The Facilitation of Mini and Small Hydropower in Switzerland: Shaping the Institutional Framework (with a Particular Focus on Storage and Pumped-Storage Schemes)

The electricity sector in Switzerland is undergoing important changes following the liberalisation process and the facilitation of renewable energy technologies. Furthermore, the phasing out of nuclear power will increase the demand for new domestic electricity generation. According to the Federal Energy Strategy 2050, additional generation will have to come from hydropower (currently 57% of Swiss electricity production), including small hydropower (currently 6%, i.e. 3.8 TWh). The small hydropower technology, with an installed capacity between 100 kW and 10 MW (whereby 100 kW till 1 MW is considered to be mini hydropower), is a renewable energy technology (RET) which is well developed. However, the technology still requires further innovation to improve its environmental integration and reduce costs. Small hydropower (SHP) provides electricity with a high energy payback ratio and, generally, with lower production costs than other RETs, aside from large hydropower. SHP can be combined within multipurpose infrastructures such as drinking water and irrigation networks. The institutional framework of SHP is conditioned by multi-level (i.e., Federal, Cantonal and Communal) and cross-sectorial institutions (e.g., within the electricity and water sectors, spatial planning). SHP still has significant potential in Switzerland with the possibility of increasing the production of 2010 by 40-50% by 2050. However, SHP requires appropriate policy instruments for its development within a liberalised electricity market as it is, on average, not yet cost-competitive. In 2009, for example, a Federal feed-in remuneration scheme was introduced. To further develop the SHP potential, the institutional framework has still to evolve. This research was aimed at identifying changes in the institutional framework in Switzerland which can contribute towards developing SHP and increasing the alignment between the technology and its institutions. To this end, the literature on co-evolution and the framework of coherence between institutions and technologies in the case of network industries, such as electricity, were used for the analysis. This thesis contributes towards further development of the coherence framework. Policy instruments are identified that can support the development of SHP. Measures to simplify and harmonise administrative procedures are evaluated, even though their implementation remains difficult. A promising endeavour, however, is to reduce opposition, thus duration of procedures, by developing regional master plans and/or multi-criteria evaluations of projects at the very early project development phase. This enables the pursuit of projects for which all stakeholders are favourable to their realisation. Another required measure is guaranteeing the technical quality of plants which receive the feed-in remuneration by introducing a global efficiency criterion. Finally, other policy instruments are analysed such as green certificates, the feed-in remuneration scheme, and CO2 credits, which will become necessary following the opening of new gas-fired plants. The current institutional facilitation of RETs generating electricity focuses solely on quantity, i.e. kWh. It does not consider the need for flexible production and energy storage to deal with the intermittent generation of some RETs and to align the electricity demand and supply. This is not coherent. The institutional facilitation should take into account flexible production and energy storage, and thus specifically support technologies such as storage and pumped-storage SHP. This research investigated, using an explorative and bottom-up approach, the technical potential of small storage and pumped-storage plants by focusing on existing and planned reservoirs in order to reduce investment costs and environmental opposition. Eleven projects were identified in the Canton of Valais. The potential in Switzerland is evaluated at roughly 200-300 MW for storage SHP plants (today 106 MW is used) and 70-150 MW for pumped-storage SHP plants (today 15 MW is used). In order to further develop this potential, which is complementary to the large storage and pumped-storage hydropower potential, some remuneration instruments are identified. The instruments include adapting the feed-in remuneration scheme to facilitate not only run-of-river plants, introducing requirements for ancillary services from RETs (in addition to large hydropower), and CO2 credits and green certificates depending on the production profile (e.g., peak and off-peak). The identified instruments lead to policy recommendations which would further facilitate the development of SHP in Switzerland, including storage and pumped-storage plants. In summary, the main findings of this research are four-fold: The institutional framework has to further evolve to be aligned with the small hydropower technology. The institutional facilitation of renewable energy technologies must not only focus on the quantity of energy, i.e. kWh, but also on the "quality", such as flexible production and energy storage. Storage and pumped-storage small hydropower could play an important role in producing distributed peak and balancing electricity and in contributing to distributed energy storage. Its technical potential in Switzerland is significant enough to shape the institutional framework adequately. The coherence framework offers a very useful lens to analyse technological and institutional changes in the network industries. However, it still needs to be improved to become more robust and less conceptual.

Related material