Filenews 28 December 2025 - by Andreas Poullikkas
The European Commission has recently presented seven targeted actions aimed at reducing electricity costs for households and businesses and strengthening the competitiveness of European industry. The central objective is to address the lag vis-à-vis the US and Asia, while continuing the green transition.
Industrial electricity prices in Europe remain two to three times higher than the US and significantly higher than China and Southeast Asia. The cost difference is leading more and more industries to consider relocating outside the EU, looking for cheaper energy. For countries such as Cyprus, where electricity tariffs remain above the EU average and the market is small and relatively isolated, this situation puts significant pressure on households and negatively affects the competitiveness of businesses.
In this context, the European Commission is activating seven main policy axes.
First, it urges Member States to make full use of the new State aid framework (CISAF), which allows for enhanced support to energy-intensive industries, both through interventions in energy costs and subsidies for their decarbonisation by 2030.
Second, it facilitates the channelling of unused resources from the Cohesion Funds to energy storage networks and infrastructure, with revised national programmes and technical support from its services.
Third, the Commission supports the further development of bilateral power purchase agreements (PPAs), with a focus on long-term contracts between RES producers and industrial consumers. In cooperation with the European Investment Bank, a €500 million pilot project has already been implemented to reduce the financial risk of such contracts and enhance access to cheaper energy from renewables.
Fourth, the acceleration of licensing procedures for RES, storage and network projects is being promoted, taking advantage of the revised Renewable Energy Directive and announcing additional simplification measures.
Fifth, emphasis is placed on strengthening cross-border interconnections and national networks so that electricity can be efficiently routed to areas with high demand and high prices. The "energy corridors" initiative targets eight critical bottlenecks, including better interconnection of the Iberian Peninsula with France, strengthening energy supplies in the Balkans and South-East Europe, and phasing out Cyprus' electrical isolation through new interconnections with mainland Europe. The electrical interconnection of Cyprus is considered of strategic importance, as it is expected to contribute to the reduction of costs, the strengthening of security of supply and the full integration of our country into the Energy Union.
Sixth, the further diversification of natural gas suppliers is promoted, with a joint demand collection mechanism for the countries of the region and cooperation with partners such as the USA, Norway and Qatar, with the aim of more competitive prices and enhanced energy security.
The seventh pillar concerns the taxation of energy, which in some cases can account for up to one third of the final bill. The EU is preparing recommendations for targeted reductions in the tax burden, with a focus on energy-intensive industries and vulnerable consumers, so that interventions have an immediate and measurable effect. According to its estimates, the package of measures could lead to savings of around €45 billion already in 2026, exceed €130 billion per year in 2030 and accumulate a total benefit of €2.5 trillion by 2040.
The success of these interventions depends to a large extent on the speed and quality of their implementation at national level. If Cyprus and the neighbouring countries of the Eastern Mediterranean make timely use of the available European tools, financial resources, state aid rules, PPAs and tax regulations, they can strengthen the resilience and competitiveness of their economies.
Otherwise, the risk is that the projected benefits will be delayed and will prove insufficient in relation to the speed of developments in international energy markets.
* Professor of Energy Systems / Frederick University
