Energy prices for crude oil, natural gas and electricity are rising for two main reasons. First, the Strait of Hormuz, a key shipping route for global oil and gas supplies, is effectively blocked. Second, Qatar’s Ras Laffan Industrial City has suffered damage. The site is one of the world’s most important facilities to produce liquefied natural gas, or LNG, and helium.
ETH Zurich has already taken steps to cushion potential shortages and price shocks affecting helium (see yesterday’s internal news). How exposed, then, is ETH Zurich to developments in the energy sources natural gas and liquefied natural gas, which are traded in far larger volumes?
Gas prices are rising more moderately in Switzerland
Overall, natural gas prices in Switzerland have risen less sharply than crude oil prices. Even so, depending on the consumption category or region, they are currently around 50 to 80 per cent above the long-term average (see gas price trends on external page the Swiss Federal Office of Energy’s Energy Dashboard).
Swiss end‑user prices have reacted less sharply because many suppliers rely on long‑term procurement strategies, and Europe’s dependence on the Middle East for gas is far lower than for oil. In the gas market, reliance on supplies from the United States is greater.
Many Swiss gas suppliers source natural gas both on the daily spot market and through long‑term contracts with fixed volumes and prices. This mixed approach helps to cushion extreme price shocks.
Diversified gas procurement helps to cushion price spikes
ETH Zurich sources its natural gas and biogas from the local gas supplier Energie 360°, which is majority‑owned by the City of Zurich. “At present, we have not observed any significant rise in gas prices,” says Dario D’Ercole, Head of Building Services and Energy in the Engineering and Systems Department, which is responsible for ETH Zurich’s secure, cost‑effective and climate‑friendly energy supply.
“However, price effects resulting from the disrupted supply routes in the Persian Gulf may be felt in a few months,” says Dario D’Ercole, adding: “That said, gas prices are significantly more stable today than they were in 2022, when the war against Ukraine began and gas supplies from Russia consequently ceased.”
Switzerland and Europe are now far better positioned than they were at the time. Since then, several LNG terminals have been built along Europe’s coastline, making gas supplies more independent and resilient. The natural gas currently supplied to ETH Zurich comes mainly from Norway, Azerbaijan, North Africa and the United States.
Reducing fossil fuels to a minimum by 2030
However, ETH Zurich does not source liquefied natural gas itself, instead procuring natural gas through established supply chains. The gas is used primarily to heat buildings and as a process gas in research facilities, for example for steam generation and for air humidification in animal facilities, laboratories and cleanrooms.
Furthermore, ETH Zurich is committed to the ETH Net Zero programme, which applies to both heating gas and heating oil. The objective is to reduce fossil fuel use entirely by 2030 and transition entirely to climate‑friendly energy sources.
This transition of ETH’s energy supply towards renewable energy, heat pumps and greater efficiency is not only a commitment to climate policy but also a key lever for greater cost stability, planning security and institutional resilience.
As a result, ETH Zurich now purchases heating oil only in limited quantities, primarily to safeguard security of supply. This includes supplying individual buildings at remote sites or operating emergency diesel generators in the event of a crisis.
There are no long‑term supply contracts for heating oil; purchases are made at daily market prices. “The small and irregular volumes required do not justify structured procurement,” says Dario D’Ercole.
When do long-term supply contracts protect against price spikes?
Structured procurement is a proven way to cushion sharp price fluctuations. It relies on long‑term supply contracts that fix prices and volumes in advance. Such contracts are effective only when consumption is stable and reliably predictable over an extended period, reducing the risk for both consumers and suppliers.
For gas and oil, however, consumption is more difficult for ETH Zurich to predict. Demand for natural gas, for example, depends heavily on outdoor temperatures and is therefore often too volatile and too erratic for fixed‑price supply contracts.
Furthermore, when consumption fluctuates significantly, any shortfalls or surpluses of gas or oil must be bought or sold on the spot market at short notice, at the prevailing daily price, even when market conditions are unfavourable. This markedly increases price risk. For this reason, ETH Zurich does not enter into such long‑term supply contracts for fossil fuels.
Electricity prices secured through long‑term supply contracts
By contrast, ETH Zurich secures its electricity needs through long‑term fixed‑price supply contracts, even as power prices may also be affected by the geopolitical tensions in the Middle East. Electricity demand at ETH Zurich remains consistently high, as data centres, laboratories and research facilities operate around the clock.
“When it comes to electricity consumption, we can predict our needs with a high degree of accuracy. Thanks to this reliability, and to the very large volumes we procure over several years and in multiple tranches, we secure stable and attractive prices,” says Dario D’Ercole. “There is therefore no immediate need for urgent action on energy procurement, but we remain vigilant and regularly review our strategy,” he concludes.