In the last few weeks I noticed in many discussions that it is assumed that the increased electricity prices of 2023 were an exception. So many people assume that we can expect falling prices in 2024. I tend in the other direction, why and what to do with the reference market price for PV systems, I try to explain here.
How is the electricity tariff made up?
The composition of the electricity tariff is important for further understanding. This has several components and looks like this:
Energy
Price for the pure energy purchase or its production.
network usage
Price for using the transmission and distribution network. This includes the construction, operation and maintenance of the grid as well as the costs for the system services (grid stability)
levies and winter reserve
Included are concession fees to communities, network surcharge for the promotion of renewable energies and from 2024 for winter reserve Development and composition of electricity prices at AEW – Source: AZ & AEW
New fee from 2024: winter reserve
For 2024, costs for the so-called “winter reserve” will be billed to all customers via Swissgrid for the first time. These costs amount to 1.2 Rp./kWh. This serves to finance all measures to counteract a possible “electricity shortage”. One of these measures is the provision of the temporary reserve power plant in Birr and the safety reserves in the reservoirs.
Energy price and its design
In Switzerland, there are several hundred distribution network operators, so there are different starting points for calculating the energy price. On the one hand, there are providers with a lot of their own production capacity, i.e. their own power plants. Such providers are less dependent on fluctuations in the energy market. Providers who have little or no production capacity of their own are heavily dependent on the electricity market. Accordingly, strong differences can occur here. Since we don’t have a liberalized market, you are tied to one provider and cannot switch providers.
Expectations for energy prices in 2024
As explained in the section above, it is primarily those suppliers with little or no production facilities of their own that are likely to increase prices. The price of electricity on the exchange has fallen massively again in recent months, but the purchase of the energy volume for 2024 was already under way. Depending on the situation, the purchase takes place 2-3 years before the actual purchase and accordingly in many places the prices will rise again in 2024, since the purchase was made in the phase with higher market prices.
Energy purchase market as a simplified example – Source: EKZ
Outlook 2025
A massive easing of the situation can be expected in 2025. Suppliers can currently buy energy for
Conclusion
The system for electricity prices in Switzerland seems a bit complex and incomprehensible to many, because the price development at the customer does not directly follow what is happening on the energy market. The impact of the increased electricity prices on the exchange will reach the end consumer with a delay of around 2 years. This is because the energy is procured in advance, in return you get stable prices every year. However, the relief for 2025 should provide a sigh of relief…