Switzerland has a high proportion of renewable energy in its electricity mix. For decades, hydropower has accounted for around 60 percent of domestic electricity production, and it thus performs well by international comparison. On the other hand, Switzerland is way behind in Europe when it comes to the share of renewable energies such as photovoltaics and wind power. Despite a good starting position, there is still a long way to go to achieve a 100 percent energy supply from renewable sources, as stipulated in the Federal Energy Strategy 2050.

From a physical point of view, the provision of electricity from renewable energy sources should follow two premises: firstly, renewable energy should be generated where resources are most available (e.g. in terms of hours of wind and sunshine), and secondly, electricity should be produced where it is consumed. This is also to avoid putting even more strain on the already well-utilised power grids. This poses a dilemma for Switzerland.

Expansion of domestic production remains key

To implement the Energy Strategy 2050, Switzerland needs both new plants and the expansion of existing ones for domestic renewable energy use. Energy generation from hydropower, wind and photovoltaics in particular is of great importance. Such projects need to reach a minimum critical size in order to be competitive on the international market. However, the planning and approval procedures are often very lengthy, and therefore need to be speeded up and simplified. This applies to both large and smaller installations, as this is the only way to achieve a certain level of investment security.

The use of additional resources requires investment and more grid capacity

The availability of resources is also a challenge. Particularly when it comes to constructing large-scale photovoltaic and wind power plants, Switzerland is at a disadvantage compared to southern and northern Europe. Firstly, because it has fewer hours of sunshine and wind on average, and secondly because it has limited space suitable for building. This makes it more difficult to realise large-scale projects with lower specific costs.

It also lacks access to an energy resource that is becoming increasingly important: offshore wind energy. Many Swiss energy suppliers and institutional investors are therefore already investing in promising foreign projects for this profitable technology. Electricity for the domestic market is also increasingly being generated abroad. Rising imports in turn require the further expansion of grid capacity. Ideally, when it comes to renewable energy, Switzerland would combine the increased expansion of domestic production with targeted investments abroad.

The high financing needs for the Energy Strategy 2050 should also be mentioned. The private sector is making an important contribution here. While higher electricity prices may be another driver for achieving the energy strategy targets, rising interest rates are making borrowing more expensive. Supply bottlenecks and increased material prices are also creating major challenges. Swiss Life Asset Managers is nevertheless confident that the benefits of the energy transition are motivating for anyone who wants to help shape a sustainable future.

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