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Swissgrid’s CHF 5.5 Billion Grid Modernization: A Blueprint for the Energy Transition

Cyrus ColeWednesday, Apr 30, 2025 3:40 am ET
3min read

Swissgrid, Switzerland’s national transmission system operator, has unveiled an ambitious CHF 5.5 billion investment plan to overhaul its grid by 2040. This initiative is a cornerstone of the nation’s energy strategy, designed to balance decarbonization, rising electricity demand, and the integration of renewable energy sources. But how will this massive investment play out over the next 16 years, and what risks and rewards lie ahead for stakeholders?

Ask Aime: "Could the Swissgrid's CHF 5.5 billion investment revolutionize Switzerland's energy landscape?"

The Dual-Phase Strategy: 2025 and Beyond

The plan is split into two phases: Strategic Grid 2025 and Strategic Grid 2040. The first phase, already underway, focuses on urgent upgrades to ensure grid reliability and security of supply. Key projects include:
- Raising the voltage of critical lines like the Bassecourt-Mühleberg 380-kV corridor, which now supports cross-border imports.
- Completing the Mörel-Ulrichen 380-kV line, enabling hydropower transport from the Valais region.
- Modernizing substations in Mettlen and Lachmatt, which handle growing demand from urban centers.

By 2025, annual investments will average CHF 200–290 million, with a focus on resolving bottlenecks and preparing for long-term projects. The second phase, Strategic Grid 2040, will address systemic challenges: integrating decentralized renewables, optimizing cross-border flows, and digitalizing grid management. This phase includes 31 major projects, such as:
- Building a direct current (DC) supergrid with European partners to enable low-loss, long-distance power transport.
- Expanding underground cables to reduce environmental impact, like the completed La Bâtiaz-Le Verney tunnel near Martigny.
- Deploying advanced digital tools, including IoT sensors and blockchain-based platforms like Equigy, to manage grid stability in real time.

The Financial Engine and Risks

Swissgrid’s financial health underpins the plan’s feasibility. In 2023, it invested CHF 220.6 million in grid modernization, part of a total CHF 279.5 million spent on transmission and digital upgrades. By 2024, annual investments hit CHF 317.5 million, driven by projects like the Chamoson-Chippis line. However, costs are rising:
- Control energy procurement increased due to solar forecast inaccuracies and record-high exports (8.8 GW in summer 2024).
- Redispatching costs surged as grid congestion worsened, highlighting the need for EU integration to streamline cross-border flows.

Ask Aime: What's the next chapter in Switzerland's energy overhaul?

The company projects CHF 103.8 million in net income for 2025, but this could drop post-2026 due to regulatory adjustments to its weighted average cost of capital (WACC). To offset risks, Swissgrid introduced a "power reserve" tariff (1.2 cents/kWh) in 2024, stabilizing cash flow by covering federal reserve plant costs.

Key Challenges: EU Dependence and Technical Hurdles

The plan’s success hinges on external factors:
1. EU Electricity Agreement: Without this, Swissgrid faces higher costs and instability due to exclusion from European grid mechanisms. The company has repeatedly stressed the need for alignment with EU regulations.
2. Solar Forecasting Accuracy: In 2024, poor solar predictions forced costly adjustments, underscoring the need for industry collaboration on predictive analytics.
3. Labor Shortages: Skilled workers are scarce, threatening project timelines—a risk Swissgrid aims to mitigate through training partnerships.

Climate Commitments and Long-Term Gains

Swissgrid’s climate goals are aggressive: reducing Scope 1 and 2 emissions by 50% by 2030 and 90% by 2040, aligned with Switzerland’s Energy Strategy 2050. This will be achieved through electrification of operations, renewable energy sourcing, and energy-efficient grid technologies.

The payoff? A grid capable of supporting decarbonized industries, electric mobility, and data centers—a necessity as electricity demand grows by an estimated 30% by 2040. The 31 projects will also enhance grid resilience, reducing outages and enabling smoother integration of solar and wind farms.

Conclusion: A Risky but Rewarding Gamble

Swissgrid’s CHF 5.5 billion plan is a high-stakes bet on Switzerland’s energy future. The near-term risks—EU regulatory delays, rising costs, and labor shortages—are significant. However, the long-term rewards are undeniable: a grid that can power a decarbonized economy, attract green investments, and ensure energy security.

With annual investments averaging CHF 344 million (CHF 5.5 billion ÷ 16 years), Swissgrid must maintain disciplined financial management. Its new tariffs and digital tools provide a cushion, but success ultimately depends on external factors like EU cooperation and technological innovation. For investors, this is a play on Switzerland’s energy transition—a critical infrastructure project in a carbon-constrained world.

In the words of Swissgrid CEO Simonetta Sommaruga, “This is not just about wires and substations; it’s about building the backbone of a sustainable future.” The coming years will test whether vision translates into reality.

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