Filenews 19 March 2023 - by Chrysanthos Manolis
The operation of the transitional competition arrangement in the electricity market is de facto prolonged for an indeterminate period, as the commercial operation of a permanent competitive market is postponed from year to year and it is now doubtful whether it will be able to enter into force before 2025. Inevitably, the distortions observed in the operation of the transitional arrangement, the presence of which does not allow effective competition and keep electricity sales prices high, with over-profit from private producers and suppliers, are also being prolonged.
With the effort to create a permanent competitive electricity market stalled, CERA last week published three decisions aimed at partially diversifying the transitional arrangement, the most important of which was the lifting of the restriction on participation in the transitional arrangement of renewable energy parks that have not been licensed through the announcement of state support plans and the creation of a framework for the operation of autonomous green energy storage systems, within the transitional arrangement.
In general, CERA is attempting to "open" the transitional arrangement to private RES parks that have secured or will secure the necessary permits, even if they did not participate and were not approved by the previous support plans for the installation of RES systems, which had been announced by the Ministry of Energy.
CERA's intention is to increase the potential production of electricity from RES within the transitional arrangement, in the hope that competition between producers and suppliers will be intensified at the same time, to the benefit of consumers.
However, while the operation of the permanent competitive market is delayed and while the problems with the capacity and non-modernization of the network are perpetuated, combined with the ability of private producers and suppliers to offer contracts with prices very close to the multiple production costs of EAC, ensuring excessive profits, there is no reason for great optimism that the future inclusion of greater green energy production will lead to substantially lower prices.
Moreover, according to what the Transmission System Operator reiterated on Monday in Parliament, as long as the systemic problems faced by electricity trading in Cyprus are not solved (insufficient grid, low consumption in spring and autumn, lack of electricity storage systems, lack of interconnection with other networks and system stability problems), CERA's intention to facilitate the inclusion of more RES parks in the electricity transitional arrangement stumbles on the a frequently occurring need for disposing of electricity from photovoltaic and solar parks.
Need for storage
It is increasingly pointed out by actors in the Cypriot energy sector that the lack of green electricity storage systems is another serious disability of the system, which limits the participation of RES in the electricity mix consumed.
In a second decision (077/2023), which was also published last week, CERA recognizes that "in the Transitional Regulation there is no framework for the activation of energy storage systems", despite the fact that "energy storage is considered as the basic solution for achieving high RES penetration, compensating for the inherent variability of these sources (s.p. production fluctuations due to weather conditions), allowing available generation to be adjusted to the demand curve and absorbing excess renewable energy that cannot be fed directly into the load, resulting in a reduction in energy outages generated by RES".
"At the same time", it is added to the decision of CERA, "energy storage can offer a network of services to the electrical system, related to the facilitation of the management of conventional production, the enhancement of its reliability and flexibility, the provision of reserves and auxiliary regulation and control services, the management of congestion, but of course also the traditional functionality of replacing expensive energy of peak units by cheaper one that is absorbed at low hours. demand and production costs'.
In order to be able to integrate energy storage plants into the electricity system within the framework of the Transitional Regulation, CERA calls, through decision 077/2023, on the Transmission System Operator of Cyprus and the Distribution System Operator (EAC Distribution) to make all necessary amendments to the Transitional Regulation Regulations and/or the Transmission Rules so that the participation of energy storage facilities upstream of the meter is possible without discrimination (p. p. before the meter) in the Transitional Regulation of the Electricity Market, and submit to CERA for approval a Final Proposal for Amendment of the Regulations of Transitional Regulation of the Electricity Market and / or the Transmission Rules by May 31, 2023.
Storage systems upstream of the meter are essentially autonomous systems that will function in some way as power plants for the production and supply of electricity. That is, they will produce-import electricity from photovoltaic systems and at the same time they will store it, so that it is available for use by electricity suppliers, but also by the Transmission System Operator, in order to reduce any security-stability problems of the system but also to reduce or eliminate the green energy that will be rejected by the Operator and will remain unexploited.
At this stage, CERA's decision concerns the need for the Administrators to create a regulatory framework by the end of May. By then, it is expected that the Ministry of Energy will finalize the decisions on the announcement of a tender or tenders for the installation of central storage systems.
More producers without a state support plan
According to CERA's decision 076/2023, a process of amendment of Regulatory Decision 04/2017 "on the Application of a Transitional Regulation to the Electricity Market of Cyprus" will be promoted, with the deletion of the last paragraph in point 2, which provides that "RES producers who are interested in joining the Transitional Arrangement should be included under a support scheme of the Ministry of Energy".
The rationale of this decision includes the finding that "the commercial operation of the competitive electricity market cannot begin before the resolution of the outstanding issues mentioned in CERA's announcement dated December 23, 2022, resulting in the need to extend the period of activity of independent electricity producers and independent electricity suppliers in the framework of the Transitional Regulation in the electricity market of Cyprus before".
We recall that the transitional arrangement was introduced in 2017, with the intention of operating for about two years, but we are already in our 5th year and will probably be extended for another two years or so. The extension of the operation of a regulation designed from the outset to be temporary and to cover needs of no more than two years has already caused a number of distortions.
With two suppliers at the same time
A third, relevant, decision of CERA (078/2023) calls on the Cyprus Transmission System Operator "to investigate amendments to the Transitional Regulation Regulations, in order to provide the possibility of customer representation by two suppliers, ensuring the right of consumers, in their capacity as customers, to conclude simultaneously more than one electricity supply contract, provided that the required connection and measurement points have been determined, so that if an independent supplier cannot cover all consumption, then the consumer can cover the rest of his consumption from a second supplier'.
TSOC is also invited to submit to CERA for approval a Final Proposal for Amendment of the Transitional Regulation Regulations of the Electricity Market by May 31, 2023.
As stated in the grounds of this decision, the Transitional Regulation does not support the general right of consumers, in their capacity as customers, to conclude more than one electricity supply contract at the same time.
