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Pace of electricity deregulation still too slow — Ellinas

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By Dr. Charles Ellinas
THIS is a follow-up to the interview of Dr Andreas Poullikas, Chairman of the Cyprus Energy Regulatory Authority (CERA): published  https://cyprus-mail.com/2021/01/22/cyprus-electricity-market-deregulation/

Dr. Poullikkas steadfastly avoided commenting on issues involving government or parliamentary responsibility – perhaps given their delays in enacting new energy regulation in response to CERA’s recommendations, this is to be expected. He was very careful to stay within the bounds under the strict remit and control of CERA. But even within these constraints his responses were quite revealing.

I did sense a degree of concern at the slow pace of change. It is something that I have been repeatedly commenting on in my own articles in this newspaper. Much can be done to bring Cyprus in line with Europe’s climate change drive. In fact, with its abundance of renewable resources Cyprus should be a leader country within the EU.

But sadly for the island, CERA’s recommendations do not yet appear to receive the support they need and deserve. Not only are government and parliament not giving these high priority or urgency, but many obstacles are continuously being put in their way.

Speeding up deregulation

The deregulation process can be speeded up if the delays in delivering the required software experienced by the TSO are finally overcome. This should have been in place in 2016, but since then revised deadlines have come and gone without result. It is now expected that the system will become fully operational in early 2022.

Let’s hope that, this time round, schedules will be adhered to.

Poullikkas has questioned the lack of long-term energy policy publicly through speeches, articles as well as through publications. He said: “The time has come for all political parties, to agree on a comprehensive sustainable energy plan based on scientifically substantiated inter-party energy agreements.”

He expanded on this. “In order for such an inter-party agreement to take place, the government must prepare and provide to the parties for consultation a fully justified plan of a comprehensive sustainable energy strategy. Such a plan should be scientifically substantiated and must ensure the balance between security of energy supply, environmental protection and economic growth.”

However, we must admit that, given our political culture, an agreement like this will require a significant amount of preparation and consultation time.

Need for long-term planning

Issues that require serious research and long-term planning should be assigned to scientists and technocrats to study and formulate an appropriate plan. We should make the most of the work of all those that have expertise on the subject. Let us now give the necessary importance and the right path to experts for all energy issues. In so doing, let us leave behind populist approaches with catastrophic long-term consequences against the rights of future citizens.

The policies that will be developed need to be consulted and accepted by the state so that they can be agreed upon by all the political forces in the country, ensuring the continuity of energy policies regardless of the change of power. The government should be prepared to incorporate the proposals of other parties. The possible position of some parties to deny their participation in the joint effort with the argument that a different policy is needed, which they will leave abstract rather than define it, is not going to benefit them in elections.”

This has now become quite urgent. A recent EU report indicates that Cyprus is near the bottom in terms of implementation of renewables.

Cyprus under pressure to increase renewables

Based on national law, this is a responsibility of the Ministry of Energy. Whatever the reasons are, with the EU Council having agreed last month to raise the emission reduction target to 55 per cent by 2030, the pressure on Cyprus to follow suit and raise its climate change commitments will only increase this year and next.
Part of the €1 billion Cyprus is about to receive from the EU’s recovery package could have been used to address these issues in a more coordinated and planned way, heeding CERA’s recommendations. This is of course the responsibility of the Ministry of Finance.

Unfortunately the opportunity is about to be squandered on reactive measures that will not necessarily usher in long-term change to a brighter energy future.

Key among these improvements is upgrading of the electrical system to a ‘smartgrid’, where power flows will be bi-directional. As Poullikkas explained, “the use of renewable technologies for electricity generation, such as wind or photovoltaics, coupled with storage capabilities and located in geographically dispersed locations, provide added challenges for the security of supply, system reliability and power quality,” that the grid must be able to accommodate.

Poullikkas said that “the existing infrastructure of the electricity network in our country is satisfactory, however, in view of the energy transition, preparations have already begun for the transformation of the current electricity network, from an electrical system where power generation is mainly produced centrally and power flows in one direction to the end users, to a smartgrid.”

He added that “smart technologies such as smart meters, automatic control systems and digital sensors, will provide consumers with real-time information on consumption and pricing. This will allow them to save energy and money by disabling unnecessary electrical appliances, heating-cooling systems and industrial loads at certain times.” Installation of smart meters will start this year and is expected to be completed by 2024.

In addition, changes have been made to the electricity market rules and grid codes in order to include storage in the electricity market. CERA has already licensed two renewable energy projects with storage, one with batteries and one using hydrogen.

Role of interconnectors

Electricity interconnections can also constitute an excellent opportunity for introducing greater flexibility of Cyprus’ business activities, creating the right ground for new investment opportunities either in electricity generation or in industry and other sectors. Based on current data, the EuroAsia interconnector is expected to be implemented in 2023.

Poullikkas emphasises that interconnectors can contribute to better utilisation and management of the renewable energy potential in Cyprus.

 

 

It is now in the hands of government and parliament to provide the required legislation in a timely manner and make available funding from the EU recovery package to speed up implementation for upgrading and transforming the electricity system. We have had enough talk, now we need to get going.

Poullikkas’ interview provides food for thought, but also action.

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