Economic advice, method- and data-based

The study shows that, despite substantial long-term potential for hydrogen in Switzerland, significant economic and regulatory barriers remain. For supporting hydrogen production, market-based instruments such as fixed premiums or contracts for difference prove to be particularly suitable. In contrast, the development of storage capacities is primarily hindered by uncertainties regarding market development and regulatory design. Switzerland currently does not have any seasonal gas storage facilities within its territory and has not yet set explicit targets for their development. Instead, storage capacities abroad are used and secured through intergovernmental agreements. Based on current knowledge, geological conditions for seasonal storage within Switzerland are considered unfavorable, meaning that such solutions would likely be significantly more expensive than using foreign storage facilities. Moreover, it should be noted that converting methane storage facilities to hydrogen storage would result in four to six times less energy being stored due to hydrogen’s lower volumetric energy density. On the demand side, dual-fuel installations currently serve as a flexibility option within Switzerland. In the longer term, liquid hydrogen derivatives could play a role in energy storage. For comparison, Switzerland’s mandatory strategic reserves for petroleum products currently correspond to 4.5 months of annual consumption.

As part of the comprehensive revision of electricity supply regulations, new provisions on the use of flexibilities have also been enacted. These are primarily intended to promote the grid-friendly use of flexible generators, consumers and storage facilities. Together with Dr Brigitta Kratz, lawyer and former Vice-President of ElCom, Polynomics examines the new regulations from a legal and economic perspective and highlights the opportunities, but also the limitations, of the regulation.

In Switzerland significant demand for H₂ has yet to emerge. High electricity and operating costs challenge the economic viability of projects; existing electrolysis capacities remain unused. The current draft of the gas supply act (GasVG) offers little encouragement: renewable gases play only a marginal role. Unlike for renewable electricity, grid feed-in charges remain possible – and an additional cost driver. There is also no possibility to introduce blending quotas. There remains little incentive to accelerate investment or stimulate demand in the future. For the use of renewable gases – and new technologies – their price and the cost of their utilisation are decisive factors. Resilient planning therefore requires an economic approach: relative costs and price elasticities determine when and where additional demand may arise. These insights form the basis for aligning infrastructure, grid development plans and import capacities in a timely manner. The Barometer is published by VSG in collaboration with E-Bridge Consulting and Polynomics. It can be subscribed to at https://gazenergie.ch/de/h2-barometer.