Large hydropower receives CHF 21.4 million in market premiums
Three recipients are supported for shares in two plants. Almost four-fifths of the funding pot remains untapped.
Three recipients together receive CHF 21.4 million in market premiums for electricity from two Swiss large-scale hydropower plants. The Federal Office of Energy (BFE) has examined and ruled on the claims for the 2025 financial year. The support announced on 2 November compensates for production whose revenues did not cover the recognised costs.
The number of recipients is not the same as the number of power plants. According to the fact sheet, three holdings in a total of two plants, or plant companies, are supported. The BFE does not publish which companies stand behind them or how the amount is distributed among them. The Energy Promotion Ordinance provides for aggregated figures in the public announcement.
Only part of the funding pot is needed
Around CHF 100 million is available for the market premium this year. At CHF 21.4 million, a good fifth of it is claimed. In the previous year, around CHF 19.6 million had also gone to three recipients for the 2024 financial year. The new commitment is thus CHF 1.8 million higher.
According to the BFE, the low uptake is linked to high electricity prices. For calendar year 2025 it cites an average spot market price of CHF 95.33 per megawatt-hour. Averaged over the years 2017 to 2020, the figure had been CHF 48.40. A high market price makes it easier for plants to cover their costs through electricity sales and thus reduces the need for this support.
Even so, the annual average is not enough to judge the profitability of an individual plant. For the calculation, the BFE values its hourly production at the respective hourly prices. That means when a plant generates electricity also counts. The volume of electricity now supported amounts to 2142 million kilowatt-hours, around 5.7 percent of Swiss hydropower generation in 2025.
Other revenues also count in the review
The market premium is aimed at large hydropower plants with more than ten megawatts of capacity. Entitled is whoever bears the risk of uncovered generation costs. That can be an operator or owner, but also an electricity supplier with a corresponding purchase agreement.
The BFE examined the applications together with its mandated enforcement body AFRY Schweiz. Recognised costs are compared with revenues. The contribution is capped at one centime (Rappen) per kilowatt-hour. It therefore does not cover an arbitrarily large gap between costs and sales revenue.
Since the ordinance was revised at the start of 2025, additional revenue opportunities have been taken into account. These include system services, meaning services for operating the electricity system, as well as forward trading, the winter reserve and guarantees of origin. On the cost side, company-wide services and the marketing of the electricity are added. The support is therefore not determined solely on the basis of an exchange price.
Revenue from the winter reserve matters for the delimitation: it enters the calculation before an uncovered gap is established. The market premium is not an additional payment for a company taking part in the reserve, but offsets remaining uncovered costs under the promotion rules.
Electricity customers finance the compensation
The market premium is financed through the grid surcharge fund. Electricity customers pay a grid surcharge of 2.3 centimes per kilowatt-hour consumed. Of this, 0.2 centimes is earmarked for the market premium under the Energy Act. The larger fund also finances other instruments for promoting renewable energies.
For a household with an assumed annual consumption of 4500 kilowatt-hours, the total surcharge comes to CHF 103.50. In this example, the share legally earmarked for the market premium corresponds to nine francs. That is not an additional bill on top of the surcharge. Nor does it follow that exactly these nine francs flow in full to the three recipients: the available funds are not exhausted this year and are used elsewhere in line with the legal requirements.
A basic-supply deduction is intended to prevent double funding. Electricity that could have been sold at generation cost in the basic supply does not entitle the holder to the market premium. According to the BFE, two of the three applicants had no such sales; the third was able to sell 0.269 gigawatt-hours accordingly.
The next submission deadline is the end of May 2027
For new, substantially expanded or renewed hydropower plants there are other funding routes, including the sliding market premium as an alternative to investment contributions. The CHF 21.4 million now granted belongs to the instrument for existing plants.
The rulings can be appealed to the Federal Administrative Court within 30 days. For claims from the current 2026 financial year, the next submission deadline is 31 May 2027. The time-limited instrument runs for financial years up to 2030; the final payment is planned for 2031.
Sources
- BFE: Market premiums 2026, media release of 2 November
- BFE: Fact sheet market premium 2026
- BFE: Market premium for large hydropower
- Lead image: Nikater, Grimselsee, Wikimedia Commons – public domain
- Article image: Daniel Reust, Grimsel construction site 2023, Wikimedia Commons
- Article image licence: CC BY-SA 4.0
