, much depends on
developments at the European Union. On that level, a consultation on
Environmental and Energy Aid Guidelines 2014-2020 is currently under
way. Whether or not Alpine hydropower may profit from the new guidelines
will be seen next spring.
This report was first published here by IPS Inter Press Service.