Reforms needed to navigate the energy transition, CERA chief says

Chairman of the Cyprus Energy Regulatory Authority (CERA) Andreas Poullikkas on Tuesday explained that significant reforms are needed in order to navigate the transition toward renewable energy sources.

In an analysis piece released this week, the CERA chief addressed the historical evolution and crucial challenges facing electricity markets amid the ongoing energy transition.

Poullikkas said that the regulation of the electricity sector, initiated in the 1990s, is now undergoing significant transformations due to the current energy transition.

Historically, he explained energy systems operated in a stable environment with known energy production and consumption technologies. However, this is no longer the case, he noted.

“The ongoing energy transition has disrupted these conditions,” Poullikkas said.

“Stability and linearity have been replaced by uncertainty and complexity,” he added.

He explained that the key questions arising include minimising the curtailment rates of renewable energy sources, accelerating investments in transmission and distribution infrastructure, promoting storage technologies, facilitating the transition to a hydrogen economy, and determining the beneficiaries of market reforms.

Poullikkas also stressed that “therefore, the regulation of electricity markets during the energy transition is a critical factor for the energy sector to adapt to new requirements, promote sustainability, and reduce greenhouse gas emissions”.

“One of the key challenges is the transition to renewable energy sources such as wind and solar energy, aiming to reduce dependence on fossil fuels,” he stated.

The CERA chief added that “the expansion of renewable energy sources requires significant investments in storage systems, hydrogen technologies, and the redesign of electrical networks for the efficient use of generated energy”.

Moreover, he said that the establishment of a unified electricity market in the European Union (EU) is another aspect of the ongoing reform.

He also mentioned that the electrical interconnection between EU member states and the development of a single electricity system aim to stabilise prices and enhance supply security across the EU.

Thus, the EU’s internal electricity market plays a crucial role in promoting and financing the energy transition, fostering competition among electricity suppliers, encouraging innovation, and ensuring the efficient integration of renewable energy sources.

Furthermore, Poullikkas addressed the technological progress in smart metering and energy management systems, empowering consumers to actively manage their energy consumption.

“In reality, today’s regulatory framework no longer treats consumers merely as users of electricity, installing energy systems, such as photovoltaics and batteries, and buying devices,” he said.

“Instead, consumers are increasingly treated as ‘participants in the market’ or ‘energy traders’ who take positions in the market based on the contracts they choose to enter,” he added.

“Beyond these, shaping policies that promote sustainability, supporting research and innovation in the electricity sector, and promoting energy efficiency are significant components of this reform,” the CERA chief concluded.