Filenews 11 January 2025 - by Chrysanthos Manoli
The promises of those responsible to the Ministry of Energy and EAC for the accelerated installation of two flexible power plants in Dhekelia (gas turbines) in order to ensure the adequacy of electricity and the security of the electricity system for the summer of 2025 are very likely or certain not to be implemented on time.
Fileleftheros reports that EAC is not ready to take a decision on the acceptance of one of the proposals received through a tender from construction companies and furthermore the Government has not taken its own decision on how the cost for the two generators will be covered, as it expects, as we were told by the Ministry of Energy, the European Commission's reply as to whether any financial contribution by the State to the investment would be considered incompatible with State aid to EAC.
Negative surprise the price
Early in 2024, EAC had stated that after securing the relevant approval from CERA, accelerated efforts would be made to investigate the market's readiness to rapidly supply two gas turbines to the Dhekelia station, in order to boost production from the southeastern end of the network by approximately 80 megawatts. This would allay fears of gaps in electricity adequacy in the summer of 2025, but would also reduce the problems of system stability and adequate coverage of electricity needs in the areas of Larnaka and free Famagusta.
The market sounding was carried out and then tenders were announced, which were received on time. Fileleftheros' unofficial information states that EAC has in its hands two offers from large companies, but it seems to have caused disappointment or even concern by the level of the cost of the gas turbine offered. There is no official information, but our information indicates that the financial proposals submitted exceed the initial budget of €80-90 million, which leads EAC to reassess the situation. We have been officially told that the evaluation of the offers is under way.
Black clouds in summer
Given that we are in January '25 and the tender has not even been awarded, it is almost certain that neither EAC nor the (any) contractor will have time to install and operate the two new generators (they will burn diesel) in the summer of 2025. And given that no natural gas will be able to be used in 2025, it means that neither the newly installed 6th EAC unit in Vasilikos (160 megawatts) nor the PEC units near the EAC station (260 megawatts) will be able to be exploited.
Under these circumstances, concerns about the ability of the electricity system to meet without problems and painful losses of consumers the demand for electricity in the summer of 2025 are multiplying, especially taking into account that in the summer of 2024 - with continuous temperatures above 40 degrees - the system was very difficult and did not avoid frequent breakdowns or consumer disconnections, with the Transmission System Operator making public calls in some cases to limit the use of air conditioners amid a prolonged heatwave.
Who and how will pay?
In addition to EAC's assessment of the cost-benefit ratio for the installation of the two new generators in Dhekelia, the burning question of "who will pay for the generators" still hangs.
As Fileleftheros has sometimes written, EAC considers that the installation of the two gas turbines, on the eve of the operation of a competitive electricity market and given the continuous increase in the penetration of photovoltaics in the electricity potential, is not economically advantageous for EAC, as it will increase the cost of the Wholesale Market Tariff and burden its own customers.
EAC has requested that the cost of the generators (which apparently will exceed 100 million euros) be borne by all electricity consumers, regardless of the supplier they will work with, as this is an expense that will ensure electricity sufficiency and balance in the system.
EAC's proposal provided for the gradual repayment of generators through a small increase in the burden on consumers in Public Utility Services (PSOs), the revenues of which currently cover the discounts granted to vulnerable consumers and low-income pensioners.
The choice to cover the costs by the PSOs had caused concern to the Commissioner of State Aid, who called on the Government to discuss the issue with the Commission in order to avoid the risk of this being deemed illegal state aid. The Ministry of Energy submitted a relevant request for approval to the Commission but the response is pending...
