Cyprus Mail

Power liberalisation put back again

The planned liberalisation of the energy market has been pushed back yet again, with lawmakers on Tuesday hearing that the July 2019 target is now unfeasible.

Instead, the most optimistic scenario is for the move to take place by mid-2020.

The reason, MPs heard, is that the Transmission System Operator (TSO) and the Distribution System Operator (DSO) will not be ready to deploy specialised software monitoring supply and demand by the deadlines previously set.

The former was supposed to be ready by July 2019, the latter by April 2019.

Instead, the TSO now estimates it will have the software in place by mid-November 2019, and the DSO by January 2020.

The schedules, set by the Cyprus Energy Regulatory Authority (Cera), were binding.

As such, both the TSO and DSO could be liable to fines, at the regulator’s discretion.

“Today we have learned that the switch to an open market will be delayed for the umpteenth time, which we consider unacceptable,” chair of the House commerce and energy committee Angelos Votsis said.

The problem lay in “objective difficulties” with obtaining the specialised software.

Currently, the only producer of electricity in Cyprus is the state-run power company.

The TSO and DSO are effectively arms of the Electricity Authority of Cyprus. But since these two bodies have been designated as monitors once the market opens up, giving them access to suppliers’ proprietary data, they need to be rendered ‘independent’.

MPs heard that the government has – after much delay – drafted legislation making the two bodies independent. The bills are to be sent to the attorney-general’s office for legal vetting.

Under full liberalisation, an ‘electricity exchange’ of sorts will be established, where suppliers’ bids for quantities of electricity will be updated every half an hour.

The exchange will match supply and demand and fix the price for a contract.

Essentially the Electricity Authority of Cyprus will act as a pool, or cache, of electricity.

The electricity exchange platform would be operated by the TSO, which will gain the added capacity of acting as market operator in addition to monitoring security of the overall electricity supply.

The system matching bids requires complex software, which needs to be customised to the particulars of the Cyprus electricity market.

Some €4m has been budgeted for the design of the software, for which tenders will be called.

Before the TSO can operate as an exchange, the Regulation of the Electricity Market Law has to be amended to render the TSO fully independent of the state power company.

In addition, regulations must be prepared detailing the terms of employment of TSO employees. Once the regulations are drafted, EAC employees now seconded to the TSO will decide whether to remain as TSO employees or be designated as EAC employees.

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