From nuclear phase-out to renewable energies in the Swiss electricity market

Liberalisation and the ever larger share of variable renewable energies (VRES), e.g. photovoltaic (PV) and wind energy, affect security of supply (SoS). We develop a system dynamics model to analyse the impact of VRES on the investment decision process and to understand how SoS is affected. We focus on the Swiss electricity market, which is currently undergoing a liberalisation process, and simultaneously faces the encouragement of VRES and a nuclear phase out. Our results show that nuclear production is replaced mainly by PV and imports; the country becomes a net importer. This evolution points to a problem of capacity adequacy. The resulting price rise, together with the subsidies needed to support VRES, lead to a rise in tariffs. In the presence of a high share of hydro, the de-rated margin may give a misleading picture of the capacity adequacy. We thus propose a new metric, the annual energy margin, which considers the energy available from all sources, while acknowledging that hydro-storage can function as a battery. This measure shows a much less reassuring picture of the country's capacity adequacy.