MINISTER OF ENERGY - THIS IS HOW WE WILL PREVENT ELECTRICITY SHORTAGES - Filenews 25/10 by Eleftheria Paizanou
The procedures are "running" by the working group set up by the Ministry of Energy and CERA for the preparation of the Implementation Plan of the power mechanism, which is the alternative scenario for dealing with the energy "hole", i.e. the electricity shortage that is possible for the years after 2029. This is a preventive plan that will ensure the smooth coverage of electricity demand in the country, especially if natural gas is not imported by the end of 2029.
According to a written briefing of the Parliament by the Minister of Energy, last summer, the ministry, following a recommendation by CERA, initiated the procedures for the activation of the power mechanism, provided for in Article 34 of the Regulation of the Electricity Market Law. The mechanism acts as a safety net when the power margins of the system fall to dangerously low levels, below the critical safety limits and there is a risk of power outages.
By the end of 2026, it is estimated that the preparation of the Implementation Plan will be completed, which will be published and then submitted to the Commission for examination and opinion.
The Project must comply with European State aid rules and, in the event that it constitutes State aid, a request to do so should be submitted to the European Commission.
It is noted that, according to European regulations, after the EU opinion on the Implementation Plan and the approval of the power mechanism, the Minister of Energy should proceed with the issuance of a decree.
However, the draft of the decree has already been forwarded to the Legal Service for legislative review, so that there are no delays and all procedures proceed in parallel.
The Ministerial Decree will set out the procedure for securing the required new electricity generation.
The arrival of gas is a decisive factor
The Minister of Energy, Michalis Damianos, informing the members of the Parliamentary Committee on Energy about the measures taken by the Ministry for the management of electricity adequacy in Cyprus, notes that the goal is to complete the required procedures for the approval of the power mechanism within the first half of 2028.
At the same time, he notes that if the procedures proceed smoothly, CERA will proceed with the announcement of a tender to ensure the required new energy production.
"The time of inclusion of the new production in the system will depend on the solution that will emerge from the tender process (to ensure additional electrical power), as well as on the availability of the required equipment (production units)," he adds.
According to the Minister of Energy, this is a preventive plan, pointing out that "although the existing planning provides for the timely completion of the terminal in Vassiliko and the availability of natural gas for electricity production, the arrival of natural gas is a decisive parameter for the adequacy of the system".
As the minister argues, it is necessary to proceed in a timely manner with the required preparatory procedures for the power mechanism, so that the Republic is properly prepared to deal with possible delays, either during the tender process for the completion of the terminal, or during the execution of the project.
"It is understood that, if the evolution of the data shows that there is no need to activate the power mechanism, the process will be re-evaluated accordingly," he emphasizes.
CERA: The findings of the study
According to data cited in Mr. Damianou's letter, last January CERA conducted a study on the adequacy of electricity in Cyprus.
In May, the Regulatory Authority informed the Minister of Energy that the values of the adequacy indicators for 2030 are inextricably linked to the date of integration of natural gas into the electricity production system of the Republic. That is, without natural gas, it will be very difficult to have sufficient electricity in 2030.
CERA, in its letter to the competent minister, warned that "if natural gas does not become available for commercial operation in electricity production by January 1, 2030, the expected installed capacity will not be sufficient to ensure a satisfactory supply of electricity in the Republic. In this case, it becomes necessary to take measures related to power mechanisms, in accordance with Article 34 of the Law."
The Ministry demanded data
On 10 July, the Ministry of Energy activated Article 34 and requested specific data from CERA and the Transmission System Operator. Specifically, he demanded the following data:
– Data on the necessary production, i.e. the additional production capacity required in the scenario without the arrival of natural gas, so that the LOLE and EENS indices return within the limits (15 hours and 0.010% respectively).
– The date of commencement of operation of the additional production capacity, as well as the duration of the measure.
– The type of power mechanism deemed appropriate, the documentation of its choice, as well as a relevant evaluation.
– The estimated cost of the measure, i.e. the investment gap, as well as the type of expenses that will be subsidized.
– Proposal on how to recover the costs that will arise from the implementation of the measure.
– Any other requirements related to the manner and conditions of distribution of the specific production, as well as, indicatively, the requirements of the network.
CERA: GSI is also a decisive factor
On July 21, CERA, in a new letter, had argued that the determination of the date on which natural gas will become available for electricity production is a prerequisite for determining the type of power mechanism, the duration, the cost and the way in which the cost of the measure will be recovered. At the same time, he noted that the time horizon for the completion of the Cyprus-Greece electrical interconnection (GSI) is also a decisive factor.
Transmission System Operator: Sets conditions
For its part, the Transmission System Operator informed the Ministry of Energy that, in order to carry out a detailed examination of the production necessary to meet the sufficiency needs in the period 2030-2034, the assumptions should be co-decided and sufficient time should be given for the preparation of specialized studies.
In fact, for the calculation of the duration of the mechanism, the Operator set as conditions the determination of the date of arrival and disposal of natural gas for electricity production, the determination of the timetable for the completion of the GSI and the results of the consultation of the Republic with the EU regarding the compliance plan for the steam units of the Vasilikos and Dhekelia power plants.
In addition, the Transmission System Operator requested information from DEFA on the date of connection of the natural gas transmission system with the licensed conventional electricity producers, the timetables for the conclusion of the natural gas supply contracts between the supplier and the eligible electricity producers, as well as the timetables for the completion of the operational checks of the units available for the use of natural gas.
