Filenews 1 January 2023 - by By Chrysanthos Manolis
Unlike Nikos Christodoulides and Andreas Mavrogiannis, Averoff Neophytou has so far not communicated a detailed program on what he intends to promote in the electricity sector, in the event of his election to the position of President of the Republic. Perhaps he will do so then. However, he devoted two policy axes (out of the 100 he prepared for all aspects of governance) to electricity and green energy issues, covering descriptively several individual sectors and submitting targets and options.
His two main lieutenants, on the other hand, submitted more detailed plans for energy.
As it is commonly said, the devil is in the details. And in the case of the programmatic positions of the three energy candidates there are many debatable details, some visible and some hidden behind the lines. It is possible that there is a lot of substance hidden in what they fail to record or clarify, even though they are real problems that concern and require solutions here and now.
The list of programmatic positions of the three candidates for the action due to space could not be complete. We recorded the priorities on which they agree, but also the differences we identified in some aspects.
Many RES and gas all three
In general, all three presidential candidates appear to want to move in the same direction: greater and faster penetration of renewable energy sources in the electricity potential, installation - with subsidies of up to 100% - of as many photovoltaics as possible in households and businesses for self-production, installation of green energy storage systems, use - even now - of natural gas in electricity generation, to reduce the cost of purchasing allowances for greenhouse gas emissions and commercial exploitation of Cypriot deposits in the EEZ or transfer of part of them to Cyprus.
Although they do not state it clearly, all three candidates seem to realize that a large part of the goals they set in the context of the energy policy they present to the voters takes several years to get into the implementation phase. It also requires many millions, as an investment. We do not choose to be pessimistic, but we are concerned that, given the great delay shown by the current administration in advancing some policies for the green transition and reconciling the existing isolated electricity system with the needs that this transition creates, securing a five-year presidential term will simply give the majority elector the right to lay the foundations that should have been laid much earlier, so that from 2030 onwards what is proposed - and missing - can be implemented today.
We note that the positions of the three candidates lack substantial proposals for the EAC of the future. Of the near and the distant. For its role, as in the medium term the conventional production of electricity will be reduced, under certain conditions, for its desired participation in the production of green energy, for its position in the competitive market as planned, for its currently unrecognized right to buy cheap electricity from private photovoltaic systems, for the future of its plant in Dhekelia and the transmission of natural gas there (when and if...), for ancillary services, etc. Mr. Christodoulides, however, mentions, briefly, in his program that EAC should remain state-owned and competitive, but also more customer-centric. Neophytou-Mavrogiannis also consider it self-evident to maintain EAC as a vertically integrated state-owned enterprise, since at no stage of the election campaign was anything mentioned about the privatization of EAC or any of its four main regulated activities (production, supply, transmission, distribution).
Christodoulides: Every home and photovoltaic system
As mentioned above, Nikos Christodoulides' programmatic positions on energy are much more detailed than those of A. Neophytou, as well as those of Andreas Mavrogiannis.
Mr. Christodoulides emphasizes from the outset that "self-generation of electricity by households and businesses, combined with specific energy saving measures, is the best short-term option to address the inflation of the price of electricity". It is a position recorded with various variations by all three candidates and endorsed by most scientists in the field, provided that the problems of saturation of the transmission and distribution network in some areas with many licensed RES parks and the lack of storage systems to avoid system stability problems will be solved. Already, more than 30-35 thousand households have seen in practice the huge financial benefit of installing rooftop photovoltaics, through which it is possible to recoup the investment relatively quickly. However, the operation of so many photovoltaic net metering burdens the operating costs - and semi-operation, for backup purposes - of EAC's units and ultimately, mainly, electricity consumers who do not have photovoltaics.
The short-term measures proposed by Mr. Christodoulides include the... Repetition of "our own successful model, where every home has its solar water heater, in order to achieve the goal "every home and photovoltaic"". In addition to the spatial restrictions that exist (e.g. apartment buildings), it should be taken into account that solar water heaters rely on energy storage (hot water for future use), while so far no rooftop photovoltaics installed include a storage system for 24-hour use.
Mr. Christodoulides promises - like other candidates - a grant (100%) to vulnerable groups of the population for the installation of photovoltaic systems and half (50%) to the rest of the households, with validity until the end of 2023 and improvement of the Virtual Net Metering (VNM) program, so that houses that do not have space on their roof (eg apartments), can exploit the possibilities of installing photovoltaic systems, if they have another privately owned suitable space.
In the medium-term measures, N. Christodoulides includes the completion of the opening of the competitive electricity market and the active participation in the EU consultations on a possible improvement of the existing electricity market model. He is the only one pointing out this possibility of changes in the model we are promoting.
In the long-term measures, it records the acceleration of the procedures for the arrival of natural gas in Cyprus for electricity generation, with the aim of reducing fuel costs. However, he says that "we are directly examining the possibility of liquefied gas coming from Egypt, through the exploitation of own deposits and trade agreements that will allow for gas swaps". That is, we will send Cypriot gas to Egypt's liquefaction terminals and import (after liquefaction) natural gas from the same terminals for local needs. Will this option be advantageous? However, it also proposes the "immediate investigation, in cooperation with the licensed companies, of the possibility of fast-track the arrival of natural gas from the Saturn discovery".
It also endorses the need to complete the electricity interconnection of Cyprus with Greece and Israel, while promoting the electricity interconnection with Egypt to remove the country's energy isolation.
For greater participation of RES in electricity generation, it promises to redesign and digitize the RES licensing procedures, expand the EAC electricity grid and convert it into a smart grid, grants for the installation of electricity storage systems, which will improve the stability of the electricity grid. As we pointed out in the area with the positions of Mr. Neophytou, all this is necessary, but it requires a lot of time and even more money.
Averoff Neophytou: Renewable everywhere, with grid enhancement
In Axis 48, of his pre-election political positions, Averoff Neophytou states that "the liberalization of the electricity market, the independence of the transmission system operator, the completion of the floating dehybridization unit in Vasilikos, the installation of smart electricity meters in all buildings regardless of the buildings and the electrical interconnection of the country through cables with Europe, Asia and Africa, are the major projects that are already on track for implementation".
Theoretically they are indeed on track to be implemented, most of them. However: The competitive market (even on the basis of the model chosen 7-8 years ago, for which no candidate seems to have any reservations as to the prospect of proving to be truly cost-oriented and not a tool of a large percentage of profit from RES companies) is postponed from year to year and today no one is committed whether it will take place even in 2024 or 2025. Or if, in the meantime, the EU itself will change the 'target model' and we will have to adapt accordingly.
Also, the installation of 400,000 smart meters is delayed, under the responsibility of EAC and bidders and will probably take another 4-5 years to be fully implemented, if it starts in 2023. As for the electrical interconnection with the networks of Europe, Asia and Africa, keep a small basket. Under the best conditions, the connection with Crete (and through it with mainland Greece) is planned in 2028. We wait and see. And it will be managed by a private organisation, whatever that may mean in practice.
Mr. Neophytou rightly points out that "the electricity grid and its proper and smart operation is the cornerstone of sustainable development and climate neutrality. Upon its completion and upgrade, it can be enriched with energy storage systems, which will allow RES to power it 24 hours a day". However, within four lines there are no solutions to one of the most serious disabilities of the Cypriot energy sector (a small and isolated system, without the possibility of serious and cheap storage for the time being). Its "completion and upgrading" and even more "enrichment with storage systems (s.p. for greater production than commercial photovoltaics)" is a necessary but long, difficult, very time-consuming and expensive process. Which must proceed quickly.
Ambitious and Averoff proposals in axis 49: "Installation of renewable energy systems in all public buildings, schools, hospitals, ministries, but also incentives for the installation of photovoltaics in each building. (...) Our goal is, as soon as the distribution network is upgraded (let's first prepare the spatial policy for the new photovoltaics, president, so that the state knows where to invest in expanding the network), the self-generation capacity will rise to 125% (s.p. on the previous electricity consumption of the household concerned), so that each household can also have income, without tax burden, from the production of electricity with renewable sources, passing from Net Metering to Net Billing (s.p. Mr. Neophytou is the only one of the three who rightly points out the need to move from Net Metering to Net Billing). A design that can gradually be extended to the hotel industry, agriculture and industry of the place".
Mavrogiannis: With offers to have cheap electricity
Andreas Mavrogiannis is the only one of the three candidates who proposes to "conduct tenders for RES projects, as is done in all EU countries, transparently and without exclusions, so that all the benefit from the price reduction goes to consumers". That is, instead of the selling price of the kilowatt-hour of photovoltaics being determined through bilateral contracts of producers and suppliers or through the stock exchange of the day-ahead market (in which the kilowatt-hours of photovoltaics will often be sold at a super profit, at the price of the most expensive producer, that is, the one who will produce with oil!) to be determined through tenders, in order to pressure producers to offer the most cost-oriented price, for the benefit of final consumers. This method promises prices of 3-4-5 cents per kilowatt-hour, instead of the 18-20 currently sold in the transitional competition arrangement. And it does not hinder the functioning of a competitive market, as the examples of EU Member States show.
Mr. Mavrogiannis also promises to restore the reduction of VAT on electricity from 19% to 9% (for as long as the energy crisis lasts) and "accelerate the integration of RES into the system, in combination with storage and upgrading of transmission and distribution networks", a goal that is not fully achievable in the short term, as we mention elsewhere.
It also proposes, like its representatives in general, the universal installation of photovoltaics in residential units, public buildings, small and medium-sized enterprises, municipalities and communities, using the Green Transition Fund (today's RES Fund) as a key financial tool. And these proposals take time to upgrade - expand the network and install storage systems.
Like the others, Mr. Mavrogiannis promises, among other things, a subsidy of up to 100% of the cost of installing photovoltaics in the low-income strata (his lieutenants speak more restrictively about the vulnerable) and financing of energy storage projects and strengthening of networks, in order to enable the installation and use of RES.
Also, "optimal integration of RES projects in the energy mix of the place, in combination with a proper and long-term spatial planning, which will not conflict with the protection and preservation of the natural environment and will not destroy the fertile agricultural land of Cyprus".
Mr. Mavrogiannis rightly points out in his program that energy storage is a key issue, both for achieving the green transition and for reducing electricity prices. He adds: "Unfortunately, Cyprus is lagging far behind in this area. In order to gain the lost ground, we must proceed immediately to the integration of storage systems in energy planning, so that we can achieve the targets for both RES energy production and a real reduction in greenhouse gas emissions".
Regarding natural gas, he emphasizes that "absolute priority must be given to the arrival, at last, of natural gas from our own deposits, to meet all our internal needs, including the needs of the Turkish Cypriot community". However, it seems to bypass the position of the current government and the companies involved, according to which it will not be economically advantageous for electricity generation to make expensive investments for the transport of gas from our EEZ to Vasilikos, for the needs of our small market.
POINT OF VIEW
No RES regardless of cost
With the exception of Mr Mavrogiannis, the other two candidates seem to place more emphasis on rapidly increasing the share of renewable energy sources in meeting electricity needs, rather than on the need to ensure that we avoid the creation of a new energy oligopoly - cartel, with the risk of keeping electricity costs very close to the cost of electricity generation from oil (or even natural gas), with intolerable profits for "green" producers and overcharging for consumers. This is already the case in the transitional competition regime and will hardly be avoided in the 'normal' competitive electricity market whenever it becomes feasible to function. It should be noted that A. Mavrogiannis is the only one who proposes energy production from photovoltaics through tenders (tenders), in order to operate as undistorted competition as possible and to squeeze the profit of the producers. Why not?
