Filenews 9 November 2024 - by Chrysanthos Manoli
The energy minister said yesterday, during the discussion of his ministry's budget in the Finance Committee, that a specific model (formula) is being examined, which will reduce the unexpected profits of renewable energy companies (RES).
The minister clarified that this is not a question of imposing a tax or fee on these companies, but another, specific, model is being studied. "We are in the very early stages," he said.
Fileleftheros reports that the Ministry of Energy is oriented towards drastic changes in the trading system of electricity produced from RES, as the only feasible and efficient solution, at this stage, for a significant reduction in electricity costs and at the same time a reduction in profits secured by private producers and suppliers of green electricity.
Transient and Target Model
Among the options being considered by the Ministry of Energy is the abolition, at this stage, of the Transitional Regulation for the electricity market, which ensures superprofits for photovoltaic producers and electricity suppliers
The possibility of submitting a request to the European Commission for a derogation to the Republic of Cyprus is also being examined, so that it does not apply (end of '25) the so-called "Target Model" for the competitive electricity market.
The considerations for the request for derogation from this obligation in relation to the EU acquis are linked to the possible option of applying a model called Single Buyer Model, which obliges all private electricity producers to sell their production to a central supplier (EAC Supply in the case of Cyprus), through a procedure that refers to tenders, to exclude overpriced green energy, but also to benefit domestic consumers.
If the request is submitted by the Government and approved by the European Union, even for the period until the operation of the electricity interconnection with Crete, technocrats estimate that there will be a serious reduction in electricity costs for residential consumers (currently ignored by the Transitional Regulation) but also for commercial consumers (businesses) who also do not currently have -to a large extent- access to private production.
Profits through distortions
Government and official officials fully share the findings of some Cypriot and other European energy and economic technocrats, according to which serious distortions are recorded in the electricity market, which allow clear speculative tendencies by private producers and suppliers.
These distortions are -in Cyprus- directly linked to the Transitional (temporary) Regulation for the electricity market, which was adopted by CERA in 2017, but is still in force today and allows serious superprofits for private participants, ensures a small discount of 8-10% from EAC prices to some industrial and large commercial consumers and obliges all residential consumers not to have access to cheap energy from Photovoltaic.
At the same time, domestic consumers are burdened with additional costs in the price of kilowatt hour, due to the heavy burden that EAC has for the uneconomic and unprofitable operation of its units, in order to support the electricity system when there are sudden fluctuations in production from RES, especially in the afternoon hours or during weather variation.
Others are shouting about the Target Model
All the above, together with the concern that the procedures underway for the completion of the LNG terminal in Vasilikos and the arrival of natural gas are practically impossible to complete in 2025, lead, as mentioned above, the Ministry of Energy to elaborate a proposal for a derogation from the energy model currently applied by most EU countries. while invoking the delay in the operation of the electricity interconnection (which is hoped to create -after 2030- real competition in the internal market) and the lifting of the isolation of the electricity system of Cyprus.
In any case, the voices of governments, political forces, consumer associations and commercial and industrial associations against the Target Model have grown louder in the EU, blaming it for the manifest overpricing of green energy and the link in its price to the most expensive electricity, i.e. that produced from fossil fuels.
