The head of the listed Romande Energie, Christian Petit, advocates frugality and a move away from economic growth – but he does have growth plans for his company.
The rafts with solar cells in Lac des Toules, a reservoir in the canton of Valais, were put into operation by Romande Energie in 2019. The pilot plant should also supply electricity in winter.
French-Swiss dual citizen Christian Petit makes short work of it: The electricity market doesn’t work, says the boss of Romande Energie, one of only two Swiss electricity companies that are listed on the stock exchange. The limits of “ultraliberalism” would be shown, because “the liberalization of the energy market in Europe was not able to protect customers in this crisis”.
In any case, the boss of 1200 employees represents quite controversial and unconventional positions for a captain of industry. The word frugality often comes up in conversation: for him, our material growth is reaching its limits. We were trained that happiness lies in consumption, although it doesn’t actually take that much to be happy: clean water, a roof over your head, reasonably produced food, friendly ties with fellow human beings. Does he also live up to his ideal? He eats far less meat than before, as a renter he doesn’t turn the heating on until mid-November and turn it down again in mid-February, and he gets around on his e-bike, he says.
Christian Petit, head of the listed company Romande Energie.
Consumers have to pay 50 percent more
However, Petit, who looks younger than 59 with his three-day beard, definitely has growth plans for his company and is presenting these to a few dozen potential investors and analysts in Zurich. The company wants to increase its own electricity production from 0.8 to 1.3 terawatt hours by 2026, using wind and solar power plants in Switzerland and France. That costs around one billion Swiss francs. Romande Energie would like to supply its 270,000 “trapped” consumers in the monopoly with its own electricity in the future. At the moment it buys around 60 percent.
Since electricity prices on the market have risen sharply, consumers at Romande Energie will have to pay around 50 percent more for electricity from 2023 than before. This increase is well above the Swiss average of 27 percent.
Similar to the larger BKW, Romande Energie is also growing in services, such as the installation of solar systems or heat pumps. There are now 500 people working in this area. Such expansion plans are questionable from a regulatory point of view. Like BKW, Romande Energie has state majority owners, with the canton of Vaud being the largest shareholder with 39 percent. The company competes in the service business with private companies that, for example, have less favorable financing conditions.
Business representatives are usually committed to free markets. Not so Petit: The liberalization of the electricity market has brought nothing, he claims. An electricity company invests in power plants that are then in operation for 40 to 80 years. However, this risk is not adequately compensated for by the market.
In Switzerland, large consumers have been able to choose their electricity company since 2009. But it is absurd that although the production costs for solar or nuclear power are 5 to 10 centimes per kilowatt hour, the price on the market is currently 60 to 70 centimes, just because the most expensive gas-fired power plant in Europe determines the price. It is true that large consumers could have obtained cheap electricity on the market for a decade. But these savings are disproportionate to the current additional costs.
Electricity companies that produce nuclear energy or electricity from renewable sources might be making “excess profits” at the moment. If one considers taxing them additionally, one would also have to compensate the companies for any losses – which was the case for years before, when prices were very low.
Petit therefore advocates a market design in which the producers receive “a reasonable and respectable margin for every market situation, and the customers receive stable and predictable prices in return”. However, his recipe is very reminiscent of earlier times when Switzerland was divided into supply areas and even the large consumers were at the mercy of their monopolist for better or worse. In any case, this was a comfortable world for electricity companies because they could always amortize their investments.
Harsh criticism of Energy Strategy 2050
Petit argues that under such a regime he could also offer ten-year contracts with stable prices. He currently has industrial customers who have not yet stocked up on electricity for 2023 because they hope that the state will intervene and push prices down. Otherwise it looks bleak for the future of these energy-intensive companies.
His harsh criticism of the Federal Council’s Energy Strategy 2050 seems rather surprising in view of the strongly ecological point of view. Here, unrealistic goals and framework conditions were assumed, he explains. It was only at the beginning of the year that the federal government presented a Plan B with the construction of gas-fired power plants. However, this plan only lasted a month: In February, Russia attacked Ukraine. Since then, gas prices have exploded.
By 2050, electricity consumption in Switzerland should increase by around half, from 60 to 90 terawatt hours, says Petit. In addition, Switzerland would also have to replace 24 terawatt hours of electricity from nuclear power plants. In Switzerland, the expansion of renewable energies is progressing more slowly than almost anywhere else in Europe: “On average, it takes 20 years before wind or hydropower projects can be implemented in Switzerland, while it takes 6 to 7 years in neighboring countries .»
He admits that wind and solar energy are pointless without storage options. And Petit points out that storage is much more behind schedule than renewables themselves. He therefore believes investments in reservoirs, batteries and hydrogen technology are necessary. The company boss from Romandy is not downplaying the hurdles and high costs on the way to the energy transition.