Up until now, photovoltaic plants in Switzerland were subsidized via a one-time capacity payment.

The amount of this payment was determined by the size of the plant, investment costs and degree of own consumption.

In 2021, the Federal Council (‘Bundesrat’) decided to determine the capacity subsidy for photovoltaic plants without own energy consumption via competitive auctions to efficiently activate additional renewable potential. The auction design was based on a study (2019) by Frontier Economics Ltd. and Energie Zukunft Schweiz.

On February 1, 2023, the first auction round for large photovoltaic plants was successfully completed.

• Photovoltaic plants without own energy consumption and with a capacity of 150 kW and above could participate in the auction.
• The auction was conducted with a maximum bid of CHF 650/kW, with a tendered auction volume of 50 MW.
• 94 bids with a total capacity of 35 MW were awarded, with an average volume-weighted award value of 516.20 CHF/kW.

The ambitious tender volume of 50 MW compared to neighbouring countries and in relation to Switzerland’s land area reflects the will for a rapid expansion of photovoltaic potential in Switzerland. To ensure enough competition, an automatic rationing rule was put in place which reduced the tendered volume to 90% of all valid bids in case of undersubscription.

Frontier Economics Ltd. advised the Swiss Ministry of Energy (BFE) in defining the core parameters for the first auction for photovoltaic systems without own energy consumption.

Frontier regularly advises on auction design. For further information, please get in touch at media@frontier-economics.com or call +442070317000.