Filenews 31 January 2025 - by Chrysanthos Manoli
Although the issue of electricity sufficiency in the coming years, especially in the southeastern region (part of the Nicosia district, Larnaka – free Famagusta) is being tried by many sides to keep it away from publicity, it is of very serious concern to the competent authorities.
The Ministry of Energy has already appealed to the Directorate General for Competition of the European Commission, asking for its approval to proceed rapidly with the installation of two new flexible gas turbines in Dhekelia, at the expense of all electricity consumers, for a total capacity of 80 megawatts, and to enable EAC to replace the aging and polluting steam boilers at the same station by 2029 when the last derogation granted by the Commission for their operation expires.
The obstacle to the purchase and installation of the two gas turbines is their unexpectedly high cost (tenders for the generators alone amounted to around €140 million, not counting other necessary similar costs) and EAC's reluctance to bear the cost on its own, since its external consultant and many technocrats argue that the two generators are not an economically advantageous option for EAC Generation. given the imminent start of the competitive market and the increased penetration of photovoltaics.
EAC argues that the depreciation of the cost of gas turbines (over a period of 20 years), combined with the operation of a competitive market, will only financially burden EAC customers and will affect the organisation operationally.
How many asked for TERNA and AVAX
EAC has already requested that the cost of the two gas turbines, to the extent that the competent authorities deem them necessary for electricity adequacy, system security and the satisfaction of commitments to the Commission to deactivate the obsolete units in Dhekelia, be covered by all consumers and not only its customers. It proposes that depreciation should be made through a small charge to all consumers, through the Public Utility Services (PSO) levy.
The efforts made to convince the EU or to find an alternative option that will also be accepted by EAC are stumbling for the time being on the surprise and disappointment caused by the prices given by two contractors, through an EAC tender, for the two gas turbines. This disappointment is now giving way to thoughts of cancelling the tender and launching another, open and international one, in the hope that more contractors and builders will respond so that better prices can be awarded.
Six contractors-managers were interested in the tender launched by EAC (deadline expired 12/12/24), but only two, the Greek TERNA SA and the also Greek AVAX SA, submitted bids for the supply of the two gas turbines. TERNA offered a price of approximately €147 million, while AVAX offered a price of €138.5 million, with Siemens machines. There was, according to reports, a second proposal from TERNA, for General Electric gas turbines, at a slightly lower price than €140 million.
The initial EAC budget spoke of a possible cost of about €80-90 million, while there were also estimates of lower prices. The pressure of time and technical data concerning the adequacy and the need to deactivate the old units may have contributed to the submission of much more expensive tenders, with the result that the process at EAC was frozen and those responsible in the organization, the Ministry of Energy, CERA and the Transmission Operator were desperately looking for advantageous alternatives.
Report on adequacy by CERA – TSOC
In order to reflect the existence or not of an adequacy problem -and from which year- the submission of a report by CERA and the Operator is pending. Some problems are expected from this summer (there were also in the summer of '24), especially if the expected high temperatures are combined with some damages, but they will be more serious in 2026 and 2027, when it is estimated that natural gas will finally be introduced and the units (EAC and PEC) will have to be deactivated alternately (for many weeks or even months) to technically prepare for the use of the new fuel, depriving the grid of valuable conventional (safe) energy.
Given the time required to complete the paperwork for tendering, evaluation and award, etc., as well as the time required to install the two generators, it is clear that if there is an additional delay in making final decisions, the coverage of electricity demand and system balance at peak times will be seriously undermined. at least for the years 2026-27 or 28.
