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Switzerland prepares for war-induced energy crisis

May 6, 2022

 

Long, warm days in summer may not require much energy, but what happens during the cold winters?

 

The Swiss government this week announced that it is preparing for “severe” power shortages due to an unstable gas supply line from Russia, according to federal officials.

 

In the wake of Russia’s invasion of Ukraine, Swiss government officials have created an energy intervention group working solely on policies that will help Switzerland sidestep energy outages in the coming months. So far, the group has launched a monitoring system with national grid operator Swissgrid to detect early on if Swiss residents will face electric outages.

 

Readying for an energy crisis

 

“The monitoring system is to provide information on the current supply and market situation in Switzerland as well as analyses of self-supply,” the Federal Department of Economic Affairs, Education and Research said in a statement. The updated system will more precisely detect changes in electric supply – those updates will go live by the end of 2022.

 

“In particular, [the grid] is intended to show how long Switzerland could secure its electricity supply without electricity imports,” officials said.

 

In addition, the Swiss government has also asked the country’s gas industry association, Verband der Schweizerischen Gasindustrie (VSG), to form a crisis intervention group that will research alternatives as there is currently very little regulation over the gas market.

 

“Against the background of the Ukraine war and the associated uncertain supply situation, the Federal Council is now nevertheless entrusting the VSG with the task of forming a [crisis intervention organization] for a limited period of one year,” government officials said in a statement.

 

“In order to take account of the reservations expressed in the consultation process, the inclusion of gas consumer representatives is stipulated and the mandate is limited to one year,” they said. The government will likely being appealing to the Swiss public to reduce energy consumption now and ration in preparation for the future.

 

“I can’t speak for everyone in Switzerland, but I’m happy to reduce my energy if it means helping with the war effort,” says Michael Reynolds, an American expat in Geneva. He added “I can’t lie, that it also scares me a bit that we’re facing this.”

 

 

Switzerland’s Energy Minister Simonetta Sommaruga spoke about the crisis at a press conference in Bern.

 

Switzerland to create a financial safety net

 

The Swiss government is also preparing a multibillion-dollar package to prevent the electricity sector from bottoming out during unprecedented price drops, Energy Minister Simonetta Sommaruga said in a press conference last month. Electricity companies will need more financial assets to continue trading electricity on the market, amidst the anticipated roller coaster price fluctuations due to the war. The package would preserve Switzerland’s power supply if the situation becomes a full-blown energy crisis in Europe, the government said.

 

Although terms of the deal are still being discussed, it could be worth as much as 10 billion CHF ($10.7 billion) over a period of four years, Sommaruga. Should a company receive financial aid, it would be on a very controlled and temporary basis. Interest rates would reflect the market and energy groups would only receive aid without dividends.

 

“An uncontrolled failure of a large company could jeopardize the security of supply in Switzerland and trigger a chain reaction,” government officials said in a statement.

 

Swiss energy companies have already begun to sound the alarm, Sommaruga said. So, the draft for an emergency law to provide financial aid to them will be a part of the Swiss parliament’s summer session. Meanwhile, the war in Ukraine rages on.

 

 

 

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