Swiss PV grows but FIT cuts push market towards self-consumption

The Swiss Federal Council announced recently that feed-in tariffs (FITs) for photovoltaic installations in the country next year would be reduced.

Specifically, the government will cut tariffs for solar PV systems up to 29.9 kW, between 30 kW and 1 MW and larger than 1 MW by 23%, 18% and 12%, respectively. However, the 15% bonus on the FIT for building-integrated photovoltaic (BIPV) systems will remain unchanged.

Swiss PV market data

By international standards, the Swiss photovoltaic market is a medium-sized market. According to information provided to pv magazine by Swissolar, Switzerland’s solar energy industry association, current photovoltaic installations in the country have reached about 1 GW. However, of these, about 250 MW were installed in 2014, bringing the market to great attention and raising hopes for a Swiss photovoltaic renaissance, especially when compared to the dwindling amounts of new capacity that has been recently added in Europe’s once leading PV markets.

Around 275 MW of Switzerland’s solar PV capacity is installed via the FIT scheme, which supports both rooftop and BIPV systems, according to Swissolar. By contrast, Swissolar Managing Director David Stickelberger said ground-mounted installations remain irrelevant, with only three systems having been installed in the country so far.

Off-grid, stand-alone systems also remain irrelevant, with less than 1 MW installed, and they are set to remain so, Stickelberger added.

FIT cuts: Implications

Both Stickelberger and Stefan Batzli of the AEE Suisse, which represents more than 15,000 power sector companies, however, are positive that "grid-connected systems with high shares of self-consumption (larger than 25% in households and larger than 50% in industry) will become important."

Stickelberger and Batzli told pv magazine that "the recent FIT cuts go too far," causing two main implications: Firstly, the "quality of PV installations is threatened and only the cheapest projects will be realized," they said. Secondly, recent FIT cuts "will shift the PV market from big to small projects. The one-time remuneration system (as opposed to FITs in place for 25 years) for installations smaller than 30 kW becomes more attractive than FIT. The PV market will probably shrink."

Both Stickelberger and Batzli believe the FIT cuts announced by the Swiss Federal Council "make big investor-driven projects impossible, while self-consumption becomes essential."

Swiss solar PV remuneration policy: innovative or bizarre?

The Swiss government runs a rather bizarre system of remuneration for solar PV. Since January 2013, photovoltaic systems between 2 kW and 9.9 kW are obliged to opt for the so-called self-consumption (Re?tribution Unique, RU) subsidy. The self-consumption scheme remunerates PV installations about 30% of their investment costs upfront, with the sum paid by Swissgrid just a few months after investors have submitted all necessary documents.

Investors who are looking to develop a PV system between 10 kW and 29.9 kW are given the option to decide whether they prefer the self-consumption or the feed-in tariff scheme, while for PV systems larger than 30 kW, the tariff scheme becomes mandatory.

Investors who decide to opt for self-consumption cannot receive any other subsidy payment in the future, although the Swiss Federal Council notes that self-consumption remains profitable because PV owners who consume their self-generated electricity save about 20 centimes ($0.20) per kilowatt hour on the cost of purchasing electricity. Furthermore, the Council says, investors can also sell the excess power to the electricity market. Power supply companies are required to purchase the generated electricity at a price consistent with the market (while the price may vary depending on the year, it currently ranges between 5 to 8 centimes per kilowatt hour).

The above remuneration system for solar energy in Switzerland is rather bizarre in that it obliges households and other small power producers to trade energy on the market while allowing bigger investors piece of mind through the FIT scheme. The usual practice in Europe and elsewhere is the other way round.

Red tape

Despite its reputation for efficiency, SwitzerlandÂ’s PV sector appears to be dogged by red tape. Indeed, the Swiss Federal Council has confirmed that solar PV progress in the country suffers from insurmountable red tape issues. According to the Council, Swissgrid, Switzerland’s transmission grid operator, "receives an average of 900 application for FIT systems per month and given the high demand and limited financial resources available" it is unable to process them in a timely manner, resulting in very long waiting lists.

In October, the Swiss Federal Council revealed that there were 33,000 applications for photovoltaic systems of around 1,800 MW of capacity on the waiting list. The 150 MW of capacity allocated to new FIT PV installations in 2014 reduced the waiting list by about 4,000 applications made in 2011, the Council said, indicating that the list is set to remain very long for the years to come.

However, investors in the 10 kW to 29.9 kW category who are willing to opt out for the self-consumption scheme will have their money paid within three months after submitting to Swissgrid all necessary installation documents, the Swiss Federal Council says.

It appears Switzerland prefers to support small installations in its PV sector, with large-scale production much more prevalent in its hydroelectric and chocolate industries.