A new study predicts high costs to make our power grids fit for the future. It is important, however, that not only more is built, but also more intelligently.
The necessary maintenance and expansion of the electricity distribution network will cost up to 3 billion Swiss francs per year up to 2050. The Federal Office of Energy recently dropped this bombshell. It is anyone’s guess whether it was the ponderous, 17-word title or a boredom with bad energy news that led to the study’s unduly deep attention. But their conclusions are tough: it costs over 30 billion francs extra to make the distribution grids fit for the future. In order to finance this, the grid fee, which in normal times accounts for more than half of the electricity price, would have to increase by up to 70 percent.
The large investment requirement is actually no surprise. Rapidly increasing electricity consumption, which will grow from around 60 TWh now to around 90 TWh by 2050, and electricity production, which will increasingly take place on roofs, hills and mountains, make it necessary to expand the grid. Nevertheless, this number must unsettle households and companies that are already suffering from high electricity costs.
Politics, business and society must address this issue that has received far too little attention:
Digitize:Our network infrastructure is outdated and analogue. This applies to metrology, for example, where the lack of “smart meters” does not allow intelligent use of the networks at all. Pressure from politicians and the long overdue liberalization are needed here to get some movement in the sluggish market with around 650 electricity supply companies.
Build optimized:The expansion of the distribution grids falls within the competence of the cantons and communes as well as the respective utility companies. There is a lot going on here: roads are being torn up several times, for example, because (waste) water, gas, telecommunications and electricity infrastructure are not coordinated. A kind of state profit guarantee on grid construction also means that too much is being built. And last but not least, the potential of batteries, which can relieve the grid, is hardly used. Coordination and incentive systems are therefore needed so that not only more is built, but better. After all, regarding the profit guarantee, the Council of States has provided solutions in a currently pending law – it is now up to the National Council to confirm these.
Create cost truth:Almost unnoticed, billions are redistributed in the network area, because the network fee paid and the costs incurred only partially match. There is also no incentive to build electricity production where there are already grids. An innovative redesign of the tariff system is therefore needed. On the demand side, the grid fee should not only depend on the amount of electricity purchased, but also on the time of purchase and the dimensioning of the necessary connection according to the user. On the supply side, giving preference to expansion close to the existing infrastructure should be considered. The power grids are a topic that receives too little attention in the current debate. For the power supply of the future, a considerable expansion is in store for us. But it would be important not just to build more, but to build in an optimized way. It takes more brains instead of just more copper.
Alexander Keberle is a member of the management board at Economiesuisse and is responsible for infrastructure, energy and the environment.
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