Subsea power cable ‘great value’ to Cyprus electricity market

By Iole Damaskinos and Elias Hazou

There is great value for the Cyprus electricity market in establishing the mooted subsea power cable connecting Cyprus, Greece and Israel – the Great Sea Interconnector – the findings of a feasibility study shown to government sources revealed on Tuesday.

The interconnector projector holds “great value for the Cyprus electricity market, as well as high geopolitical value” due to the fact the island is located in the middle of the national electricity grids of Greece and Israel, the assessment said.

Energy Minister George Papanastasiou told the Cyprus News Agency the project’s feasibility was evaluated in three areas: sustainability, contribution to the island’s electricity market, and geopolitical value “in the wider environment of the Eastern Mediterranean”.

CNA reported that the findings of the study were “positive”. A discussion and a Q&A followed the presentation by the foreign firm which compiled the assessment.

The firm commissioned by the government to carry out the study also assessed the risks that the Republic of Cyprus might undertake should it decide to participate in the project as a stakeholder.

It’s understood the assessment also compares the interconnector project to potential alternatives, such as boosting the storage capacities of Cyprus’ own electricity grid.

Earlier, the energy minister had said that Cyprus will decide by January 31 on whether to participate as an investor.

“If an investment decision is made, the Republic of Cyprus will enter as a shareholder in the company that owns the project,” he said.

Papanastasiou explained that the Independent Electricity Transmission Operator of Greece (Admie), which is the implementing body of the project, will set up a holding company (an SPV or Special Purpose Vehicle) and would then seek to raise equity capital.

“If and when the Republic…decides to participate in the project, it would express interest in acquiring equity capital, as well as [seek out] any other interested investment funders,” he said.

He noted that Cyprus could invest up to €100 million and assuming this happened, Cyprus and Admie would jointly hold the majority stake in the holding company.

Greece’s Admie is 51 per cent owned by the Greek state. The State Grid Corporation of China has a 24 per cent stake, with the rest owned by other investors.

The Great Sea Interconnector is the new commercial name for the EuroAsia Interconnector.

In January 2022 the European Commission had approved €657 million under the Connecting Europe Facility (CEF) for the cable project. There was also an additional grant of €100 million through the Cyprus Recovery and Resilience Plan, part of the EU Recovery and Resilience Facility (RRF).

In a separate statement of its own on Tuesday, Admie sounded buoyant about the prospects of the interconnector.

It said EU pre-financing for the project has gone up from €55.2 million to €164.5 million – corresponding to 25 per cent of the €657 million pledged by the European Commission.

“The intensive and effective collaboration between Admie and Cinea [European Climate, Infrastructure and Environment Executive Agency] that manages the European grant for the project…and the receipt of the entire pre-financing amount contributes decisively to the speeding up of the project,” Admie said.

Admie recalled that in late 2023 it gave Nexans – the company with the contract to build the Crete-Cyprus segment of the cable – a ‘Notice to Proceed’.

According to the statement, the next milestone is “the expansion of the shareholding structure of the Great Sea Interconnector, as we await a final decision by the government of Cyprus [on whether it will invest]”.

Admie said also that talks are already underway with banks, in order to secure “financial closure” for the project.