"How far is it fair to make tenants bear the burden of the incentives granted to owners to produce their electricity and thereby make savings, or even profits?" wonders Christian Rod, an energy transition expert and founder of the company CREST.
Photovoltaics have experienced a spectacular increase over the past few years. In a decade, between 2014 and 2024 — the last year for which Swissolar’s official figures are available — installed capacity was multiplied by seven, reaching a total of nearly 6 GW.
This strong growth has not been without consequences for feed-in prices. Even if the magnitude of their change is not comparable to that of photovoltaic production, the trend of recent years is clearly downward. And this is true even when abstracting from the surge in prices observed around 2023 due to the war in Ukraine.
This gradual reduction in purchase prices is provoking many reactions across the political spectrum. Where some proponents of the energy transition accuse electricity companies of making undue profits and call for their nationalization, opponents see it as proof of the failure of that same transition, incapable, they say, of sustainably financing renewable energies.
And what if the truth were more nuanced than these sometimes simplistic speeches suggest? Might this fall in feed-in prices not rather be evidence, by example, that the energy transition is on the right track?
Electricity companies are obliged to purchase the vast majority of the solar energy produced in their supply area — for installations up to 3 MW, which corresponds to a surface area equivalent to about two football fields. They must then resell this energy on the markets or directly to their customers. In order to protect the majority of these customers, who consume less than 100 MWh per year, the legal framework sets an upper limit on the purchase costs that can be passed on to captive customers.
Without detailing the (too many?) scenarios provided by the legislator, this protection mechanism can be summarized as follows: these costs cannot exceed the market value of the purchased energy. This value is calculated and published every quarter by the Federal Office of Energy.
If this average market value serves to cap the resale price, it also acts as a lower limit for the purchase price. Apart from the small leeway offered by relying on guarantees of origin, electricity companies can therefore only offer prices higher than the quarterly values at the risk of incurring financial losses. Those losses are in turn borne by their shareholders, who are very often public authorities.
Even if this development fits perfectly within the legal framework, seeing its purchase price decrease year after year is certainly not the most cheering prospect.
Even if this development fits perfectly within the legal framework, seeing its purchase price decrease year after year is certainly not the most cheering prospect and can raise concerns about the profitability of one’s solar installation. These concerns are legitimately all the greater when the purchase prices were high at the time the installation was carried out.
For this reason, regulated purchase prices also include a protection mechanism for producers. Depending on the size and type of photovoltaic installation, floor prices corresponding to average production costs are provided. The smallest producers, owning an installation with a capacity of up to 30 kW, are guaranteed to receive at least 6 cents for every kilowatt-hour they resell indirectly to other captive consumers through their supplier. And this holds even in summer, when this value is well above the energy market price.
Unfortunately, this protection does not extend to the other end of the spectrum. For installations larger than 150 kW, there is no such mechanism. Such capacities generally do not concern private individuals and are typical of industrial installations owned by operators whom the legislator considers professional producers, responsible for marketing and ensuring the profitability of their energy themselves. And this without the indirect support of households.
While the liberal vision underlying this reasoning may make perfect sense in some cases, it exposes, by extension, many farmers who have covered the roofs of their sheds and barns with photovoltaic panels. And even if local electricity utilities offer them new opportunities for valorization, these farmers could, once again, end up bearing part of the costs.
This indirect limitation of purchase prices can of course be frustrating for producers, as well as for the most ardent supporters of subsidy-based encouragement. But it is important to remember that, similarly to a classical subsidy financed by a tax, a higher purchase price, as some wish, would be directly passed on to the sale price that all consumers must pay.
This reality raises certain questions of social justice. Indeed, how far is it fair to make tenants bear the burden of the encouragement granted to owners to produce their own electricity and thus make savings, even profits?
By linking the purchase price — and therefore, indirectly, the sales price — to the production cost of solar energy, the legislator encourages the energy transition by guaranteeing a minimum profitability.
Thus, by linking the purchase price — and therefore, indirectly, the sales price — to the production cost of solar energy, the legislator encourages the energy transition by guaranteeing a minimum profitability, while ensuring that the profits of a minority are not financed by the majority.
The reduction in purchase prices observed in recent years is in line with the implementation of the popular decision of 9 June 2024. By enabling producers to be remunerated fairly while limiting the impact on consumers’ bills, the current photovoltaic remuneration framework ensures a balance — by definition always imperfect — between economic, social and environmental issues.
The current purchase prices thus demonstrate, by example, that energy that is simultaneously renewable, economically viable and socially just is not a utopia, but already a reality!
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