Cyprus Mail
Business Cyprus

Fighting over renewable pie

By Elias Hazou

DESPITE government assurances yesterday that there is no intention after all of scaling back on net metering systems, a turf war has broken out among lobby groups and stakeholders in the Renewable Energy Sources (RES) industry.

Energy Minister Giorgos Lakkotrypis told MPs at the House commerce committee that some 5,000 additional licences would be issued for net metering systems in 2014 – the same number as for the previous year.

Recently the government informed the Cyprus Energy Regulatory Authority (CERA) that it had revised its RES plan, by downgrading the total capacity of PV systems for homes and small businesses to 13.5 megawatts (MW) from about 30MW as initially planned for 2014.

The reason cited for the revised policy was the recent decision by the cabinet green-lighting the construction of two solar thermal parks of a combined capacity of 100 MW.

On hearing this, deputies had threatened to block passage of the government’s special RES fund unless they received a satisfactory explanation for the change in policy.

But on Monday Lakkotrypis said the increased penetration of solar thermal energy would not crowd out net metering systems, as some had feared.

Following their briefing by the minister, legislators remained doubtful but were willing to give the government the benefit of the doubt – for now.

“We shall wait for the RES plan and the budget to see if the minister’s promises check out,” said Costas Costa, AKEL MP.

The RES plan is expected to be submitted to the House after the European Parliament elections. At any rate, the permits for the two solar thermal parks are subject to the approval of the energy regulator.

Parliamentarians, however, maintained their suspicions. Up until March 6, said Costa, there were no provisions for solar thermal energy in the RES scheme for this year. Then abruptly, around mid-April, there was a major shift in policy with 100MW allotted to solar thermal parks.

“That’s strange, to say the least,” he said.

Asked whether MPs demanded to learn the reason for the shift in policy, Costa said they did, though the explanations offered by the minister left a lot to be desired.

“We were told only that the government has taken a ‘political decision’ on the solar thermal parks. The minister said also the government intends to move forward with the solar thermal parks as it was seeking to co-finance these via the NER300 programme.”

NER300 is a financing instrument managed jointly by the European Commission, the European Investment Bank and EU member states that sets aside allowances (rights to emit one tonne of carbon dioxide) in the New Entrants’ Reserve of the European Emissions Trading Scheme for subsidising installations of innovative renewable energy technology and carbon capture and storage (CCS).

But given that the government is pressing ahead with its solar thermal plans, doesn’t that mean a smaller share of the RES pie for net metering?

The current Renewables Directive of the European Union requires that 20 per cent of the energy consumed within the European Union by the year 2020 is renewable. This target, known as 20-20, is pooled among the member states.

Now, the EU is mulling amending the target so that 30 per cent of the energy consumed by the year 2030 is renewable. The energy ministry here has already drafted a policy memo for 30-30, and it’s understood this will increase the overall RES pie, in this way accommodating – in theory at least – both PV systems and solar thermal.

At a press conference on Monday, the Cyprus Association of Renewable Energy Enterprises (CAREE) said the introduction of net metering – other than benefiting consumers – has created jobs for companies importing and installing the systems.

Giorgos Georgiou, head of the association, said this was now at stake given the uncertainty over government plans.

CAREE counts around 60 companies among its members, while some 1,000 people (including trades such as electricians) are employed in the net metering business.

According to Georgiou, today net metering carries zero cost for the taxpayer, while the electricity cost has dropped substantially to an average of about 8 cents per kilowatt-hour (kWh).

Moreover, Georgiou told the Mail, the electricity cost of PV systems is flexible – in contrast to solar thermal and wind energy, where the tariffs are fixed for a long period of time (usually 15 to 20 years) to compensate investors for their significant capital outlays.

Georgiou questioned claims by the Cyprus Wind Energy Association (CWEA), which asserted that the average cost of PV systems (small and large-scale) stood at 32 cents per kWh.
Akis Ellinas, head of CWEA, said that by comparison the cost of wind parks was 16.6 cents per KWh.

Citing these figures Ellinas was making the argument that wind energy is cheaper than PV, and expressed concern that the government’s plans for solar thermal energy would sideline wind parks. Ellinas is the main investor in the wind park at Orithes, Paphos district.

But Georgiou countered that the 32 cents per KWh cited by Ellinas was outdated, taken out of context and thus misleading. This may have been the cost of PV systems initially, but prices have since dropped dramatically, he said.

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