• Industry: Power & Utilities
  • Date: 10/5/2011

Alternative energy sources still too inefficient 

KPMGnews interview with Orlando Lanfranchi, Sector Head Energy & Natural Resources
KPMGnews: In which direction is energy policy in Switzerland heading?


Orlando Lanfranchi: The commotion surrounding the issue of phasing out nuclear energy as quickly as possible has died down. In the political arena we are already seeing the first signs of a softer approach toward a complete withdrawal, even though the Council of States last week supported the policy decision taken by the Federal Council. Yet the debate has been highly political and somewhat hypothetical from the outset, since the question of a withdrawal has been discussed without any real alternatives being put forward. The promotion of alternative forms of energy will continue to be a big issue. In my opinion, the incentive schemes set up by the government, such as the compensatory feed-in remuneration (KEV), are not conducive to achieving the targeted objectives, as these schemes support existing technology but do not stimulate innovation. For private investors, getting involved in alternative energies is risky and unreliable. Switzerland will not be able to give up nuclear power very quickly, in terms of either its own energy production or imports from abroad.


To what extent is Switzerland dependent on foreign developments? Is Switzerland free to set its own energy policy?


Orlando Lanfranchi: In principle, Switzerland is free to set its own energy policy, as is any other country. However, in a European context it is essential to establish a common platform for energy trade. Only if the markets are linked in terms of infrastructure, cross-border trade and regulation can energy be produced and distributed efficiently in Europe. At the moment, these markets are still organized and regulated too much along national lines.


Which renewable energies offer particularly strong potential? Where does Switzerland stand with regard to the use of these alternative energy sources?


Orlando Lanfranchi: Let me start by pointing out that Switzerland currently uses a mixture of methods to generate power, 60 percent of which comes from renewable energies, in particular hydropower. However, as yet none of the alternative energy sources that are currently available are efficient enough to satisfy demand in Switzerland. And any increase in energy efficiency is being offset by the rise in consumption. Both for topographical reasons and due to considerations regarding the environment and landscape conservation, wind power is only feasible to a limited extent in this country. Photovoltaic systems are not yet sufficiently developed to be able to cope with the demand for energy. Geothermal energy and biomass conversion are also far from being significant contributors to satisfying power requirements in Switzerland. Solar technology, however, shows the greatest potential. If we succeed in finding new and efficient ways to harness the unlimited energy of the sun, all of our power supply problems will be resolved.


What is the status of the liberalization of the electricity market?


Orlando Lanfranchi: There is not much happening at the moment in this respect. The experiences gained from free trade at the level of large-scale consumers from industry have not entirely fulfilled expectations concerning deregulation. Setting prices with regard to production costs and the interplay between supply and demand has not worked as intended. Furthermore, examples from abroad show that only around 20 percent of private households are willing to switch energy providers based on the prices being offered. Some voices are also talking about a move back toward the regulated market model instead.


You were at the European Global Power & Utilities Conference in Paris. What are the most significant impressions you gained from this? What do you consider to be the key trends?


Orlando Lanfranchi: Mohamed ElBaradei, the winner of the Nobel Peace Prize and former Director General of the International Atomic Energy Agency (IAEA), clearly indicated in his impressive presentation that the world cannot move away from nuclear energy production very quickly. However, he is calling for a significant reinforcement of both national and international supervision of nuclear power plants as well as a link between the two. This is a move which has been fast-tracked as a result of the events in Fukushima. Today energy producers are already talking about a new generation of compliance and regulation in this area. Moreover, it became clear at the Global Power & Utilities Conference in Paris that phasing out nuclear energy is predominantly an issue for the German-speaking nations of Europe, although Austria has never operated its own nuclear power plants. A complete withdrawal from nuclear power does not seem to be a primary objective for the rest of the world. It also emerged from the conference in Paris that the topics of sustainability and CO2 emissions have disappeared from the list of top priorities on the political agenda, whereas these issues were still at the heart of the energy industry two years ago.



Interview: Simone Glarner, Marketing & Communications

Orlando Lanfranchi

Orlando Lanfranchi

Partner, Audit

+41 58 249 41 70

Power & Utilities

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