A new study released by the Swiss Energy Ministry (BFE by its initials in German) has concluded that subsidies will be needed to encourage increased production of renewable energy in Switzerland.

The study, released 3 July, looked at financing for renewable energy in eight other European countries. It found that these governments provided a range of support to encourage renewable energy in their jurisdictions.

Most of these governments operate a feed-in tariff system. Under this system, utilities are required to purchase a percentage of the electricity they supply from renewable energy sources at a fixed price or tariff. This price is either set by calculating generation costs plus a reasonable profit, or by adding a premium to market electricity prices. The financial burden is borne by consumers, since it is added to the final price of retail electricity charged by utilities.* Other subsidies in these countries included soft loans, investment incentives, and tax breaks.

After examining the existing schemes in the eight European countries, the BFE study concludes that government aid to small and medium sized firms in Switzerland is needed to create an effective renewable energy market. In particular, the study pointed to the feed-in tariff schemes operating in many other European countries as a possible model the Swiss could follow.

A copy of the study can be obtained from the BFE website at http://www.news-service.admin.ch/NSBSubscriber/message/attachments/9003.pdf (German, with executive summary in French).

*This system operates as a cross-subsidy scheme whereby profits from electricity from non-renewable sources are used to cover losses from electricity from renewable resources.