Diaspora delegates briefed on Cyprus’ energy challenges

Cyprus’ energy sector is crucial for the country’s competitive edge and must adapt to renewable energy demands if it is overcome the major challenges it currently faces, Energy Minister George Papanastasiou said on Wednesday.

Briefing the Cypriot diaspora currently on the island for a three-day conference, the minister stressed the government’s strategy is securing low-cost electricity and ensuring its supply.

Neighbouring European and Eastern Mediterranean countries have the same objectives “which creates a business environment that favours the development of natural gas deposits discovered in Cyprus’ Exclusive Economic Zone”.

Papanastasiou briefed attendees of progress on the hydrocarbons front including the “high quality natural gas” in the Glaucus 2 appraisal well and findings in Cyprus’ block six.

Nonetheless, “the ongoing energy crisis, as well as the EU’s ambitious targets for climate neutrality by 2050 demand we speed up reforms in our energy sector.”

As such, Cyprus’ ongoing review of its National Energy and Climate Plan should reflect the ambitions arising from the REPowerEU and Fit for 55 reform packages, looking towards a competitive low greenhouse gas emission energy system, the energy minister stressed.

“This system will facilitate and encourage energy savings, further penetration of renewable energy sources and the adoption of circular economy practices.”

Papanastasiou explained that integrating renewable energy in Cyprus electricity production “is difficult due to the small and isolated size of the market, the absence of electricity storage systems and seasonal demand.

“At the same time, our island is still heavily dependent on imported oil products, which makes the Cypriot economy much more vulnerable than those of other countries to fluctuations in international oil prices.”

To this end, a series of measures and reforms are underway through the Recovery and Resiliency plan ‘Cyprus Tomorrow’ underlining that 41 per cent of funds will be utilised for a green transition.

Regarding the internal gas market, the energy ministry “is intensifying efforts to implement the LNG import terminal at Vasilikos and, in parallel, to supply gas for power generation purposes, via pipeline, from Eastern Mediterranean fields”.

Initiatives have been undertaken with other states such as Israel and with hydrocarbon and electricity companies, to create the necessary infrastructure, such as a gas transmission pipeline in Cyprus and a modular or floating liquefaction terminal, Papanastasiou said.

Such infrastructure will provide Eastern Mediterranean gas producers incentives to use them “and transport gas to our country as an alternative, for use in local conventional power generation and for export to global markets as LNG.”

“The advent of natural gas in Cyprus will certainly have multiple benefits for our economy. In addition to reducing costs and enhancing our energy security, it will provide an opportunity for independent electricity producers to operate, creating competition in the electricity market, reduce greenhouse gas emissions in electricity generation and allow the necessary flexibility in conventional generation to further promote renewable energy sources,” he underscored.

Between 2021-2027 the energy ministry has secured around €590 million, which will be used mainly for financial incentives to households, businesses and public entities for investments in energy efficiency and renewable energy sources.

Papanastasiou added the Cyprus Tomorrow plan entails a €5.4m allocated for the management system of the competitive electricity market, as well as €100m for the Cyprus-Greece-Israel electricity interconnection project.

Additionally, €40m has been secured from European funds to promote electricity storage systems, as well as around €120m to expand, upgrade and digitise networks, including the deployment of smart meters.