Showing posts with label Switzerland Power Market Trends. Show all posts
Showing posts with label Switzerland Power Market Trends. Show all posts

Friday, July 27, 2018

Understanding the Switzerland Power Market: Ken Research

Switzerland in 1999 ratified the new Swiss Electricity Market Law. The primary aim of this law was to ensure that the power/electricity generation sector moves from a regulated to a deregulated environment. Switzerland is one of the few countries that does not produce much of fossil fuels and relies heavily on renewable forms of energy especially nuclear power and hydro projects. Although presently, Switzerland is a net importer of power to meet its internal demands however, the electricity generation has picked up pace in the recent years recently which has been forecasted grow in the future at a very fast pace.

According to the study, ‘Switzerland Power Market Outlook to 2030, Update 2018 - Market Trends, Regulations, and Competitive Landscape’, some of the companies that are currently operating in this segment includes Axpo Holding AG, BKW AG Alpiq Holding AG. The competition in the power generation sector within companies is very stiff. Only a few of the companies hold majority of the market share because of their ability to invest huge amount of money and also possess the technological expertise to produce electricity at the lowest cost. They also have the potential to make profits while simultaneously incurring huge costs. All these factors make the entry of new players practically impossible. This has resulted in the market to be highly consolidated. The power market has other players but they have significant influence over the market.

Oil is the largest contributor in terms of sources of electricity generation which is followed by nuclear sources, hydroelectric power plants, and natural gas plants.

The regulatory landscape of the energy production in Switzerland consists of Swiss Federal Office of Energy is the centre concerned with issues of energy supply and energy use at the Federal Department of the Environment, Transport, Energy and Communications. This body creates and implements the entire action plan concerning energy production and is also responsible for increasing the overall share of renewable sources of energy which would ultimately lead to reduction in the CO2 emissions. Most of the energy generated is used as a fuel in order to ensure vehicular movement which would be followed by electricity.

There are 2 variations of prices of electricity that prevail in the Swiss energy market. These include the wholesale and the retail prices. The wholesale electricity is traded over the counter and therefore likely to be below the market prices. A very small proportion of the total electricity consumption goes in the form of wholesale electricity generation. Retail prices are market prices. The recent trend that has been witnessed in the Retail Prices segment is an increase in the prices. This trend is expected to continue for the next couple of years which varies upon the location of the supply station from where the electricity is being supplied.

The overall Swiss power market is expected to grow in the coming years. The forms of energy shall majorly shift to either nuclear or hydroelectric projects due to the growing emergence of renewable forms of energy. The competition is very stiff with very few companies holding majority of the market share which gives the benefit of economies of scale. The new entrants need to competitively price their services in order to ensure that they are able to compete with existing giants.

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