Switzerland plans freedom of electricity: lessons from Britain's crisis!

Switzerland plans freedom of electricity: lessons from Britain's crisis!

Switzerland is currently faceting its energy market and plans to give citizens the freedom to choose their electricity supplier. Currently, customers in Switzerland are forced to stay with the local provider, often the local electricity company. With over 600 basic suppliers, there are a large number of providers, but consumers still lack freedom of choice. A proposed electricity deal with the EU could promote competition and lower prices, which would be important for consumers. The example of Great Britain, which is faced with the consequences of deregulation, could offer valuable lessons NZZ reported.

In Great Britain, the liberalization of the electricity market led to serious problems. The experience of deregulation there is instructive: in 2021, 30 out of 70 providers went bankrupt, resulting in around 4.5 million Brits losing their electricity provider. In extreme cases, taxpayers had to bear the financial consequences of the insolvency of large providers such as Bulb Energy. The situation escalated further when the company Rebel Energy, founded in 2019, had to cease operations in April 2023. The company had no power plants of its own and could no longer pay its electricity bills.

The consequences of deregulation

After several bankruptcies, the British supervisory authority had to tighten the requirements for new providers. Many of the providers were trading companies that bought and sold electricity wholesale without having long-term contracts to hedge prices. This structure has led to sharp price jumps in wholesale trade in recent years, particularly for natural gas, which has had a direct impact on electricity prices. Severe price shocks meant that many providers were no longer competitive and went bankrupt.

Since the start of the Ukraine war in February 2022, the number of bankruptcies initially remained stable until another setback occurred with Rebel Energy. Loud Mirror Britain is now facing impending shortages in electricity and gas supplies, which has reignited discussion about electricity market deregulation.

The Swiss reform plans for liberalization could therefore be viewed under the influence of the British experience. Although competition could drive down prices, ensuring stable and reliable supply remains a key challenge that Switzerland must subject to comprehensive analysis as part of its reform.