Joint project "The future of Swiss hydropower"

This project combined assessments of operational options and market developments, investment and long-term uncertainty management, and regional impact and sustainability aspects of Swiss hydropower.

  • Project description (completed research project)

    Dropdown Icon

    Hydropower (HP), representing about 60% of the electricity mix in Switzerland, is a pillar of the Energy Strategy 2050, and an important industry of the Swiss economy, in particular in mountain regions, where it also provides an important source of public revenue. However, in recent years the Swiss hydropower industry has suffered from decreasing market prices for electric energy and faced new market dynamics induced by an increasing share of renewable generation and overall European market developments. It is also challenged by new storage technologies and climate change, while the end of water concessions and the ongoing debate about water fees pose regulatory challenges.

  • Aim

    Dropdown Icon

    The main aim of this joint project was to provide a comprehensive economic framework for the evaluation of threats to Swiss Hydropower and develop solutions for the challenges at hand.

  • Results

    Dropdown Icon

    The joint project provides insights along the three research dimensions. With respect to market developments the results highlight the significance of European market developments for Swiss HP; companies need to adjust – but their moving space is limited. With respect to the long term uncertainty the assessments highlight the importance of a more flexible investment approach (managerial flexibility) to counter the capital intensive and long term character of HP. With respect to regional, regulatory and political challenges the analysis of institutional aspects shows the importance of a close and early stakeholder process to foster successful HP projects and the challenges embedded in altering the water fee structure from a cantonal and municipality perspective.

    Overall the results call for a continued adjustment of the existing regulatory hydro framework in Switzerland to the ongoing transformation processes on the electricity markets.

  • Relevance

    Dropdown Icon

    Implications for research

    Beside the individual sub-projects’ insights the joint assessment highlights the importance for cross-topical and comprehensive approaches. With the impact of multiple drivers along different spatial and temporal as well as political dimensions a singular focus on sub-topics is insufficient. Future assessments should follow the approach presented in this joint project to provide comprehensive insights.

    Implications for practice

    The insight from the project highlights the importance of both adjusting company strategies and the political framing in the coming years to ensure a sustainable future for Swiss HP. Companies need to adjust their operation and management to the new market realities. Even if the current payoff for flexibility is low, a prolonged reliance on old decision structures can jeopardise company performance in the volatile market environment. Similarly, the regulatory framing needs to acknowledge the new realities. Given that the current system of water concessions and water fees has been tailored to regulated electricity systems, this process will require negotiations and compromises between the involved parties to obtain an adjustment that is suitable for all parties concerned.

  • Original title

    Dropdown Icon

    The Future of Swiss Hydropower: An Integrated Economic Assessment of Chances, Threats and Solutions

  • Sub-projects

    Dropdown Icon

    The joint project consists of three research projects

    Hydro Power Operation and Economic Performance in a Changing Market Environment External Link Icon

    • Prof. René Schumann, Institut Informatique de gestion, HES-SO Valais; Prof. Hannes Weigt

    Hydropower investments in the perspective of a new energy paradigm (HP Investment) External Link Icon

    • Dr. Franco Romerio-Giudici, Institut des sciences de l'environnement, Université de Genève; Prof. Werner Hediger

    Regional Impact Analysis and Sustainability Assessment of Hydropower External Link Icon

    • Prof. Werner Hediger, Zentum für wirtschaftspolitische Forschung, HTW Chur; Prof. Lutz E. Schlange, Dr. Franco Romerio-Giudici

    Cooperation with other projects from NRP 70

    Joint project "Supply of electricity for 2050: hydropower and geo-energies" Prof. Domenico Giardini, Institut für Geophysik, ETH Zürich