By Stefanos Evripidou
THE ISRAELI Electricity Company (IEC) has made a proposal to provide cheaper electricity to Cyprus through an underwater cable from Israel.
Sources yesterday confirmed a report in Politis on Wednesday saying that the IEC met with the Electricity Authority of Cyprus (EAC) to table a “concept” proposal to bring cheaper electricity to the island.
The proposal is not directly related to the EuroAsia Interconnector project, which enjoys the backing of the governments of Cyprus, Greece and Israel and aims to connect all three countries via an underwater electricity cable able to transfer energy with a total capacity of 2,000 MW.
The IEC’s proposal is to lay down a smaller submarine cable between the two countries to provide Cyprus with cheaper electricity until the island can produce its own cheap electricity, utilising its own natural gas resources. The agreement provides that at that point, Cyprus can reverse the flow of energy, selling its cheaper electricity to the Israeli market.
According to one source, the proposal is clearly an alternative to the government’s current deliberations on whether to sign a contract with Russian company Itera to secure the short-term supply of natural gas to Cyprus as a stop-gap solution until it can bring ashore its own natural gas. The interim gas would be used for domestic electricity production.
The government has made it very clear, however, that it would only go ahead with the decision if the agreed price with Itera would allow for a significant reduction in the price of electricity, alleviating somewhat the battered economy.
Speaking on Tuesday, energy and trade minister Giorgos Lakkotrypis said a final decision on the interim solution for the supply of natural gas to Cyprus would be announced in around two weeks.
The source explained that the only official proposal on the table is the Itera one. Until the negotiating process with Itera is complete, the government cannot seriously consider any other offer.
At the same time, he noted that it would be very difficult for Itera to make its proposal commercially viable for Cyprus, given the cost of bringing liquefied natural gas to the island.
Since the government won’t proceed unless it can guarantee lower electricity prices to businesses and consumers, there is a strong possibility other options will be considered in the coming months.
The IEC option, however, is still at a very early stage, said the source, noting that it was merely a “concept” at present, not a detailed proposal, with many technical, economic and political parameters that needed to be considered.
The proposal is considered separate to the EuroAsia Interconnector project, though theoretically, once a link has been established between Israel and Cyprus, this could then be extended to also reach Greece.
The source said the matter was not just about cheap electricity, but national strategy, questioning whether Cyprus should rely on an interconnecting cable for its supply of electric power.
“What happens if it breaks down or is sabotaged?” he asked.
Any such deal would also raise more than existential questions about the raison d’etre of the EAC, which already struggles to find demand for its maximum capacity to produce 1,400MW of power, with around 800MW generated in the peak summer season.
Should the EAC give up its capacity to generate electricity and work solely as a retailer, while maintaining control of the transmission, distribution and substations?
Another informal option also waiting for examination should the talks with Itera collapse is a proposal by Noble Energy to provide a short-term supply of gas from its Block 12 concession in Cyprus’ exclusive economic zone.