"The transformation of the system is not an obstacle, but an opportunity provided that it gives electricity suppliers the freedom to assert themselves in the face of competition without being smothered by unnecessary regulations," reminds Jan Flückiger, public affairs manager at AES.
The electricity agreement, currently being negotiated as part of the Bilaterals III, is a central element for the Swiss economy, serving as a guarantee for our cross‑border import and export capacities. These are particularly important for Switzerland during the winter season.
The agreement also ensures participation in the European electricity markets, which will lower prices, notably those of adjustment and balancing energy, while offering new opportunities for Swiss hydropower. It furthermore guarantees access to central coordination and planning bodies, thereby facilitating the maintenance of grid stability while reducing its costs.
Continuing as before is therefore no longer possible, because Switzerland is increasingly being excluded from the relevant bodies, platforms and markets, while cross‑border capacities are shrinking. In short: without an electricity agreement, Switzerland's power supply will become less secure and more expensive.
The electricity agreement includes a full opening of the market, meaning a freedom for all customers to choose their electricity supplier themselves. Until now, private customers as well as SMEs whose consumption is below 100 MWh remain "captive" to basic supply.
The principle of this model is simple: to permanently guarantee households and small businesses a supply of electricity at regulated tariffs, independent of short‑term market fluctuations. The customers concerned are tied to their local supplier and cannot change freely.
On the surface, this system aims to protect customers from market price fluctuations. In reality, it mainly protects basic supply providers: they retain their customers regardless of their level of innovation, their efficiency or customer satisfaction. This protected monopoly environment shields them from competitive pressure.
Prices are certainly more stable, but they also largely follow — usually with some delay — market developments. This was clearly demonstrated during the energy crisis of 2022 and 2023. For the basic supply providers themselves, this model is also becoming less and less attractive: regulatory density is increasing while the profit margin allowed by regulation is decreasing.
Some today argue that, without a guaranteed customer base under basic supply, no one would invest in the energy transition or in renewable energy production in Switzerland. This argument does not hold up in many respects.
Our neighbors liberalized their markets long ago and are developing renewable energies at a much faster pace than Switzerland.
Our neighbors liberalized their markets long ago and are developing wind, solar and hydroelectric energy at a much faster pace than Switzerland. Support for renewables remains perfectly possible even within the framework of an electricity agreement. There is a wide range of support instruments compatible with European law, whether investment contributions, feed‑in payments, contracts for difference, PPAs or capacity markets. The only thing that will no longer be possible is unilateral financing of these subsidies at the expense of a "captive" residential customer base.
Swiss energy suppliers invest considerable sums in renewable electricity production and already market a large portion of it on the market (80% of the volumes sold in basic supply). The main obstacle to additional domestic investments is not a lack of capital, but the length of procedures, opposition from environmental and landscape protection groups, and organized resistance at the local level, particularly when it comes to wind farms.
The transformation of our energy system requires considerable investments as well as long payback periods; these are indisputable facts. It requires investing not only in renewable energy production facilities, but also in power grids, storage infrastructure, reserve capacities and the stability of the entire system.
The current geopolitical situation further aggravates the situation. The desire to reduce our dependence on fossil fuels, as well as the growing need for resilience in a context of global crises, makes these investments all the more urgent. But is it really the right solution to have households and small businesses — who cannot freely choose their supplier — finance a large part of these investments? Wouldn't it be more appropriate for society and the economy as a whole to finance this transition?
A liberalized and efficient market, integrated into the European electricity market and therefore more liquid, generates lower economic costs.
In my view, the answer to this question is clear. We should therefore steer the debate towards how to ensure this financing at the level of society as a whole, and how to effectively organize the economic promotion of renewable energies. We must stop subsidizing electricity production at times when it has virtually no value — for example during the summer midday period — and concentrate support on additional production, ideally dispatchable, during the winter period.
Ultimately, there must be an honest political debate about the value we, as a society, place on a secure, clean and affordable energy and electricity supply.
Another obvious observation: a liberalized and efficient market, integrated into the European electricity market and therefore more liquid, generates lower economic costs than an isolated approach based on protected monopolies. Fears related to competition are therefore unfounded.
One only needs to look to Germany or Austria to see that municipal utilities, generally publicly owned, are doing very well — often even better than before the market opened. The number of customers who regularly change supplier remains limited. Companies that offer attractive deals to their customers have nothing to worry about. On the contrary, I am convinced that innovative business models, such as regional and renewable electricity offers, would sell well, particularly in Switzerland.
In a liberalized market, it is also much easier to integrate decentralized photovoltaic generation. Models such as aggregation within self‑consumption schemes (RCPv) or local electricity communities (CEL) would be possible in an open market without complex regulation.
Added to this would be new business models for aggregators, which would relieve customers of optimally marketing the electricity they produce, in the interest of the grid and the system. Again, if you look at neighboring countries, they are already much further advanced in integrating renewable energies.
However, the benefits of a liberalized market can only fully materialize if the political framework is adapted accordingly. On this point, the Federal Council and Parliament still have their work cut out.
It is not acceptable that the market be liberalized while regulations inherited from a monopolistic era continue to apply.
It is not acceptable that, on the one hand, the market is liberalized and electricity suppliers must succeed in finding their place in it, while on the other hand overly extensive bureaucratic regulations inherited from a monopolistic era continue to apply. The AES acknowledges that a political majority wishes to maintain a basic supply for residential customers and small businesses. However, this must be designed to be as light and market‑oriented as possible. In particular, any "Swiss finish" should be avoided.
If customers permanently have the option to change supplier, it is no longer necessary to maintain detailed prescriptions or exhaustive price regulation. It is enough to require electricity suppliers to offer a product with stable annual prices communicated in advance. Companies should then be left to determine how to achieve this in order to remain competitive and to offer a genuinely attractive basic supply. One cannot, on the one hand, open the market and, on the other hand, over‑regulate it.
The decisive question is therefore not whether opening the electricity market endangers the transformation of the energy system, but rather how we wish, as a society, to finance this transition — and how we can take advantage of market opening and competition to give new momentum to renewable energies. Abandoning certain practices from another era will be an important first step.
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