Swiss consider new incentive system -- Market choice

Switzerland is hoping to put itself firmly on the European wind energy map with new market incentives from October 2008. Under a draft regulation now under consideration, operators of turbines online from January 2006 will be able to choose between a power purchase price set by government or selling electricity as green power on the open market in the expectation it will be valued at a premium.

Swiss wind energy association Suisse Eole welcomes the regulation, but is concerned the price proposed is too low to drive a significant market. A rate of CHF 23/kWh (EUR 0.15/kWh) is to be paid for the first five years of operation, dropping to CHF 0.15/kWh (EUR 0.10/kWh) for turbines at windy locations, based on comparing performance with a "reference turbine;" if a wind facility generates more than 150% of the reference, the pay rate is reduced. For less windy locations, the higher rate continues for a further two months for every 0.75% that production falls short of the reference basis. In addition, a bonus is paid for production from smaller turbines, starting at CHF 0.06/kWh (EUR 0.04/kWh) for machines rated at less than 500 kW and decreasing for larger turbines. A further bonus of CHF 0.02/kWh (EUR 0.013/kWh) is paid for turbines installed at altitudes exceeding 1700 metres. From 2013, the overall purchase price is to drop by 0.5% each year.

Under the draft regulation, older turbines built before 2006 will continue to receive the current Swiss payment of CHF 0.15/kWh, a rate that has failed to trigger substantial wind development in the country -- capacity has stagnated at just 11.57 MW since 2005.

Suisse Eole says the rates should be higher and the bonus for turbines of more than 500 kW removed. Furthermore, turbine operators should be able to divide sale of their electricity output between the two systems each year, rather than selecting one or other option, says the association. "Otherwise the producer runs the danger of producing power it can't sell."

Increasing demand

In good news for producers considering the second option, demand for green power is increasing in Switzerland. Potential buyers include Zürich city utility Elektrizitätswerk der Stadt Zürich (EWZ), which says its green electricity offering -- introduced in autumn 2006 -- is increasingly popular. The demand is such that it has gone outside Switzerland to procure certified wind power, including from the Irish 25.2 MW Arklow Bank offshore wind farm, the French 6 MW Nibas wind station and seven Austrian wind stations with a combined capacity of 9.25 MW. The utility has set a target of procuring 100-200 GWh of wind power a year by 2018, or 3.6% of its current annual sales. EWZ has also secured a loan of CHF 20 million from the Zürich city council, giving it the flexibility when opportunities arise to buy into wind power plant or sign up for wind electricity supplies.

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