The retail electricity market of Canton Ticino

The Vogorno dam, in the Verzasca Valley
The Vogorno dam, in the Verzasca Valley

Università della Svizzera italiana

11 May 2017

As part of the public mandate of the Institute for Economic Research (IRE, USI Faculty of Economics), the Observatory for Public Finance and Energy (O-FPE) research unit has analyzed the situation of the retail electricity market in Ticino, comparing it to the rest of Switzerland, the neighboring Italian region of Lombardy, and to the European context of neighboring countries. 

The report reveals a series of useful elements for the discussion in the light of current changes in Switzerland, with the Federal government’s Energy Strategy 2050, and in Europe, with the ongoing liberalization of energy markets. A first element that emerges from the O-FPE report is that, since 2015, in Ticino the cost of electricity for households and businesses is slightly higher in comparison to that of the rest of Switzerland, and approaching the cost levels of neighboring Lombardy. Compared to the latter, over the past five years, the situation marked a clear advantage for Ticino: among the reasons for this trend reversal, among other things, there is the effect of the exchange rate between the Swiss franc and the euro. 

A second element highlighted in the O-FPE report relates to the short-term prospects, with a total cost of electricity that should remain relatively stable for most of its components. At present, commodity (31%), grid (42%), taxes and other fees (19%), and renewable energy incentives (7%) are the components of the cost of electricity. With concerns to the latter, the researchers at O-FPE expect modest increases in incentives in case of a successful outcome of the referendum on the Energy Strategy 2050, on May 21. Nonetheless, the cost to encourage renewables would still be lower than that sustained by the Italian consumers in Lombardy and, on average, by other EU Member States. 

As for the medium term, the report forecasts a modest increase in the cost of transportation and distribution grids, which are increasingly obsolete and need to be renovated in order to accommodate the dismantling of existing nuclear power plants and an increased contribution of renewable sources.

For the full report (in Italian) and the executive summary (in English):