Cyprus Mail

Energy ministry says special subsidies for RES abolished in 2015

The energy ministry on Friday said the government abolished guaranteed subsidy rates for renewable energy sources (RES) in 2015 after it emerged that under a 2008 cabinet decision, investors in wind farms were guaranteed a fixed rate over a 20-year period leading to over-payments to producers.

In a written statement the ministry said that a special report by auditor-general Odysseas Michaelides on the matter clarified that the 2008 support scheme for large wind farms commited the state to paying a fixed tariff of 16.6 cents per kilowatt hour for 20 years and has thus contributed to serious deficits to the RES funds.

The Anastasiades government, however, the announcement said, took corrective measures by abolishing guaranteed subsidy rates by a cabinet decision in April 2015.

“In this context, the Ministry of Energy launched two very successful RES-funded sponsorship schemes with no guaranteed prices and with their final outcome in the competitive electricity market.”

In both cases, it said, the applications exceeded the available capacity, almost by 200 per cent in the first scheme and 300 per cent in the second, “which will help achieve our environmental objectives”.

“At the same time, abolishing the guaranteed rates has contributed to the creation of a reserve in the RES fund, which is already diversely returned to domestic consumers through funding schemes related to photovoltaic and/or thermal insulation of houses.”

The ministry said it proposed regulations to the House which provide for a reduction of the consumption fee paid to the EAC by more than 50 per cent.

On Thursday, state-aid Commissioner Theophanis Theophanous dubbed the case as the “biggest scandal of our time” after the House watchdog committee, heard that, to date, the state may have paid some €55m extra to RES producers than it otherwise might have.

Under a 2008 cabinet decision, investors in wind farms were guaranteed 16.6 cents per kilowatt-hour (kWh) over a 20-year period with a rate negotiation clause.

A special report by Michaelides however, found that a ministerial committee (ministry of commerce and energy) tasked with overseeing RES affairs subsequently amended the rate policy, scrubbing the renegotiation clause.

The revised policy was never officially communicated to the European Commission, as it should have been because no official documents exist on the new policy.

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