Filenews 11 May 2025 - by Chrysanthos Manoli
During his speech at the general assembly of OEB last Wednesday, the President of the Republic said that the official launch of the competitive electricity market will take place in September and not earlier in the summer. Obviously, in order to avoid problems during the period of very high electricity demand, given the marginal ability of the system to cope with the needs of consumption.
As "Fileleftheros" recently wrote, CERA, the Transmission System Operator (Market Operator) and the Ministry of Energy are determined to prevent this time any factor that may cause a new postponement in the competitive market. Although the sincere cooperation of all private individuals in the sector for the successful completion of the current trial operation of the market has not been confirmed.
This determination, however, is not so much linked to the conviction of the competent bodies - not even the Ministry of Energy - that the functioning of the competitive market will bring about a substantial reduction in electricity prices for the great mass of consumers, but to two other factors:
First, it is unprofitable - and scandalous - for electricity consumers to continue the current regime of transitional electricity regulation; that ensures super profits for private producers and suppliers of electricity from photovoltaic parks and keeps the price for residential consumers and small and medium-sized enterprises high and, secondly, it is technically, legally and politically difficult – and time-consuming – to overturn at the last minute the multi-year plan for the operation of a competitive market on the basis of the Target Model. (Target Model) of the European Union, even if this model consciously allows the sale of electricity from renewables at prices with a profit of 200 and 300% against the real cost of production.
As "F" pointed out in a recent report, significant progress has been recorded in recent months in terms of the response of a large portion of private producers and suppliers of green energy, as well as in the utilization of software systems and other equipment by the Market Operator.
On the other hand, the problems remain with the non-participation in the trial operation of the competitive market of small producers with a total capacity of 200 megawatts, as they have not been included in Centralized Representation Bodies (FOSE). The official cooperation of a sufficient number of banks with the CSE is also pending, for the processing of transactions within the market, but also for the provision of guarantees for the financial response of the "players" in the energy exchange.
Odysseus' intervention
However, the biggest problem in view of the operation of the Target Model for a competitive market remains the pessimism of a large part of technocrats in the public and private sectors about the ability of this model to provide substantial solutions to the huge issue of expensive electricity.
Today's estimate, which is gaining ground, concludes with the possibility of a slight reduction in costs in some phases of the 24-hour period but also in large increases in other phases. With these data, the voices for a re-evaluation of the correctness of the application of the competitive market on the basis of the Target Model or for its abandonment if it does not indeed ensure real competition and lower prices are strengthened.
On Saturday, an extensive analysis – intervention by the former Auditor General Odysseas Michaelides on energy issues was published, in the context of which the position is expressed that the Target Model "will be an improvement (in relation to the current transitional arrangement), but it will far from providing solutions to the small and isolated electricity system of Cyprus".
Mr. Michaelides predicts that "this model will simply preserve the profits of the few, without leading to a substantial reduction in the price."
Reliable information from the Liberal Party states that this concern is also shared by government officials of competent ministries and authorities and has recorded it in recent exchanges of views – warnings.
Odysseas Michaelides proposes the following: "We are bringing competition today. Commercial RES licenses that were issued and not implemented on time must be revoked. Now, new commercial RES licenses should be subject to a system of discounted tenders of EAC-Supply (i.e. offers from private individuals and the purchase of green electricity from EAC Supply at the lowest prices, so that everyone benefits) and include an obligation to store, at the expense of producers, in order to achieve further penetration of RES but to the benefit of consumers. The single buyers model is allowed in non-interconnected electricity systems and is applied by neighbouring small Malta, which has electricity prices much lower than ours."
AKEL's long-standing position on bidders
The same or similar proposal has been submitted 4-5 years ago by AKEL, which often brings it back. The information provided by the Liberal Party confirms that the same view is of concern to the Government and if the first indications from the operation of the Target Model confirm the pessimism about substantially lower prices, the continuation of the competitive market as planned is likely to be re-evaluated by the Cypriot authorities as well as by the European authorities, which are aware from official sources of the particular obstacles to the development of real competition in Cyprus.
