Saving electricity with construction director Martin Neukom

Mr. Neukom, the city of Zurich is making progress in saving energy and is currently implementing a multi-stage plan. Hardly anything is heard from the canton, it has just launched a website that refers to the federal government. Why so hesitant?

We are also preparing measures. We still have to coordinate a few things, including with the communities. The canton administration is relatively large and heterogeneous, with many offices and directorates. What I certainly don’t want are any hasty actions that we then have to reverse after two weeks because they don’t work at all.

Will the canton set guidelines for the municipalities?

I wouldn’t speak of specifications, we respect community autonomy. But we offer support and recommendations and a coordinated approach, for example with street lighting. You can imagine that this doesn’t happen overnight either, with 162 municipalities in the canton.

How important is street lighting?

As a canton, we consume around 55 GWh of electricity per year in all of our units and organizations. Of this, 11 GWh are only used for street lighting. There are about 24,000 streetlights that we control. Although we replace around 1,500 of them with economical LED lights each year, the power consumption is not insignificant.

Street lighting is also a safety issue. Is it appropriate to save here of all places?

There are two aspects. One is road safety. Here we can assess quite well where shutdowns are justifiable and where not. The other is the subjective sense of security, especially for women who are out and about on foot in the dark. Of course we take that very seriously. We’re not going to just turn off any lights without thinking.

The city of Zurich bases its lighting on the operating hours of public transport. When the last tram has gone, the lights go out.

We will definitely consider that too. However, I cannot say anything more precise here and now, because we will first discuss my proposals within the government.

Apart from street lighting, where can the canton actually start to save?

Safe by the buildings. Our portfolio is very heterogeneous. This goes from canton schools to universities and prisons to a fish farm. The canton has 2100 buildings. Although we know which buildings are heated and how, we are still in the process of getting an overview of where there is potential for saving electricity.

That means you can’t yet put a figure on how big the savings potential is?

Exactly. We still lack some meaningful data for this. There are buildings where we can measure electricity consumption to the hour. All major consumers are already equipped with smart meters, which also helps us to check whether our savings efforts are working at all.

How much electricity does the canton consume overall, i.e. not only the administration, but also the population and the economy?

Around 10,000 GWh, i.e. around 170 times as much as the cantonal institutions. This also illustrates our limited potential. Although we are a major consumer, the potential is put into perspective when compared to the total volume.

Is it ultimately just about the symbolism?

no I want to implement measures in our area of ​​responsibility that actually make a difference. But of course we also want to be a role model. The Grossmünster, for example, is a cantonal building and is illuminated with relatively strong lamps. I understand those who are wondering why they should actually save energy at home while the Grossmünster is still illuminated.

As an advocate of the canton’s energy strategy and as a Green Party, you must actually welcome significantly higher energy prices. The incentive to save energy is great.

In general, I don’t think higher electricity prices and correspondingly higher savings incentives are bad. But the energy prices are currently so high and they have risen so quickly that existential questions are being asked. That’s definitely not on my mind. It is no longer a question of whether companies can save energy, but whether they go bankrupt. If an SME suddenly has to spend 20 percent of its turnover on energy instead of 2 percent, then its survival is at risk.

The canton provides financial support for switching from gas and oil to heat pumps, and the Energy Act even requires the switchover at the end of a heating system’s service life. is that smart You should be happy about every house that doesn’t also have a power-intensive heat pump.

The impact is smaller than one might think. According to our estimates, the heat pumps, which will be installed by spring 2023, will increase the canton’s electricity consumption by around 0.2 percent. But I agree with you that with more heat pumps, electricity consumption in winter will also increase. That’s why we absolutely have to expand electricity production in the medium term, especially with solar systems in the Alps.

Of course, as Zurich’s construction director, you can easily demand that, Zurich doesn’t have any high mountains. As the director of an alpine tourism area, you would probably see things differently.

This is a problem that we also know from other discussions. No one is applying for a radioactive waste storage facility or a landfill site, but there are overriding interests.

The Canton of Zurich, together with EKZ, is the largest shareholder in the Axpo energy group. In an emergency, he had to secure a credit limit of CHF 4 billion from the federal government. As recently as August, the Zurich government had expressed confidence about Axpo. Were you surprised by the development?

The moment I found out, yes. But we’ve been dealing with the issue since March. Even then it was clear: as soon as the gas tap shuts off, the gas price will shoot through the roof and with it the electricity price, and we will have a problem. So I was rather surprised that it took so long. Axpo did what it could to reduce risk and borrowed a great deal.

Have the owner cantons tried to protect Axpo?

The cantons were already considering what they could do in March. But they lack the legal basis to lend money to Axpo. You would first have to create them, and that requires a parliamentary resolution. If we do that in Zurich, the other eight owner cantons would also have to take part. That would be extremely difficult politically. We therefore considered a national solution to be more sensible and were glad that the federal government decided on it. Axpo is not only systemically important for the cantons involved, but for the whole of Switzerland.

But it’s embarrassing when such a cantonal utility has to be secured by the federal government.

Sure, it’s uncomfortable. The plants in Vienna were also saved by Austria, and the national government also supported electricity producers in Germany and other countries.

Isn’t there a danger that the federal government will now demand more influence in the energy sector?

In the medium term we have to position ourselves in such a way that we no longer get into such a situation. I don’t want to be at the same point in five years if the price of electricity explodes again for whatever reason.

You could do that by selling the canton’s shares. So are you advocating the privatization of Axpo?

no Axpo would have the same problems if it were in private hands. The problem could be defused by selling more electricity directly from Axpo to the electricity companies.

It gives the impression of a fair-weather structure that has to be rescued by the federal government in the event of a storm. That’s suboptimal.

Suboptimal? No, that’s very bad. But the circumstances are also extraordinary. In my opinion, one can hardly blame the Axpo management for that. Before the Ukraine war, no one could have foreseen these upheavals. To say in hindsight that you saw it coming is a bit simplistic.

But the co-owners, all of the cantons in north-western Switzerland, expect the electricity that Axpo produces to be available to them. Now we have learned that within two to three years it will already be sold.

This is exactly what the discussion will be about in the future. Now the producers are selling the electricity on the exchange. And distribution plants buy it there. This is part of the liberalized market.

Once again is the market to blame? You make it very easy for yourself.

It just is. For a long time, the price of electricity on the exchange was cheaper. The cantonal electricity companies (EKZ) bought it there and not directly from the producers. That’s where the discussion begins. It can go in the direction of buying electricity more directly again.

So that EKZ has to buy electricity from Axpo?

The question is how to implement this in the current market. There is competition law. The EKZ cannot simply buy from Axpo. You have to write out. It’s about questions of basic services or skimming off profits. We have reasonably cheap domestic electricity production and could use it ourselves. Now the prices on the stock exchange are very high. At the moment, Axpo is not making as much money as one might think.

Why not?

Because it sold the electricity it is now producing two to three years ago, at a pitifully low price from today’s perspective. But in the future, if electricity prices remain high, Axpo might make big profits.

Is it worth considering questioning ownership of Axpo?

There’s a lot to be said for and against. The liberal principle that anyone who wants to produce electricity is not wrong per se. Liberalization has brought some positive changes; before that, everything was organized in a very monopolistic way. But it clearly has negative sides that you can see now. The question arises: do we take half a step back and act more directly again? The free market will not be completely questioned, not even in Europe. But there is an intense discussion about new rules.

Can the cantons exert enough influence?

There was a good reason why electricity production was outsourced and given to a separate organization. If we wanted to control it ourselves, it would be an administrative department of the building department. Axpo is an AG according to the Swiss Code of Obligations. But she belongs to the state. However, it is not intended that the major shareholders will influence them directly, that would not be in the spirit of the construct. Of course we are in contact with the board of directors and the management. You know what our expectations as owners are.

What if governments were represented on the Governing Body, as was the case up to five years ago?

Good question. We would certainly have more information. But whether the decisions would be better, I leave open.

Finally: How great do you think the general willingness of the population is to make a contribution to saving energy?

The awareness is definitely there. Of course there will be people who will not restrict themselves, but the direction is basically undisputed. It’s important to me that we focus on the areas that pour, such as heaters or devices that have been in operation for a long time. Then we can already achieve a lot.

Are the savings even feasible?

Yes, as long as we act in time. It doesn’t take that much at all. In previous years, Switzerland consumed around 34 TWh of electricity in winter, of which an average of 4 TWh was imported, i.e. around 10 percent. We can compensate for that. But we shouldn’t wait. If we don’t find out until the end of February that our reservoirs are empty, then it’s too late.