The recent power cuts have rightly brought the issue of adequacy back to the centre of the public debate. According to the TSOC, the need for controlled load dumping arose from the combination of increased demand and extraordinary breakdowns in conventional plants with a total capacity of approximately 165 MW.
Failures, however, are not something unthinkable for an electrical system. Rather, they are incidents for which a well-designed system must have sufficient reserve and alternatives.
Sufficiency does not simply mean that the country has several installed megawatts on paper. It means that it can, at any time, meet demand with units that are actually available, with sufficient operational reserves, storage, demand response and secure networks. It also means that the system can withstand the loss of one or more units without interrupting the supply to consumers.
In Cyprus, the challenge is even greater. We are an isolated electrical system, without the ability to directly introduce electricity when a deficit occurs. At the same time, we now have a large photovoltaic production at noon, but a much smaller possibility of using it during the evening peak. For this reason, adequacy cannot be considered solely on the basis of aggregate demand or the rated power of the units. Even if the peak demand met by conventional generation has not changed dramatically over the past decade, the risk increases when the actual available capacity is reduced or there is insufficient storage and flexibility.
Today's problem did not arise overnight. In 2017, CERA set as a binding goal the full operation of the competitive electricity market on July 1, 2019. The transitional arrangement was designed precisely to cover the short period until the start of the new market. In the end, however, the competitive market was only put into operation on October 1, 2025. A temporary bridge of about two years was converted into an eight-year regime.
This delay is directly linked to the absence of storage on a significant scale. In 2019, the requirement of mandatory storage for large RES projects was removed, with the logic that the imminent competitive market would impose injection programs and deviation charges, creating in itself the economic incentive for storage. CERA continues to argue that, with the operation of the market, compulsory storage becomes "obsolete".
This approach can only have a theoretical basis when the market is actually functioning and on time. However, when its operation is delayed for another six years, the result is that there is neither a normal storage obligation nor a real market mark for its installation. This should not be treated as a party slogan, but as an institutional lesson: every regulatory decision must be reviewed when the basic assumptions on which it was based are not implemented, and this is essentially what the signatory did.
The needs were well known. The National Energy and Climate Plan considered scenarios with a new 216 MW combined cycle flexible plant from 2024, 130 MW pumped storage with a duration of eight hours, batteries, demand response and electrical interconnection. These were not all automatic manufacturing orders, but they did demonstrate that the need for new conventional power, storage and flexibility had been identified in time.
The same goes for demand management. As of 2023, there is a regulatory framework for dynamic pricing, but without extensive installation of smart meters, the consumer cannot respond to real market conditions. The mass installation of smart meters is now underway in all provinces (and this with the current Government). When completed, dynamic tariffs will be able to transfer part of the consumption from peak hours to high RES production hours. Perhaps this could even start immediately, on a pilot basis, in those areas where smart meters have been installed and are operating.
The launch of the competitive market in October 2025 is, therefore, an important step, which should be credited to the current Government. The market can now capture when there is a surplus of cheap energy and when there is a lack of power and flexibility. The sponsorship scheme for storage, along with existing RES projects, the contracts for 120 MW/400 MWh central systems and private storage projects without state subsidy, with a total capacity of 231 MW and a capacity of 570 MWh, which have received preliminary connection conditions, have also progressed. (Note: There may be more today).
However, the impression should not be created that a market that operated a few months ago can correct years of delays in one day. It takes at least a full cycle of operations to properly assess the prices and behaviours of participants, while it usually takes two to three years for the licensing, financing, connection and construction of major storage projects.
The next step should be to speed up the implementation. Storage permits and connection conditions must be issued with clear deadlines, standardized requirements and digital procedures. The order of priority of projects must be public and the Managers must be held accountable for delays. At the same time, commercial RES projects, independent producers and suppliers must take a proportionate part of the responsibility for adequacy, through their own storage, reserve contracts, demand response or other certified flexibility. It is not right for EAC Production to maintain the obligation to cover the adequacy almost on its own, while the other participants are limited only to the benefits from the market.
Finally, strict price surveillance is needed. The limit of €180/MWh (per half hour) provisionally applied in the European Union from 1 December 2022 can be used as a European benchmark for a legal national mechanism for the recovery of extreme excess revenues, with the amounts being returned to consumers through the reduction of network charges and other non-competitive charges.
The adequacy of electricity in a country is a collective obligation and not the sole responsibility of an organization. Anyone who participates in the market and earns revenue from it must contribute proportionately to the security of the system. The current Government has broken the many years of inertia with the operation of the market and the promotion of storage. Success, however, will now be judged by the speed and consistency with which CERA, the Operators, the EAC and the state machine, as well as the private participants, will implement what we have known for years that should have been done.
Former Minister of Energy, Trade and Industry.
