Filenews 16 February 2025 - by Charalambos Zakos
The discussion of EAC's budget for 2025 in the House Standing Committee on Finance brought back to public debate previous erroneous – as evidenced today – decisions, which deprived citizens of their right to reduced electricity prices.
Indicative of the above, the questions raised by DIKO and DIPA MPs during the debate, which concern two different issues, but are linked and apparently could affect electricity prices.
Moreover, the statements made by EAC President George Petrou during the debate clearly show that these decisions resulted in millions in profits for individuals, while excluding consumers from cheap energy.
The exclusion of EAC
In particular, the President of the Board of Directors of the Electricity Authority of Cyprus, George Petrou, speaking during the examination of EAC's budget for 2025 in Parliament, revealed details which, although known, nevertheless show the big problem caused by the decisions to exclude the Authority from the production of energy from Renewable Energy Sources (RES).
As Mr. Petrou said before the members of the House Standing Committee on Finance, the Electricity Authority of Cyprus, although it wants to proceed with the production of green energy, nevertheless faces difficulties in finding land for the installation of photovoltaics. This is because, as is well known, EAC until recently was excluded from its participation in RES production for reasons of competition.
As today's data show, by the time CERA's decision was taken to allow the participation of the Electricity Authority of Cyprus in the production of energy from RES, it was too late, since most of the land that could be used for this purpose had passed into private hands.
The two decisions affecting
More specifically, among other issues, the committee raised questions about the decisions that had to do with EAC's penetration into green energy on the one hand and the failure of the Single Buyer Model on the other.
CERA's decision to leave EAC out of developments for the production of electricity from Renewable Energy Sources (RES), on the grounds of the competitive electricity market and the preservation of competition, seems to have had the opposite results in two fields.
On the one hand, EAC could not produce cheaper energy and had to continue burning fuel oil, therefore at a higher cost, and on the other hand – and after CERA finally allowed its entry into RES with delay – EAC faced and is facing a serious problem in finding land for the development of photovoltaic parks, since the private sector managed to penetrate to a large extent, leaving negligible areas of suitable and offered land, which can be used for this purpose.
Indeed, the chairwoman of the Finance Committee, Christiana Erotokritou, in her statements after the meeting, expressed her disappointment with this decision, even describing this ban as scandalous.
EAC searches and does not find land
Indicative of the problem are the announcements and the call for expression of interest by the Electricity Authority of Cyprus for land rental, but so far the appropriate pieces of land have not been found that can meet the needs of EAC.
In fact, due to the above problem, EAC had also put on the table the option to buy existing licenses for photovoltaic parks from individuals, which however did not succeed since it was considered unprofitable due to high prices.
It should be noted that EAC, from the photovoltaic parks it managed to develop, produces green energy at a cost of 5 cents per kilowatt hour, in contrast to the approximately five times the cost it bears for the production of one kilowatt hour of fuel oil.
Besides, it has already been stated by experts that if EAC were given permission to participate in green energy production from the outset, electricity prices today could be reduced by 10% for everyone, since the penetration of green energy into EAC's energy mix would benefit all consumers and not some, as is the case today.
Black market permits for RES
EAC President George Petrou explained to MPs that several private individuals who secured land approached EAC to sell their licences, however, the price they were asking for for the sale of these permits reaches many millions of euros. A typical example of the alaloum that was created and the problems due to CERA's decisions, is the case revealed by Mr. Petrou.
Specifically, the President of the Electricity Authority of Cyprus told MPs that, in one case, a private individual submitted an offer to EAC for the sale of a license it holds for 14 megawatts at €7 million, however, as Mr. Petrou added, the cost to the individual – when he had obtained this license – ranged between €30,000 and €50,000.
Mr. Petrou also pointed out that due to these bad decisions, the price of electricity can be reduced only after at least two years, until EAC manages to produce satisfactory green energy, which by including it in its energy mix will be able to bring down prices.
Failure with the Single Buyer Model
That said, we come to the Single Buyer Model, which if implemented as it should, today the electricity bill for all households would fall again.
The relevant issue during the debate in Parliament was raised by MPs of the DEA, with the MP of the party, Alekos Tryfonidis wondering if it was ultimately more correct to ensure the implementation of this model.
In fact, the reintroduction of the Single Buyer Model issue should not be considered irrelevant to efforts for the competitive electricity market, since according to people familiar with what is developing, the thought of reintroducing this model can put pressure on RES companies to implement the market opening as best as possible. This also seems to be the "plan b" of the Ministry of Energy, in case of failure of the open electricity market.
They left the Single Buyer Model and went privately
In short, the Single Buyer Model provided for EAC to buy RES energy from private producers at a fixed price and which production would be introduced into its energy mix that would bring down electricity prices.
For as long as it was successfully implemented, the avoidance cost was set at 11€/kWh, however, this applied to those producers who were contracted with EAC. Something that changed after some time, since most producers who were in the Plan decided to leave – since it was allowed – and proceeded with private contracts with industries, selling essentially at double the price, i.e. around 22 € / kWh or more in some periods.
As a result of the above, EAC could not add cheap energy to its energy mix and a small number of industrialists benefited from the development of RES, which, although they paid lower prices than those of EAC, nevertheless, prices were still considered high in relation to production costs.
Taxation of superprofits – In the Legal Service bill
As shown above, RES producers can produce energy at a low cost – reaching five to seven cents per kilowatt hour – however, due to the high prices of EAC, which costs close to 20-25 cents, they can sell their energy with a higher profit margin, since their price will still be lower. even slightly, from EAC.
This was the reason why reactions had arisen in the previous period, with parties and MPs characterizing the profits of RES companies as superprofits, calling for them to be taxed.
The discussion on taxation had begun during the previous government and while the Minister of Energy was Natasa Pilides, who asked to proceed with an audit of whether superprofits arise.
As "F" is informed, a relevant bill for the taxation of the superprofits of RES companies has been prepared by the current Government and is currently in the Legal Service for legislative review.
