Swiss
energy companies are determined to turn the country into a ‘battery
for Europe’. Vast investments are made in big-scale water power
projects. But it is not certain they will eventually pay off.
With the decision for a nuclear shutdown, the spotlight in
Switzerland and Germany has switched to renewable energy sources. In
Germany there’s a massive boost to solar and wind energy
production, while Switzerland’s energy companies focus on
increasing their storage capacities in the Alps.
About 11
percent of Europe’s electricity flows through Switzerland. The
Swiss electricity industry stresses the advantages of the country’s
central location in Europe and its topography. On the European energy
map, Swiss mountain lakes could function as a huge battery for
unsteadily generated renewable energy, and generate high revenues.
Natural
and artificial mountain lakes are an essential component of
Switzerland’s energy supply. Water power makes up 57 percent of the
country’s electricity production. Some of these lakes aren’t just
natural water reservoirs though, but serve as basins for
pumped-storage hydro power plants (PSPs).
The
system is simple and has long been a good business. Throughout the
day, cheap, spare electricity is bought on the market and then used
to pump water from a lower reservoir to a basin further up the
mountain. At times when demand for electricity is high, stored water
is released and drives turbines that produce electricity, which can
then be sold on the market for a higher price.
PSPs
function like huge batteries.
Currently,
11 such plants are running in Switzerland with a combined 1400
megawatt capacity. Three other projects are under construction, to
increase Swiss pumped-storage capacity to 3500 megawatts by 2017. Two
more PSPs are being planned: ‘Grimsel 3′ at the Grimsel Pass in
the Bernese Alps and ‘Lago Bianco’ at the Bernina Pass in
Grisons.
“The
symbiosis between nature and technology has defined the character of
this landscape,” writes the Grimsel region’s tourism agency.
Ernst Baumberger, press officer at the regional energy company KWO
looks at Grimsel through two lenses: while praising the region’s
beauty, Baumberger points out that a plenty of precipitation,
glaciation, rock as building ground and the immense altitude
difference make it ideal for water power use. KWO put its first power
plant at Grimsel in operation 80 years ago.
The
company recently was licenced to implement its 1.2 billion Swiss
francs project ‘KWOplus’, including the construction of a second
PSP (‘Grimsel 3′). The plant will have a 660 megawatt capacity,
which is about the power of an average Swiss nuclear plant. The plan
is controversial, both politically and economically.
“Switzerland
doesn’t need any additional PSPs. There’s neither a lack of
batteries, nor a grid stability problem,” argues Jürg Buri,
managing director of the Swiss Energy Foundation (SES). He says that
no country operates as many flexible power stations as Switzerland.
Environmental
organisations say that mainly cheap electricity from coal and nuclear
plants is used for the pumping and that during the process, about a
quarter of the energy is lost. Even worse, at windy times, PSPs keep
coal and nuclear plants running.
There’s
nothing green about pumped-storage hydroelectricity anyway. “If
today’s PSPs were supplied with clean energy, that business would
be unprofitable,” Buri says. “The revenues of the peak current
wouldn’t make up for the purchase price and the energy lost for
pumping.”
According
to the licence, KWO is obliged to run Grimsel 3 with as much
renewable energy as “economically and technically possible.” No
fixed share was defined however. KWO’s Baumberger stresses that in
the long term, the company’s PSPs should run solely with green
electricity. “However, the primary criteria will remain the
profitability,” he adds.
While the
energy company praises Grimsel 3 as an important contribution to the
security of energy supply for the country, Jürg Buri claims that the
pumped-storage business further strains transmission lines. “In
fact, to run Grimsel 3, even more lines would have to be built,
something which people often forget about.”
KWO is
currently busy preparing the necessary building applications. In a
next step, the management board will discuss the profitability
prospects and decide on the investments. “Concerning Grimsel 3, the
shareholders are a bit cautious,” KWO’s spokesperson says. “They
fear that with the current electricity prices, the investments may
not pay off.”
The Swiss
Association for Water Management (SWV) views investments in PSPs as
risky and their profitability as volatile. At the Bernische
Kraftwerke (BKW), which holds half of KWO’s shares and manages
electricity trade, the media officer declines to comment on the
prospects of pumped-storage hydroelectricity. It’s no secret though
that Swiss energy companies are deeply concerned by the volatile
electricity price and the declining price difference between peak and
off-peak current.
That
difference is essential for the PSP business model, which relies on
providing expensive peak current, especially at noon time. Nowadays,
subsidised wind and solar energy from other European states are
conquering that market, challenging and flattening the prices of peak
current and thereby reducing the profit rates of PSP-based energy
providers.
SES’s
Jürg Buri is sure that Switzerland’s ‘battery boost’ will soon
come to an end. “Neither Lago Bianco, nor Grimsel 3 will be built.
The economic risks are too high.” He stresses that both projects
primarily target the European market. “Don’t forget that besides
decreasing electricity trade revenues, Swiss PSPs are further
challenged by the increasing number of flexible power plants in
Europe.”
Ernst
Baumberger explains that his company has different options to move on
with Grimsel 3. “If the situation on the electricity market
worsens, we may split the building of Grimsel 3 in various stages. At
each stage, market developments could be analysed before moving on
with construction.”
In
contrast to environmental organisations, KWO’s Baumberger remains
optimistic. He stresses that in the light of booming wind and solar
energy in Europe, the demand for further storage capacities will
grow. “What Switzerland so far offers in terms of energy storage is
nothing but a drop in the ocean.”
While
opinions on the future of Swiss pumped-storage hydroelectricity
differ sharply, one thing seems sure: the industry’s prospects lie
in the hands of European, not Swiss politicians and businessmen.
This report was first published here by IPS Inter Press Service.
Posts
