Study confirms economic sustainability, says EuroAsia project promoter

The project promoter stressed the significant socio-economic benefit resulting from the implementation of the Cyprus-Greece (Crete) electricity interconnection to consumers, which amounts to €300 million annually.

This practically means reduced electricity bills for everyone, it noted.

It said the evaluation study also confirms the Economic Net Present Value (ENPV) of the project with positive indicators, affirming that the economic benefit generated by the project to consumers exceeds the total cost of construction and operation, as well as the economic viability of the Cyprus-Greece (Crete) electricity interconnection.

According to the statement, despite the acknowledgment of the economic viability and positive economic indicators of the electricity interconnection, the European Investment Bank, in the context of the procedures it applies for granting loans, compares the implementation of the electricity interconnection with other potential alternatives (counterfactual scenario). In this case, as an alternative option for Cyprus, the European Investment Bank proposed the mass installation of batteries throughout Cyprus with a capacity of 1350MW and lasting 4 hours.

However, significant technical points need to be mentioned in order to present a comprehensive picture, the announcement continues. In relation to the assumptions taken into account in this particular study, the degradation factor of the batteries was not considered, which is usually 2.6% per year, while it was assumed that these batteries had a usage index of 100%, while practically this indicator is 90%, EuroAsia notes.

It is added that the life of the batteries is 15 years compared to 40/50 years which is the life of the electricity interconnector. For this reason, the study should have calculated the mass replacement of batteries up to 3 times (instead of 2 calculated in the study) to generate corresponding economic benefits to those of the electricity interconnector.

In the event of a serious breakdown or blackout, the batteries can supply energy to the Cyprus electrical system for only four hours, if they are fully charged at that particular moment, in contrast to the electricity interconnector which can provide direct, continuous and uninterrupted electricity supply for as long as necessary.

The EIB’s evaluation is purely economic and does not take into account the significant qualitative, operational and environmental benefits resulting from the implementation of the electricity interconnector against the non-comparable solution with the installation of batteries only, the statement said.

It stressed that the project will end the energy isolation of Cyprus, a “decades-long objective for our island” which remains the only energy-isolated country in the European Union.

Furthermore, a reliable electricity corridor between Israel – Cyprus – Greece – European Union, with a two-way and uninterrupted flow of energy is created, while, according to the project promoter, geopolitical importance of the project is highlighted in relation to trilateral cooperation and the interconnection of Cyprus with the regional countries of Israel and Greece.

Cyprus is interconnected with Greece and the Single European Electricity Market, resulting in the creation of a truly competitive market and the reduction of electricity costs for the Cypriot Consumer. Finally, it is stated that the penetration of Renewable Energy Sources is maximised to achieve the European Union’s NetZero zero carbon dioxide emissions target and the National and European Energy Targets of the Green Transition are fulfilled.

According to the statement, the project promoter, together with its specialist techno-economic advisors, is analysing the assumptions of the EIB study and will discuss them with the European Investment Bank at a meeting in September, which will be preceded by a consultation with all interested parties, the Cyprus Government and the European Commission.

The EuroAsia Interconnector electricity interconnection implements the energy policy and objectives of the European Commission, from which it has secured a €757.9 million grant, it is added, noting that the project also falls under the financing policy of the European Investment Bank for the Green Transition, having financed similar electricity interconnection projects in Greece, such as the Crete-Attica interconnection and the Cyclades electricity interconnection.

Along with the possibility of the funding request to the European Investment Bank being reviewed, the Project Promoter is proceeding with the completion of the financing programme for the construction of the electricity interconnector, a “major life project for Cyprus, society and the economy”, the statement added.