Filenews 28 February 2025 - by Chrysanthos Manoli
The private energy sector in Cyprus, which mainly cooperates within the Electricity Market Association (SAI), does not take kindly to the upgrade of the Dhekelia power station with two gas turbines, and especially the request of EAC and the Ministry of Energy to the European Commission to amortize this cost at a small charge to all electricity consumers through Public Utility Services. instead of only EAC consumers.
Fileleftheros information, confirmed by the Association, states that a complaint has been made in recent days to the General Directorate of Competition regarding the written representations made by the Ministry of Energy, in order to persuade the General Directorate of Competition to approve the treatment of the installation of the two generators in Dhekelia as an upgrade that will protect the overall electricity system of Cyprus due to stability problems, it will strengthen the effort for electricity sufficiency in the absence of interconnections, will help the smooth electrification of the eastern part of the country during peak consumption periods and will allow EAC to withdraw after 2029 the polluting steam boilers in Dhekelia, as demanded by the European Commission itself.
Our information indicates that, through its complaint, the Electricity Market Association accuses the Cypriot Government of strengthening EAC's dominant position in the electricity market with the above efforts. It also argues that a possible consent by the Commission to recoup the cost of the two generators by all consumers, through Public Utility Services, would constitute state aid to EAC.
We are also informed that SAH explains in its letter that the Dhekelia power station upgrade project is not viable and claims that it will not effectively help cover the adequacy of electricity in Cyprus. The Association's position is that electricity adequacy problems can be solved by utilizing the new power station (PEC-Cyfield) in Vasilikos, with a total capacity of 260 megawatts, either by advancing natural gas as soon as possible, or by temporarily converting the generators, so that they can use diesel, until the introduction of natural gas.
The position of SAH, chaired by Cyfield CEO George Chrysochos, is that any problems highlighted by the Transmission System Operator and preventing the increase of production capacity from Vasilikos (from EAC and PEC stations) can be solved by upgrades to EAC substations in the area, something that the Ministry of Energy rejects. CERA, Transmission Operator and EAC.
Risk of a negative answer
The new complaint of the SAH to the Directorate General for Competition, regarding the gas turbines in Dhekelia, has alarmed the government side, as already recorded in the previous days difficulty in the effort of the Ministry of Energy to convince the Commission to approve the financing of the investment (about 150 million euros) through the Ministry of Energy, by all consumers.
If the concerns are confirmed and the request is ultimately not approved by the Directorate of Competition, the Ministry of Energy and EAC will be called upon to deal with a serious dilemma: abandon the planning for new generators in Dhekelia (the installation of which CERA and the Transmission Operator consider imperative), against a very high risk for the security of the system and the adequacy of electricity in the coming years. or proceed with the installation of the generators at EAC's financial charge.
In the latter case, EAC will be in danger of a very serious financial adventure, as its officials consider the upgrading of Dhekelia – under the current energy situation in Cyprus – unprofitable and unsustainable for EAC itself. The assumption of the financial burden for the new generators (the Electricity Authority has already committed to bear from its cash resources the cost of storage systems) will increase the cost of electricity for EAC customers, in competitive market conditions, but will also create conditions for private energy producers to raise their own prices. at levels close to EAC prices, despite the large difference in their production costs.
It was preceded by another, last year
This complaint (regarding the new generators in Dhekelia) was preceded by another complaint by the association to the Directorate-General for Competition, about a year ago, concerning this time the request of the Ministry of Energy to grant a derogation to Cyprus, so that central storage systems can be installed by EAC -and managed by the independent Transmission Operator- to support the grid to balance the system more easily, reduce photovoltaic cuts and ensure more economical electricity production through less use of obsolete anti-economic generators.
The Republic's request for derogation was finally accepted by the EU and already the Council of Ministers has approved a bill in early February that allows the Operator to manage central storage systems. The bill was tabled yesterday in Parliament.
