Government spent €440 million to offset energy crisis impact, says minister

The government has spent some €440 million to cushion consumers from the financial impact of the ongoing global energy crisis, while making other moves aimed at driving down the cost of electricity generation, Energy Minister George Panastasiou said on Thursday.

He was speaking at a meeting of the Electricity Market Association.

At the moment the country’s energy system is going through “a process of total restructuring,” said the minister.

This included efforts to roll out the competitive electricity market, ending the island’s energy isolation through electricity interconnectors, and expanding and digitising the grid.

Creating those conditions leading to the reduction of electricity costs for every household and business, remains one of the ministry’s top priorities.

In a bid to shield consumers from the energy crisis, Papanastasiou said, the government has to date taken various measures with a fiscal cost of €440 million.

He went on to summarise the major actions promoted by the energy ministry: harmonizing domestic law with EU Directive 2019/944 on common rules for the internal market for electricity; securing €35 million for the installation of 400,000 smart metres via the Transmission System Operator; and supporting the state power utility in obtaining €83.3 million from the EU’s Just Transition Fund for upgrading and automating the grid.

“At the same time, we are working to put in place the necessary infrastructures for the importation of natural gas, as well as the further penetration of renewables in our energy mix, while also promoting energy storage and hydrogen-production systems.”

In addition, €4.7 million was secured from the ‘Cyprus Tomorrow’ programme relating to the installation of the system managing the electricity market.

Papanastasiou expressed the hope that once the electricity market opens up – with new producers, providers and aggregators – it will help drive down electricity costs for all consumers.

An aggregator is a type of energy service provider which can increase or moderate the electricity consumption of a group of consumers according to total electricity demand on the grid.

In his own comments, the head of the energy regulatory authority (Cera) Andreas Poullikkas cited some basic information about the electricity production system in Cyprus.

Today there are installed 476 megawatts (MW) from photovoltaic systems, 157 MW from wind farms, and 13 MW from biomass systems. That brings total renewables capacity to 646 MW.

Installed capacity from conventional fuels comes to 1483 MW. In terms of installed capacity, renewables account for around 40 to 45 per cent, while in terms of actual consumption they make up about 21 per cent.

This, said Poullikkas, is because photovoltaics and wind energy are intermittent.

For his part, deputy chair of the House energy committee, Averof Neophytou, called for the design of a long-term national energy policy “that won’t change from month to month, or year to year.”

The island urgently needs electricity interconnectors, and to this end it might take a partnership with other island nation states in the EU to lobby for an EU-wide policy on this matter.

This would help “save the country,” he remarked.