Filenews 14 August 2024 - by Chrysanthos Manoli
Very important requests for the further penetration of the private energy sector in the production, supply, storage and even transmission and distribution of electricity, which today is the only monopoly part of the Cypriot energy environment (EAC – Networks), were submitted to the President of the Republic by the Electricity Market Association.
A delegation of the association had a meeting with President Christodoulides at the Presidential Palace on July 25, in the presence of Energy Minister George Papanastasiou. After the meeting, the Electricity Market Association (SAH), which consists mainly of private companies producing and supplying electricity from RES, sent a multi-page memorandum to Mr. Christodoulides, through which he submits extensively and in detail the individual demands he raises. The memorandum is signed by SAH President George Chrysochos.
What individuals ask for
- Of particular importance is SAE's request for a review (cancellation) of the operational unbundling of EAC (Production-Supply-Transmission-Distribution), with legal (ownership) separation of the network division from the rest of the EAC backbone. According to the association, only with the legal separation of networks (which currently belong to EAC's vertically integrated organization) will a healthy and truly free market be able to function. It also notes that "it is necessary to assess whether the functional unbundling applied (in EAC) ensures the independence and therefore the impartiality of the decision-making process regarding network activity".
- Acceleration of licensing procedures for RES energy production and storage projects. The association proposes that existing RES projects that have already secured all required permits be exempted from the obligation to go through the entire permitting process for the installation of energy storage systems. They call, in particular, for a simplified and accelerated licensing of these projects in order to quickly install batteries and reduce the green energy cut by the Transmission System Operator (TSO) due to overproduction in some time intervals.
- The association requests that the provision that exists in the draft Plan for hybrid systems (production from RES and storage in the same area) and which obliges owners to conclude bilateral contracts with EAC Supply in order to be able to benefit from the sponsorship scheme should not apply. The Government considers that the mandatory cooperation of hybrid storage system owners with EAC Supply, on the basis of offers or a price ceiling, ensures that EAC ensures cheaper electricity, with a reduction in the average price for all electricity consumers. On the contrary, the Association of the Electricity Market emphasizes to the President of the Republic that "it is imperative (to give) the opportunity to participate in the sponsorship scheme and suppliers from the private sector".
- The association requests not to take advantage of the derogation received by the Christodoulides Government from the EU, in order to enable the development, management and operation of central energy storage systems by the Transmission System Operator, for the stability and safety of the electricity system. The association states that "we consider the implementation of this derogation unfair, illegal, irregular, therefore we ask that its revocation be considered, in order to create a truly healthy competitive environment."
- The SAC is also asking President Christodoulides for compensatory measures for cuts in photovoltaic power generation. As possible solutions, it proposes a) covering the deficit resulting from cuts at a lower price than the weighted average D-X (Wholesale Tariff), eg. avoidance costs, (b) allowing participants to update their statements within 15 days of the monthly declaration. This flexibility will allow producers and suppliers to better respond to changing market conditions and cutback forecasts" and c) the TSO to offer estimates of cut-offs in the shorter term (publish weekly forecasts).
- The UNSC is calling for amendments to the Transitional Rules so that its members are less burdened by green energy cuts in certain periods. In particular, it calls for lower non-compliance charges to participants (<€150/MWh) or not to be charged by compliance charges when the TSO forecast deviates significantly (e.g>10%) from the actual one.
What do private producers claim for Dhekelia?
The claims of the Electricity Market Association regarding EAC's power station in Dhekelia are also of great interest. EAC, in cooperation with the Ministry of Energy and with a request to CERA, promotes the installation in Dhekelia of two relatively small and flexible conventional production units, with a total capacity of 80 megawatts, as well as a storage system of 160 megawatts. The reinforcement of production from Dhekelia, while limiting production from the anti-economic and polluting units of the plant, is considered critical by the TSO for the security of the system, as from the Vasilikos area there are restrictions on the energy that can be produced and transferred to the system.
However, SAH asks CERA to give "the opportunity and priority to private investors to invest in conventional power plants (e.g. Dhekelia) and storage projects". Elsewhere, the association points out to President Christodoulides that the private sector "is willing to consider investing in the upgrade of Dhekelia station, without further burden on the final consumer". He adds: "Therefore, we propose to conduct an open tender that will allow the most economical option for the construction of the project, thus ensuring the maximum benefit for the Cypriot consumer."
They are worried that EAC will close!
A large part of the memorandum of the Electricity Market Association (part of OEB) to the President of the Republic is spent on electricity interconnection. Among many other things, the association points out that the interconnection "is a private project competing with domestic production and that possible state aid establishes unfair competition, which is illegal under state and EU principles".
SAH disputes ADMIE's position that the interconnection will ensure a 30% reduction in electricity costs. He argues that it is a misleading figure, because if we had gas in Cyprus today, based on today's gas price, the cost of electricity would already be 40% cheaper."
At another point, he points out the following: "In essence, we will be led to the closure of EAC, which is an asset of the state, to the destruction of private investments by primarily Cypriot funds, amounting to €900 million, made in the production of energy from RES and conventional fuels, as well as to the bankruptcy of the huge investment of €700 million by DEFA for the construction of a natural gas import terminal".
