This week, VSE, an electricity association, said pricey electricity markets will likely lead to even higher Swiss electricity prices in 2024.
Prices rose on average by 27% (+6 cents/kWh) in Switzerland in 2023. In 2024 VSE expects them to rise by a further 12% (+3 cents/kWh). This would bring the average price to almost 30 cents/kWh. The price rise estimates are based on the results of a survey of 135 the association’s members.
The price rises are driven by higher wholesale prices – Switzerland buys and sells significant quantities of electricity in the European market – which have been driven higher by the rising cost of the fossil fuels used to generate electricity and the higher prices paid for emitting CO2. While the price of fossil fuels such as gas have fallen from recent peaks they remain high. In addition, some of the electricity for 2024 was bought in advance before prices fell. Around 75% of electricity supply companies buy electricity on long-term contracts of two to three years.
The costs of government efforts to create a winter electricity reserve in 2022 also now need to be passed on to electricity suppliers and ultimately customers.
However, there will continue to be wide variations in electricity prices across the country in 2024. This is mainly driven by how much electricity a supplier produces itself. Those who buy most of what they sell will increase their prices the most. Four out of five electricity supply companies obtain most of their electricity from the market.
Rising electricity prices are a double edged sword for cutting emissions. On one hand they help to incentivise home owners to install solar panels and home storage solutions. But on the other they reduce the incentive to replace dirty alternatives such as oil heating with electric heat pumps.