Insights and Opportunities
Overview: The Swiss market for renewable energy was valued at $926 million in 2007, with imports from the U.S. registering $28 million. The overall renewable energy market is expected to grow marginally in the months ahead due to the bleak economic outlook. However, because renewable energy is a vital industry sector, the Swiss market bears potential for U.S. suppliers to further solidify their position or to penetrate. The term "renewable energy" refers both to conventional hydropower and to other "new" forms of renewable energy to include solar/PV, wood, biomass, wind and geothermal/ambient heat. Today, almost 60% of Switzerland’s overall electricity production stems from renewable sources, with hydropower by far the biggest contributor, garnering a 54% stake.
Production from “new” renewable forms of energy was divided up as follows in 2007: Waste incineration 81.8%; Drainage 9.9% ; Biomass 5.1% ; Wind 1.3% ; and Solar 1.9%.
Although Switzerland is a relatively small consumer of power, it plays an important role in importing and exporting energy in order to provide “peak energy” to neighboring countries through the power supply lines that crisscross the country. In line with the current trend in Europe, Switzerland will be facing an electric power shortage unless there is substantial investment in new generating facilities (estimated requirement is for $20-30 billion) over the next 15-20 years.
As a country devoid of raw materials, Switzerland has no direct access to fossil energy resources and is therefore heavily reliant upon imports. Indigenous renewable energy sources are offering a decisive contribution toward the overall energy production and consumption. Historically, Switzerland's longest-serving and most significant source of renewable energy has been hydropower. But "new" renewable energy sources play an increasingly important role in Switzerland’s energy mix. The long-term potentials of domestic renewable energy indicate that the prospects for electricity and heat are intact. However, chiefly due to economic reasons, it will only be possible to fully utilize the major potentials of photovoltaics or geothermal energy in approximately 30 years. Other renewables to encompass wood and biomass, ambient heat, electricity from small-scale hydropower plants – and to a modest extent -- wind, are available now and are already economically viable.
The federal government bases its future energy policy on the following four pillars: Improvement of energy efficiency;
Promotion of renewable energy sources; Replacement of existing and construction of new large-scale power stations;
and Increased international cooperation.
Switzerland’s companies involved in renewable energy/power are continually seeking equipment to streamline and upgrade operations, and demand will continue to grow for power management systems (IT), switching and distribution equipment. Of the power produced in Switzerland, 40% is generated from five nuclear power plants, and the other 60% is mostly generated from hydropower, the latter of which is distributed to surrounding countries, especially Northern Italy, in order to stabilize the European grid during periods of peak demand. Hydroelectric facilities still have a limited potential for expansion but will fall short of growing demand. Other sources of renewable energy in Switzerland are in their infancy with some efforts to promote solar, geothermal and wind energy.
The three chief renewable energy sources, which bear excellent growth potential, encompass the following:
Heat from heat pumps, solar thermal power/PV, geothermal power and biomass; Electricity from hydropower, wind power, geothermal power and biomass; and Gas and liquid fuels extracted from biomass.
Switzerland is heavily reliant upon oil, importing over 11 tons in 2007. A total of 60% of the total imports was used for motor vehicles, 32% for heating and 8% for kerosene. Switzerland imports more oil than most other industrialized countries (oil is also the source for some 77% of Switzerland’s CO2 emissions). This notwithstanding, Switzerland views renewable energy as a vital component to comply with the Kyoto Protocol on reducing greenhouse gas emissions. Technology and financial incentives are the other pillars of the solution sought by the Swiss federal government. Over $ 163 million in government funds at all levels are allocated per annum for R&D activities. In addition, annual private sector investments allocated basis to spur renewable activities are forecast to lie in the $ 300 million ballpark, thereby driving market demand for equipment and technologies used in renewable energy. U.S. suppliers are encouraged to exploit opportunities in the Swiss market. A fairly large number of enterprises serving the renewable energy market source technology from a numerous U.S. small, medium or large suppliers, which combined garnered a market share of 8% of the overall import market in 2007. In spite of the dampening of the overall market in line with the slowing economy, U.S. suppliers are expected to retain or increase market share due to a more favorable U.S. dollar/Swiss franc exchange rate, which will make U.S. suppliers more competitive than current European suppliers (including those from France, Germany, Denmark, and Finland. Receptivity of U.S. technology is high among Swiss buyers; consequently, the Swiss market bears excellent opportunities for U.S. suppliers to consider.
Emerging opportunities include: Energy efficient heating pumps; Consulting engineering services, including management and financing in renewable energy related projects; Geothermal energy systems; Biomass-based systems and processes for heating purposes, fermentation, etc.; Photovoltaic panels and complete systems, including relevant controls; Wind turbines; Methane gas powered generating systems; Process controls for energy efficiency;
Systems and processes to improve energy efficiency; and Instrumentation and control systems.