Filenews 8 June 2025 - by Michalis Dracoudis
On the occasion of the termination of the "Net Metering" and "Net Billing" projects, as of 1 August 2025, I would like to propose concrete actions, with the aim of strengthening the state policy in the energy sector and the energy transition of Cyprus.
In this context, I submit five proposals on the issues of storage, energy saving, simplification of upgrade procedures, introduction of energy education and targeted regulations for large commercial producers.
- Energy Storage
First of all, it is a common assumption that energy storage is considered a fundamental element for the continuation of the energy transition. The crucial question that arises is whether the Ministry's future plans will give the necessary impetus to the installation of small residential storage systems or whether the creation of future central storage systems will be preferred, in order to cover residential photovoltaics.
I believe that centralized storage systems – located either near substations or centrally under the control of the Distribution Operator – are the most rational approach, as with less money we can get more storage, which at the same time offers us greater flexibility in the network, fewer cuts and greater security to avoid a blackout.
Furthermore, because the investment for such infrastructure is large, I believe that it would not be right to burden citizens who do not have photovoltaic systems, but neither would the public treasury.
For the purposes of energy justice, I propose that all PV system owners (whether they have a cut-off receiver or not) be charged a small storage fee, which should be charged in the same way as it is currently done for grid use, i.e. on the basis of the energy exportable to the grid. The resources from the imposition of this fee will be pooled in a special fund, through which any requirements for storage infrastructure will be financed.
Needless to say, the installation of photovoltaic systems no longer needs to be subsidized by the state, except of course for specific vulnerable groups, as the cost has been greatly reduced.
In this way, on the one hand, there will be savings of public resources and on the other hand, the resources of the RES EXE fund can be channelled directly to strengthen the Storage Fund.
Parenthetically, I think it is useful to briefly recall some disadvantages of small storage systems, compared to large scale systems:
⦁ Multiple costs per kwh and shorter service life.
⦁ Most installed household inverters do not support storage.
⦁ Batteries should be placed in close proximity to the inverters, which are mostly placed next to the meters. However, if we take into account that most houses have their meters either at the entrance of the house, in the garage, or on the wall of the house, reasonable questions arise about their placement. In addition, it should be noted that batteries must be placed in a waterproof and ventilated area.
⦁ Also, official re-inspection and additional equipment will be required, procedures which require additional costs.
⦁ Due to the high temperatures during the summer months, a new liquid cooling technology is recommended, which is only found in large systems.
⦁ Batteries contain several toxic materials, which are not environmentally friendly. Scattered batteries on the right and left will make recycling them even more difficult.
⦁ In the event of a blackout, small household batteries will be completely useless. Most hybrid inverters on the market are grid followers rather than grid forming. This means that, in the event of a network loss, they will simply stop working.
Another distortion that indirectly results from existing self-consumption plans is the false impression that consumers do not need to be careful about saving energy.
In particular, there is the phenomenon that consumers who have installed a larger system than their needs and accumulate several kilowatt hours as a surplus, cease to be careful with their consumption. If one takes into account that residential consumers in particular record increased consumption during hours when energy production is purely based on conventional production, this increases the operating costs of the EAC, which essentially burden consumers who do not have installed photovoltaic systems.
For this reason, I propose that consumers should be able to sell their stored energy at the end of the year, rather than losing their surpluses after three years. This would potentially lead this category of consumers to seek to increase their potential revenues at the end of each year. Furthermore, the sale price may be lower than the cost of avoiding the EAC, so that the EAC also benefits from this operation. It should also be noted that this regulation, in conjunction with my proposal for a storage levy, may encourage consumers to save energy, as they will know that even the electricity they produce as a surplus has a cost.
Procedures With regard to undeclared photovoltaics, especially illegal upgrades, it would be useful to simplify the procedures. Practically speaking, most of the upgrades concern the addition of 1-2 kw to existing systems. That is, the chassis is simply increased, without any change of inverter and electrical equipment.
Based on the current procedure, this small upgrade requires a fee of €250 to the EAC, the submission of a new application and a new audit of the system, which, in addition to the cost, causes unnecessary bureaucratic procedure.
In this regard, I propose that the procedures for minor upgrades be simplified. For example, up to 2 kw of power increase and since there will be no inverter change, it is more practical to require an informative declaration to the EAC, accompanied by a fee of €50.
The recent strong dissatisfaction from citizens over the cuts that have occurred in home photovoltaic systems has highlighted the lack of energy education. It has been observed that many of our fellow citizens draw wrong conclusions from the reading of the EAC invoices. It is understandable that many do not know enough how to calculate the efficiency of a photovoltaic system and how to calculate the actual cost of cutting losses. This is, I believe, a key source of the strong dissatisfaction with the cuts, which have emerged in recent months.
The truth is that cuts are necessary for the stability of the system and will not go away, since there is no substantial benefit from creating too many storage units in order to eliminate the cuts. It is a clear cost-benefit issue.
To this end, I propose that the state, and in particular the Ministry of Energy, launch a nationwide campaign to inform citizens on energy issues, utilizing modern forms of communication. Through a well-targeted communication campaign (e.g. through short spots) it can be explained how to calculate the investment of a PV, how to read the EAC bill, how the electricity grid works, why EAC must maintain a minimum conventional production of 250 MW, how to calculate the cost of cuts, but also why the public body in the energy sector is necessary and necessary.
- Storage for Large Commercial Energy Producers
It is clear that the removal of the clause for mandatory storage in large commercial producers has created the current situation with very large cuts. In this regard, the minister had stated that the reason for the removal of the clause was the very high cost of storage, based on the data of that period.
This, however, no longer exists. The cost of storage at the MWH level has been reduced so much that storing such sizes is considered a profitable investment. Especially when the storage system is placed in photovoltaic parks, which have already been depreciated or have been operating during the transitional market for a few years.
To be fair, Minister, this clause should never have been removed. If storage was expensive at the time, the storage size requirements should simply be reduced. It would also be appropriate to review this clause annually, based on the needs of the system and the current storage costs.
As everyone knows, the transitional market, the very high energy prices and the removal of the storage clause, led to super profits, which inflated the real value of RES investments. As a result, these investments (a few thousand euros) are resold at outrageously high prices (a few million) to third-party investors, often to foreign investors, who see their investments not yielding to the extent they expected, due to the cuts.
For all the above reasons, I believe that the state subsidy of private storage units will be scandalous. Unless one believes that they do not have the necessary funds! The reality is that the lack of a proper regulatory framework has created the current distorted situation, which reminds us of the stock market bubble in 1999 and the unsustainable practices of overvaluation, with the well-known disastrous results.
For this reason, in my opinion, it is self-evident that citizens cannot shoulder the burden of this situation and neither can they turn their backs on the continuation of a bubble in RES investments.
Instead of an epilogue
, Minister, the citizens know that you are not responsible for many of the bad things in the energy sector and the scandalous regulations that your predecessors inherited from you. But it is your responsibility to put things right and, above all, to finally lay a sound and correct foundation in the energy sector.
I am sure you will agree that, only through rules of transparency, control and energy justice can we achieve the smooth and fair transition of Cyprus through RES.
This means putting Energy Democracy rules into practice for:
⦁ Cheap and accessible energy to all citizens
⦁ Fully combating energy poverty
⦁ Establishing a fair and transparent institutional framework
⦁ Decentralized energy production, with the active participation of citizens
⦁ Strengthening the role of the public and public benefit organization (EAC), so that it can rationally manage our energy transition, for the benefit of society as a whole.
- Chief Executive Officer of Dracoudis Energy
