Swiss energy security faces a test as gas prices rise and bailout expires

Gas has climbed from €28 to nearly €73 per megawatt hour since January, placing Switzerland between a volatile international market and a winter it cannot fully control. The rise reflects the conflict in the Middle East, continuing pressure on supplier countries and the closure of the Strait of Hormuz, which has reduced liquefied natural gas available on global markets.

Swiss households use gas for heating, while manufacturers rely on it for industrial processes. A cold winter would increase demand just as storage levels remain uneven across Europe. Daniela Decurtins, director of the Association of the Swiss Gas Industry, said uncertainty is considerably higher than in previous years. She pointed to historically low stocks in Germany and the Netherlands, two important reference markets for Swiss supply, while France and Italy have stronger reserves.

The immediate forecast does not point to a repeat of the 2022 shock, when prices reached as much as €340 per megawatt hour. Industry experts still see a scenario in which prices double from current levels. That would feed through to municipal utilities, industrial contracts and household heating bills, even if physical supplies remain available.

Switzerland enters this winter with access to European networks, yet without the storage buffer of a domestic gas facility. Price exposure therefore remains closely tied to conditions beyond the country's borders.

Switzerland has no gas storage facilities of its own, leaving the country dependent on imported volumes, pipeline access and commercial decisions made across Europe. It has traditionally obtained much of its gas through Germany, where storage levels are currently among the weakest on the continent.

The geography gives Switzerland several connections, yet each route carries conditions. France and Italy are better stocked this autumn, creating opportunities for regional trade. The gas sector has also proposed using a transit pipeline that carries gas from France through Switzerland towards Italy. During an emergency, Switzerland could retain gas already in the pipeline and compensate Italy by purchasing equivalent volumes there.

Decurtins described the arrangement as an insurance policy for industry and commerce. It would not create new gas or remove exposure to international prices. It could give Swiss buyers additional flexibility during a short supply disruption, provided neighbouring countries and pipeline operators accept the exchange.

The risk profile differs across the economy. Households receive strong protection in emergency planning, while industrial users face greater exposure to curtailment or higher contract prices. The gas association expects shortages severe enough to cut supplies to households and industrial businesses to remain unlikely. A tight market can still impose costs through rationing plans, delayed production and expensive replacement fuels.

The electricity sector's emergency safety net will expire on December 31, 2026, after parliament refused to extend it to 2031. The House of Representatives rejected the government's proposal first. The Senate followed the recommendation of its preparatory committee on Thursday, October 2, and declined to consider the extension.

Parliament created the Federal Act on Subsidiary Financial Assistance for the Rescue of Systemically Important Companies in the Electricity Sector during the autumn session of 2022. Energy prices had surged, and policymakers feared large electricity companies could lose the deposits required to trade on wholesale markets. A failure to meet those obligations could have disrupted supply even if the underlying power stations continued operating.

No federal loan has been drawn under the scheme. That record helped strengthen the case for allowing the temporary law to lapse. The government also withdrew its support for the extension, removing the basis for a formal vote on the proposal itself.

The decision changes the financial risk framework for companies such as major utilities and electricity traders. They must now rely on their own liquidity, hedging and shareholder support during a market shock. The state retains broader crisis powers, yet the specific federal backstop created in 2022 will no longer stand ready for systemically important firms.

Thierry Burkart says companies and their owners must prepare for the next crisis, rather than depend on a permanent federal guarantee. The committee chair's position captures the political choice behind the sunset of the rescue law: market participants should carry more of the cost and responsibility for resilience.

That approach carries consequences for the structure of Swiss energy. Electricity companies operate in a partially liberalised market, with public shareholders, cantonal interests and private investors often sharing responsibility. Stronger requirements for liquidity reserves or collateral could improve resilience. They could also raise financing costs and eventually affect tariffs for customers.

The decision does not settle every vulnerability. Gas companies face a separate exposure to imported fuel, while electricity firms must manage volatile wholesale prices, trading collateral and winter demand. A disruption in one market can increase pressure on the other. Gas shortages can lift demand for electricity, while power market stress can increase the cost of heating and industrial operations.

An expert analysis published in March concluded that Switzerland could secure its electricity supply during winter even after nuclear plant closures. That assessment offers reassurance, although it depends on imports, hydropower, grid operation and functioning European markets. The end of the bailout framework leaves companies responsible for maintaining the financial capacity needed to keep those systems working under pressure.

Renewable gas remains a small part of Switzerland's protection against imported price shocks, with current supplies averaging about 10% of consumption. The industry aims to reach 15% by 2030 and 100% by 2050. Domestic biogas production is expected to double by 2030, while Switzerland is already Europe's largest importer of biomethane.

Those targets will take time to influence winter security. Biogas and biomethane can diversify supply and reduce exposure to fossil fuel markets, though they cannot immediately replace the volumes delivered through European pipelines. Their contribution will depend on investment in plants, connections, certification and long term purchasing agreements.

For the coming winter, the practical safeguards are closer coordination with neighbouring countries, careful gas procurement and credible plans for industrial demand. Switzerland also needs electricity companies to maintain sufficient liquidity after the federal rescue law expires. The absence of loans under the previous scheme suggests the emergency facility was never tested, yet market conditions can change rapidly when prices rise and trading collateral increases.

Consumers are likely to experience the pressure first through contracts, heating costs and industrial prices. The supply outlook remains manageable under current expectations. A colder season, further disruption around the Middle East or weaker European storage could tighten that margin quickly. Swiss energy policy now places greater weight on company preparedness, regional cooperation and the gradual expansion of renewable gas.