Last month, we threw away more than 18 gigawatt hours of solar power – enough to power the average Cypriot household for nearly 2,000 years. This process, referred to as ‘curtailment’, is where the system operator is forcibly switching off solar parks and now even residential systems in order to better manage the grid.

This has been happening for a while, but it’s recently gotten dramatically worse. According to data from Cyprus Grid, just 3.5 per cent of renewable energy was curtailed in 2022. This rose to 13.4 per cent in 2023 and we’re at around 28 per cent so far this year – with some months averaging over 50 per cent and some bad days seeing over 80 per cent of generated power discarded.

Why is this happening?

You might think this is due to the combined solar fleet (now an impressive 731MW) producing more power than the island needs at any given moment.

In fact – in looking closely at the data, I found that this scenario occurs extremely rarely. It had never happened prior to this year and even now occurs on less than 1.5 per cent of days. Most of the time, the system operator is curtailing solar power just to meet demand with oil-burning conventional generation.

Despite its apparent inefficiency, this practice stems from an unfortunate technical necessity. The island’s ageing power plants – some of which are over 30 years old – cannot ramp up or down quick enough to respond to any changes in the supply/demand balance. So, to keep the grid stable as more renewables are installed, the system operators must keep the antiquated generation fleet running at a minimum level.

This inflexibility means that even on days with abundant sunshine and relatively low electricity demand, hundreds of megawatts of clean solar power must be discarded while oil-burning generators continue operating.

The situation would not be as bad if more modern generators were in use, but upgrades have been put off by an operator that has for years been in limbo waiting for the arrival of gas, liberalisation of the energy market and interconnector cable to Greece.

All three of these should technically improve the situation. Both gas generators and the proposed interconnector would allow more renewable energy to be produced and consumed without threatening grid stability, while the liberalisation of the energy market would finally ensure that price signals reflect the needs of the grid, incentivising battery storage installations and slowing the development of solar until the flexibility issue can be improved.

But, as 2025 approaches, none of these anticipated developments have materialised, and the situation has become untenable.

This year it is expected Cyprus will pay more than €250 million euros in fines to the European Trading Scheme for exceeding carbon limits – a cost that is shouldered by consumers through levies applied to bills. Electricity costs are weighing heavily on household finances and putting pressure on businesses of all kinds.

Curtailment is particularly bad in the Spring and Autumn, where high solar production encounters low AC usage

The proposed solution

In response to these mounting challenges, the energy minister has put forward a proposed solution: the Single Buyer Model.

Currently, if you build a solar farm in Cyprus, you’re free to contract with a private supplier for the power you produce at a bilaterally agreed price.

Short of the fully open, competitive market that we’ve long been promised, this ‘transitional’ market has seen some success, with 294MWs of solar currently contracted to newly formed, private suppliers.

Under the proposed scheme, even this semblance of a market-based approach would end. All private producers would be required to sell their electricity exclusively to the EAC.

Unsurprisingly, this mechanism would conflict with the EU’s ‘Target Model’ for competitive electricity markets, meaning that Cyprus would actually require a derogation from the European Commission to enact this.

The energy ministry proposed legislative amendments would allow the EAC to remonopolise the entire generation market and confiscate a percentage of profits from independent energy producers. By forcing these private investors into a captive market where the EAC is the sole potential customer, with the ability to dictate prices, it is estimated that consumer bills could be reduced by a maximum of 1.7 cents per kilowatt-hour. This estimate is based on analyses assuming EAC purchases all renewable energy production on the island at 11 cents per kilowatt-hour. Currently, the EAC buys the energy produced by 35 per cent of the installed RES capacity on the island at this price, bringing consumer bills down by an average of 0.9 cents per kilowatt-hour.

While these measures might deliver a small, short-term reduction in consumer bills, they fail to address the systemic drivers of high prices. Instead, they deepen the market’s monopolistic structure, dismantle any semblance of competition, and effectively penalise the private investors who have supported Cyprus’ modest energy transition so far.

The resulting loss of investor confidence would almost certainly drive up the cost of capital, choking off the pipeline of future projects and innovation just when Cyprus urgently needs sustained, large-scale investment in its energy infrastructure.

The apparent playbook is almost uncanny – by stalling for years on the promised liberalisation of the energy market, the government has allowed systemic problems to fester and prices to soar. Now, faced with growing outrage and instability, they are attempting to leverage the chaos and urgency caused by their own inaction to justify a hyper-centralised model – one that abandons competitive principles and risks long-term growth and resilience in the name of temporary price relief.

Cyprus stands at a crossroads. It can double down on a hyper-centralised, short-term fix that flies in the face of the European blueprint for open, competitive energy markets, and scares away future investment, or it can finally deliver the long-promised market liberalisation.

Battery storage, which has declined in cost by more than 90 per cent in the last 15-years, offers a compelling and cost-effective solution to the island’s curtailment woes. But no rational investor is going to spend the money to build these assets out of the goodness of their heart, and indeed nobody so far has.

A fit-for-purpose, liberalised energy market has been promised for over a decade. Now is the time to take that step forward and avoid the temptation of patchwork solutions that will ultimately hinder our long-term progress.