A host of issues has been raised by the government’s stand-off with the Electricity Authority of Cyprus (EAC) over the establishment of a 20MW photovoltaic park in Akrotiri. Apart from the environmental concerns, which cannot be underestimated, there are also questions relating to who decides energy policy, whether monopolistic powers should be expanded, how private property could be utilised and to what extent the government could interfere in the business decisions of semi-governmental organisations.
The dispute has existed for some time but was made public after the chairman of the EAC Andreas Marangos publicly dubbed the energy ministry’s objections to a solar park ‘a hostile act’, drawing a response from the ministry’s permanent secretary, who claimed Marangos was ignoring the gist of the matter and politicising the issue. For now the government is standing by the environment department’s study which found the park would affect the bio-diversity and ecosystem of the area and lead to the cutting of more than 4,000 trees. It also mentioned that the area was undergoing zoning modifications.
On the economic front, both sides have strong arguments but when put in context they are not so convincing. For instance, the energy ministry quite rightly argues that such a project should not go ahead before the opening up of the electricity market, which, as result of EAC foot-dragging, will not take place until mid-2019. By setting up a solar park, the Authority will have closed the market to private producers, once the electricity market is liberalised and this would be a clear abuse of its dominant position, especially considering there has been one company trying for several years to secure a licence for a big solar park.
The government is right in objecting to the EAC plan but on the other hand, it has been instrumental in preventing the Authority from securing gas supplies for its power stations that would reduce production costs and carbon emissions, as per EU directives. Now the Authority argues that a solar park would enable it to cut electricity prices and help the government meet the 2020 carbon emission targets set by the EU for member states. Failure to meet these targets would lead to fines which would translate into higher rates.
While the government is at fault for vetoing several gas supply deals reached by the EAC, the latter and its powerful unions were clearly to blame for blocking the opening up of the electricity market, using every trick in the book to scupper the government’s plans. Why should the EAC now be rewarded for its obstruction tactics? This is what will happen if it is left to set up a 20MW solar park now when it enjoys monopoly powers and no other producer can enter the market. This would minimise competition when the market is finally, if ever, liberalised.
Both sides have contributed to the mess although this is no consolation to households and businesses which are likely to continue to pay top prices for their electricity.