In December 2023, the pinnacle of the Cyprus Vitality Regulatory Authority (CERA), Andreas Poullikkas, introduced an outline of the nation’s vitality combine at a neighborhood convention. The island’s electrical energy era fleet comprised 1.5 GW of standard services (primarily diesel and gasoline) and 776 MW of renewable vitality vegetation. The nation’s state-owned utility, the Electrical energy Authority of Cyprus (EAC), owns all standard energy stations whereas impartial buyers dominate renewables era. Photo voltaic initiatives are by far essentially the most widespread renewable vitality know-how within the nation, with 606 MW of era capability. Wind and biomass websites are available at 157 MW and 13 MW, respectively.
Cyprus doesn’t have a liberalized vitality market. Within the retail market, the EAC enjoys an absolute monopoly. The wholesale electrical energy sector has opened as much as impartial energy suppliers though they will solely promote electrical energy to giant customers.
So far, there are six impartial energy suppliers on the island. All six function photo voltaic vegetation, with portfolios that correspond to about 8% of electrical energy generated within the nation. Curiously, personal suppliers promote electrical energy to giant customers about 10% cheaper than the EAC does.
Incentives
Put in photo voltaic capability on the island is remunerated by way of numerous schemes together with internet metering (which credit family mills to the retail worth of the electrical energy they export to the grid), internet billing (which credit on the wholesale electrical energy charge), and feed-in tariffs (FITs). There may be additionally a fleet of subsidy-free initiatives, first developed in 2017, when the federal government allowed 102 MW of recent photo voltaic capability to function underneath an “avoidance price” regime. The avoidance price paid to such mills equals the amount of cash the EAC saves by not paying fossil gasoline energy vegetation to generate as a result of the electrical energy has been coated by renewables.
At the moment, a lot of the photo voltaic parks developed underneath the fee avoidance regime have deserted these funds and as a substitute promote electrical energy independently available on the market. That’s as a result of, since Could 2023, CERA has capped the quantity of avoidance price funds at €0.11 ($0.12)/kWh. Turbines can promote their electrical energy at increased costs by way of personal suppliers.
Other than the avoidance price regime, the federal government has additionally allowed a further variety of PV initiatives to be constructed underneath personal energy buy agreements (PPAs), resulting in a separate portfolio of round 150 MW of put in photo voltaic capability. In whole, Cyprus has round 250 MW of put in photo voltaic working underneath PPAs.
Photo voltaic plan
In October 2023, CERA issued permission for the EAC to construct 600 MW of recent photo voltaic capability by 2032. This enables for the incumbent utility to construct a set quantity of PV annually, ranging from 30 MW in 2023 and reaching the 600 MW whole in 2032.
CERA has additionally communicated the EAC’s plan to the European Fee for approval and whereas that has not but been granted, the utility has revealed an open name to landowners to suggest land for renewable vitality initiatives till a deadline June 1, 2024.
Photo voltaic installations in Cyprus by assist mechanism
| Assist scheme | Capability in MW, Dec. 2023 |
|---|---|
| Internet metering and internet billing | 244 |
| FIT (set by authorities) | 77 |
| FIT (set by way of tender) | 35 |
| Avoidance price | 101.5 |
| PPA | 148.5 |
Supply: pv journal/Ilias Tsagas
Fanos Karantonis, chairman of the Affiliation of Renewable Enterprises Cyprus and a number one photo voltaic investor, informed pv journal that the renewables affiliation opposes CERA’s resolution. Karantonis is of the opinion that the EAC’s plan will kill competitors within the vitality market proper at a time when the Cypriot wholesale market is trying to liberalize.
Karantonis notes that, in Could 2022, CERA revealed a preliminary resolution arguing that it couldn’t enable the EAC to enter renewables as a result of the nation’s vitality market was very concentrated. The state of affairs isn’t any completely different at this time, mentioned Karantonis, and the EAC continues to dominate the vitality market.
The rationale behind CERA’s resolution, revealed in October 2023, was that it has granted licenses to round 1.9 GW of renewable vitality vegetation and there’ll, subsequently, be ample competitors available in the market by the point the EAC’s portfolio of 600 MW turns into operational.
Karantonis rejects this argument. “The way in which the regulator presents the case is deceptive,” he mentioned. “The community is very congested and it’s clear to anybody that not even 10% of the 1.9 GW of licensed initiatives might be constructed by 2032. Furthermore, there isn’t a assure that the entire initiatives licensed by the regulator will obtain environmental permits.”
The renewables business consultant mentioned that impartial buyers have “fought onerous” over the previous six years to license initiatives, discover appropriate land, and join their 250 MW of initiatives, both developed underneath PPA or by way of the avoidance price mechanism. “It’s utter creativeness that Cyprus can add 500 MW to 1,000 MW within the following 5 years,” he mentioned.
An argument usually circulating in public discourse is that permitting the EAC to personal a renewable vitality portfolio would scale back wholesale electrical energy costs. Karantonis counters that one of the best ways to cut back wholesale costs is by boosting competitors and tackling the nation’s urgent curtailment situation.
“The EAC has, already, entry to about 500 MW of renewable vitality era within the nation, together with photo voltaic, wind, and biomass initiatives,” he mentioned. That’s as a result of all renewable vitality era websites, aside from the PPA initiatives, promote electrical energy to the EAC.
“Think about, for instance, the FIT initiatives,” added Karantonis. “Renewable energy buyers promote electrical energy to the EAC however the EAC solely pays one a part of the feed-in tariff, which equals the avoidance price. The remaining quantity of the tariff is paid by the nation’s renewable energies fund, which is in flip funded by electrical energy customers.”
Karantonis crunched the numbers. With the avoidance price set at €0.11/kWh, the EAC pays solely that quantity. It sells the electrical energy on the wholesale market at €0.21/kWh.
Curtailment disaster
Personal photo voltaic mills say that curtailment of renewable electrical energy stays a serious drawback. Cypriot renewable vitality professional Andreas Procopiou famous the island’s PV era capability grew by a formidable 51% in 2023. Nevertheless, the total worth of that capability improve was not echoed by a big rise within the know-how’s contribution to the island’s vitality consumption.
In line with Procopiou’s information, PV energy contributed 16.5% of Cyprus’s whole demand in 2023, solely 4.5% greater than within the earlier 12 months. “The discrepancy within the development charge of put in capability versus the rise in PV vitality contribution underscores a essential situation: curtailments impacting renewable vitality manufacturing,” mentioned the analyst. “The common each day curtailment, which was at 3.3% in 2022, sharply escalated to 13.4% in 2023. Significantly regarding was April, which recorded the very best common each day curtailment, of 32.23%.”
Such a pointy improve in vitality curtailment is affecting wholesale costs too, added Karantonis. Turbines are usually not compensated for curtailed energy and are subsequently unwilling to promote the electrical energy they produce to non-public energy suppliers at decrease costs.
Vitality storage
Cyprus is in pressing want of vitality storage. In mid-2023, the nation’s Ministry of Vitality, Commerce and Trade revealed a draft plan presenting insurance policies to assist the set up of family and enterprise, “behind-the-meter” vitality storage services.
The draft requires the remuneration of fresh vitality and vitality storage websites – and hybrid initiatives, that includes each – in two foremost methods. Firstly, present renewables vegetation might be provided a capital expenditure (capex) subsidy for the acquisition and set up of vitality storage models. Secondly, new hybrid vegetation will have the ability to declare each capex and contract-for-difference (CfD) assist. Underneath CfD regimes, renewable vitality mills obtain a set energy export charge minus the day-ahead hourly wholesale worth of electrical energy as a bonus on high of any funds they obtain individually from the industrial sale of the ability they generate. When the wholesale worth is increased than the ability export charge, mills refund the distinction.
Each the capex assist and energy export charge could be set utilizing aggressive bidding amongst mills. The ministry’s proposal, although, got here with restricted element: solely new hybrid vegetation which can be keen to export energy to the EAC could be allowed to assert the subsidies. In different phrases, the federal government would provide state support solely to initiatives that collaborate with the incumbent utility and would neglect personal wholesale electrical energy suppliers.
Karantonis claims this can be a breach of European state-aid legal guidelines. He mentioned that the Affiliation of Renewable Enterprises Cyprus introduced this opinion to the European Fee’s directorate-general for competitors in November 2023. The federal government’s try to undermine competitors within the electrical energy market, and to exclude impartial undertaking homeowners, doesn’t cease there, he added.
Different measures, in response to Karantonis, embody efforts to permit Cypriot transmission and distribution electrical energy operators to personal grid-side, “front-of-meter” vitality storage belongings, in breach of European Union rules.
“We consider each the federal government’s draft plan for behind-the-meter vitality storage in addition to the latest European resolution on the Cypriot community operators proudly owning front-of-meter storage will kill competitors in our nation’s wholesale electrical energy [market],” mentioned Karantonis.
All European Union member states have dedicated to reforming their home electrical energy markets in keeping with the bloc’s Goal Mannequin in an effort to align nationwide marketplaces in preparation for incorporation right into a single market. Cyprus has additionally dedicated to adopting the Goal Mannequin with the Cypriot transmission system operator (TSO) assigned to carry out the position of market operator.
But, a decade after its preliminary dedication, Cyprus has not independently staffed its TSO, which is reportedly crammed primarily by EAC personnel. Underneath European regulation, the TSO and the distribution system operator (DSO) must be separate entities, impartial from the nationwide utility. Critics say that in Cyprus, the road separating the incumbent vitality firm’s energy provide enterprise from the DSO is blurred.
Island economies have usually been trailblazers within the adoption of renewable vitality, altering perceptions about how electrical energy techniques and marketplaces can function with excessive penetration ranges of fresh vitality. Cyprus has a lot to realize from the accelerated adoption of photo voltaic, vitality storage, and market liberalization. The truth that incumbents retain appreciable energy, nevertheless, is proving efficient in delaying adoption.
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