Cyprus has been trying for years to import natural gas for its electricity production, while in other electricity markets the development of renewable energy sources and storage systems is already limiting its use.
This development does not abolish the role of natural gas, but requires a review of the economic assumptions on which the relevant investments are based. The critical question is not only when the gas will arrive, but also how much our electricity system will need when its infrastructure is fully operational.
What happened in California
The recent example of California is typical. According to the United States Energy Information Administration, in May and June 2025, storage systems (batteries) in the system of the California Independent System Operator (CAISO) delivered an average of 4.9 gigawatts of power between 17:00 and 21:00, compared to less than one gigawatt in the corresponding months of 2022. This increased contribution replaced electricity production from natural gas during peak evening hours.
The mechanism is simple. Batteries store electricity, primarily during peak renewable generation hours when available energy is abundant and deliver it to the system during times of increased demand or reduced renewable generation. They do not produce new energy, but allow the available production to be utilized at a different time. Thus, more solar energy can meet the demand after sunset, limiting the need to operate conventional units.
The change is also reflected in the overall figures. In the first five months of 2026, electricity generation from natural gas in California's CAISO system was down 60% compared to the same period in 2024, while electricity delivered by batteries had tripled. The decrease was not solely due to storage, since solar production and electricity imports also increased. It is noteworthy that the installed capacity of natural gas plants remained almost unchanged, although their production was significantly reduced.
– A similar change is recorded in Australia. According to the Australian Energy Market Operator (AEMO), in the third quarter of 2026 large-scale batteries covered 8% of electricity during the evening peak, between 16:00 and 21:00, compared to 5.1% from natural gas plants. It was the first time that batteries surpassed natural gas in this time zone at a quarterly level.
Developments in Cyprus
For Cyprus, these examples are of particular importance, as the effort to complete the natural gas import infrastructure is evolving in parallel with the development of storage. The Cyprus Transmission System Operator is promoting three central systems, with a total capacity of 120 megawatts and an energy capacity of 400 megawatt hours.
At the same time, the Electricity Authority of Cyprus is promoting a system with a capacity of 80 megawatts and an energy capacity of 160 megawatt hours in Dhekelia.
At the same time, there is also interest from private initiatives for the installation of batteries, both autonomous and in combination with photovoltaic projects. Indicatively, five private projects with a total capacity of 60 megawatts have already received offers and connection terms. Ensuring connection conditions does not imply that projects have already been implemented, but it does indicate the potential for private investors to contribute to future storage capacity.
Of course, Cyprus does not have the characteristics of large markets. Therefore, the percentages of California or Australia cannot be transferred as such to the Cypriot planning. The main conclusion is that more renewables and storage can reduce the quantities of gas that would be needed without them, even if conventional power is still needed for security of supply.
The cost of infrastructure
This is where a crucial economic issue arises. Liquefied natural gas import and regasification infrastructure has significant fixed costs. Since these costs are recovered from the quantities handled, the reduction in consumption means sharing the same costs in fewer fuel units.
With the remaining parameters constant, the charge per unit increases. The extent of the risk for Cyprus depends on the amount of the expenditure, the contractual terms and the way in which it is recovered. For this reason, a specific techno-economic evaluation is required. This risk is in line with European remarks on the effect of lower infrastructure use on gas charges, without being a specific provision for Cyprus.
This does not mean that storage necessarily increases the international purchase price of natural gas or the total cost of electricity. The price of fuel is one thing and the charge for the use of infrastructure per unit of gas is another. A higher infrastructure unit charge may coexist with a lower total fuel cost if fewer quantities are purchased. The issue, therefore, is the total cost of the electricity system and not the isolated examination of a single charge.
At the same time, the arrival of natural gas should not be confused with its immediate and full utilization by all units, as technical adjustments and operational tests of power plants with the new fuel are required. If consumption increases gradually after the opening of the infrastructure, while fixed costs have already started to be paid, the initial unit charge may be higher.
If photovoltaics and batteries are expanded at the same time, future demand may turn out to be lower than initial forecasts. This requires combined scenarios of natural gas consumption, storage development and gradual utilization of the plants, together with gas supply contracts that offer the necessary flexibility.
Combined assessment
The choice for Cyprus is not "gas or storage", but the right combination of technologies, which ensures power adequacy, security of supply and the lowest possible cost of electricity. The development of storage can curb gas consumption, without eliminating the need to maintain sufficient conventional capacity.
For this reason, energy planning must consider the combined utilization of natural gas infrastructure, the penetration of renewable sources and the development of storage. The success of the energy transition will not only be judged by the completion of the infrastructure, but by the ability of the electricity system to provide reliable and affordable electricity to consumers.
* Professor of Energy Systems
Vice Rector, Frederick University
