Cyprus Mail
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Questions over surprise RES change

By Elias Hazou

IN A MOVE puzzling to many, the government has apparently decided to drastically curtail the licences allotted to small-scale photovoltaic energy systems in favour of two solar thermal parks.

Only last Friday the energy ministry’s energy service informed the Cyprus Energy Regulatory Authority (CERA) that it has revised its plan. It has downgraded the total capacity of PV systems for homes – also known as net metering – and for businesses to 13.5 megawatts (MW) from about 30MW as initially planned for 2014.

According to Politis, which broke the story, the reason cited for this revision is the recent decision by the cabinet green-lighting the construction of two solar thermal parks of a combined capacity of 100 MW.

As an EU member, complying with targets on cutting greenhouse gas emissions and raising the penetration of renewable energy sources (RES) in the power grid, Cyprus has set a goal for the year 2020 of generating 13 per cent of the gross final energy consumption from RES.

Since the penetration of renewable energy sources (RES) in the power grid is limited and finite, it follows that photovoltaic systems will have to make room for the capacity of the planned large-scale thermal parks.

The decision on the two thermal parks is not yet cast in stone, however. Technically it needs approval from the energy regulator, but also from parliament which needs to okay the subsidies scheme, which is part of the budget for the special RES fund.

Asked on Monday, head of CERA George Shammas confirmed receipt of the energy ministry’s new plans, which he said they would study before delivering their opinion.

Since net metering was introduced last year, an estimated 3,000 households have installed the systems. Net metering allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid. It’s a billing mechanism that credits solar energy system owners for the electricity they add to the grid.

Today the House commerce committee – whose members backed the project for household net metering – is scheduled to discuss the government’s apparent change of course, which came as a surprise since net metering had been billed as a means of lowering households’ and businesses’ electricity, particularly amid the financial crisis.

One of the planned solar thermal parks (with a 50MW capacity) is to be built in the area of Malounda, on land owned by the church. The other park (also 50MW) is to be located near Alassa, Limassol, where the key investor is Alpha Panareti Public Ltd, major land and property developers. Alpha Panareti has also got a licence for a golf and leisure resort, likewise near the village of Alassa, overlooking the Kouris dam. Plans by the electricity authority (EAC) to build its own solar park of 20MW have been shelved.

Meantime energy experts are querying the wisdom of allocating 100MW to solar thermal parks, given the small size of the island’s electricity capacity.

“We’ve got to wait and see what policymakers are thinking, but at first sight it doesn’t seem sustainable,” commented Constantinos Hadjistassou, an energy researcher with the Kios centre, University of Cyprus.

For the electricity grid to be stable, he explained, production from RES at any point in time should ideally be at 20 to 25 per cent of total production. That’s because of the risks involved due to output fluctuations typically associated with RES systems.

Today the total installed capacity of RES comes to 165MW: 145MW from wind energy and another 20MW from industrial-scale photovoltaic parks. Adding another 100MW from the two solar thermal parks would bring total RES production up to 270MW. But actual energy consumption is currently at a mere 520MW, meaning that 270MW from RES goes well beyond the 25 per cent threshold considered safe for the grid.

Neither is electricity consumption expected to rise substantially over the next two to three years as cash-strapped consumers try to cut on expenses any way they can.

“So it looks like smaller RES systems, like net metering, would definitely be crowded out should authorities go ahead with plans for industrial-scale solar parks,” Hadjistassou told the Mail.

Also, electricity generated by solar thermal parks is relatively costly – an incentive to companies which expect a high return on investment. And usually, said Hadjistassou, because of the large capital overheads, contracts for such projects are awarded on a long-term basis, perhaps 15 to 20 years.

Moreover, during this time the companies are guaranteed a fixed price at which they’d sell power to the EAC.

The government’s move to allow large-scale RES projects also raises questions about the future of the EAC, which is slated to be privatised by 2017, as a means for the government to raise cash to pay down the national debt. Should the EAC’s direct contribution (that is, excluding RES) to energy production be diminished, that might negatively impact the market value of the organisation.

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