Electricity prices: Why do rates vary depending on suppliers?

To understand it, one must look at the two fundamental components of an electricity bill: energy, the part that covers energy production and purchases, and the stamp, which covers the maintenance and development costs of the electricity distribution network.

Electricity prices: Why do rates vary depending on suppliers?
The realities and constraints faced by GRDs necessarily vary, thereby affecting their pricing. To understand this, one must look more closely at the components of the electricity bill. DR

We reproduce here the excellent synthesis summarizing the issues related to energy prices in Switzerland, a synthesis written by Thomas Pfefferlé and published on the Romande Energie blog.


In Switzerland, the way electricity distribution is organized reflects the great diversity specific to its territory. A small country that, between its multiple mountain valleys, its lakes, its waterways and its different cantons and the numerous supply zones linked to them, must contend with complex territorial and political specificities.

This is evidenced by the 650 distribution grid operators (GRD) who carry out the national mission of securing the distribution of electricity, as well as the energy supply for monopoly customers consuming less than 100'000 kWh per year. And in this context, the realities and constraints faced by the GRD necessarily vary, thereby impacting their pricing. To understand it, one must observe the components of the electricity bill more closely.

Energy price, stamp price

Among them, the energy that is supplied to customers on the regulated market. Its cost will depend on the procurement strategies of each of the GRD, with however a legal framework that changes from 2026. Indeed, the new Electricity Act obliges GRD to purchase energy for their customers in a staggered manner starting three years before delivery.

In addition, a minimum share of 20% domestic renewable energy will have to be included. This will be covered either by renewable production owned by each GRD, or by purchases from renewable production suppliers in Switzerland (for example, photovoltaic producers that are pushed back and sell all or part of their energy on their GRD's network).

The stamp represents the second essential component of the bill, which encompasses the costs borne by the GRD to maintain and develop their network. An important initial consideration applies here: the GRD networks differ, depending on whether they concern and serve urban, peripheral or rural areas.

The three components of an electricity bill: energy, the part that covers production and energy purchases; the stamp, the one that covers the maintenance and development costs of the electricity distribution network. Remaining to add municipal, cantonal and federal taxes.

Thus, the SIL or the SIG, for example, manage urban networks, to which many customers are connected within a dense area. Consequently, the maintenance and development costs of these urban networks prove to be lower, at least in comparison with the typology of networks such as that of Romande Energie or Groupe E for example.

Extending between peripheral and rural areas, the latter are vast and include thousands of kilometers of power lines thus grouping consumers more scattered across the territory. Less dense, they therefore prove to be more expensive to develop and maintain. A cost that is reflected in the stamp component of the electricity bill. "Note also that this part of the bill must cover fixed costs not dependent on the quantity of energy consumed," specifies Romande Energie's energy pricing manager Yves Bonaccorsi.

"In the energy mix behind the socket, the random solar part, which makes up about 20% of the energy consumed by our customers, disturbs our purchase forecasts on the energy market," recalls Yves Bonaccorsi, energy pricing manager at Romande Energie.

Solar, between a sustainable asset and constraints

Another increasingly central aspect to consider is the impact of photovoltaic deployment within the network. While the growth of solar is of course good news in terms of sustainability, it is, however, not without generating new constraints.

For the GRD, this factor impacts both procurement, via the obligation to accept stipulated in the Electricity Act, and network management. To understand this, it is necessary to consider what the new dynamics are and what the new energy flows that transit within the network under the rise of solar are.

"It must be kept in mind that photovoltaic production is logically correlated with meteorological fluctuations," recalls Yves Bonaccorsi. "Therefore, in the energy mix behind the socket, this random solar part, which makes up about 20% of the energy consumed by our customers, disturbs our purchase forecasts on the energy market. These are made over long periods of up to four years in advance," he explains.

Within a much shorter time span, when weather forecasts prove poor, or at least inaccurate, a GRD like Romande Energie must react very quickly to adjust this energy mix over a day and guarantee the continuity of supply. "For example, if sunshine is not present as expected, the decrease in solar production implies having to make last-minute purchases on the markets at a higher price. These costs, which can be considerable, are reflected in the energy portion of the bill," explains Yves Bonaccorsi.

The other constraint linked to solar is that of occasional overloads that can occur on the network. Indeed, during photovoltaic production peaks, GRD find themselves in a situation of energy surplus that must be managed. "And this process is very expensive when we have unplanned surplus energy," emphasizes Yves Bonaccorsi.

The electrical network was not originally sized to push current back up between the different voltage levels. The installation of photovoltaic therefore entails network development and reinforcements in order to be able to ensure supply and guarantee voltage quality, and this of course also has a cost.

The installation of photovoltaic therefore entails network development and reinforcements in order to be able to ensure supply and guarantee voltage quality, and this of course also has a cost.DR

Self-consumption and size of solar installations

To respond to this issue of excess solar energy at certain times, the challenge is twofold and consists of promoting self-consumption as much as possible while making an effort in sizing photovoltaic installations.

While it may be useful to recall that self-consumption relies on simple actions and habits to adopt, favoring the use of appliances during the day, it is not always easy to implement them, notably for tenants - who represent 58% of households in Switzerland - since the equipment provided by property managers does not all allow optimization of their operating settings.

"If sunshine is not present as expected, the decrease in solar production implies having to make last-minute purchases on the markets at a higher price," explains Yves Bonaccorsi, energy pricing manager at Romande Energie.

Another alternative to favor is storage batteries. A solution that remains debatable from a sustainability point of view but which, deployed at the scale of a neighborhood or a building for example, can prove relevant to avoid having to reinject the surplus current into the network.

"This evolution also explains that, to push this dynamic further, collective self-consumption models are developing," explains Yves Bonaccorsi. "These groupings at the scale of nearby buildings or a neighborhood can indeed help to limit, or even avoid, the problems of pushing back current onto the network. Provided that, at these scales as well, residents adopt habits that favor self-consumption."

Finally, regarding the initial sizing of solar installations, a dichotomy persists between the political message and the view of producers. At the level of the political message, it is requested to install the maximum solar capacity on all roofs, without considering what is self-consumable, in order to reduce our import needs during winter periods.

From the producers' perspective, the payback period of a project will depend on the self-consumable share as well as the prices at which the surplus energy will be taken back. Hence the importance of sizing solar installations according to what can be self-consumed.


This article has been automatically translated using AI. If you notice any errors, please don't hesitate to contact us.

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