Cyprus’ energy market will be opened up to private companies on October 1, the energy regulatory authority (Cera) confirmed on Friday.

It said the move will “mark a new era in the electricity sector”, with it hoped that in time, the island will have “a fully free competitive market, where all parties, producers, suppliers, and end customers are free to decide among themselves … how to manage and pay for the electricity they produce”.

The announcement was made upon the expiry of the deadline for participant companies, which had been set for Friday.

Cera also explained that customers which are not contracted to any net billing scheme – wherein they receive money off their bills from the electricity authority (EAC) because they own solar panels which supply the grid – will “have the right to act as active customers” from October 1.

As such, it said, those who own solar panels will be “free to choose the way to manage the surplus energy which will be produced” by them.

Questions have been raised whether the opening of the energy grid will help to reduce consumers’ bills, with Energy Minister George Papanastasiou having said earlier this year that he “cannot tell” whether this will be the case.

“I cannot tell you whether the price will go down, because this particular model, namely the ‘target model’, has not been tested in small markets such as in Cyprus,” he said.

“If you ask the minister whether prices will go down, that will depend very much on how the parties compete in a small market in which he decided to apply the ‘target model’.”

The ‘target model’ aims to create a unified electricity market across the European Union, with all 27 member states’ electricity grids open to private companies, with the hope that widespread competition will drive down prices for consumers across the bloc.

Earlier, he had said that he was unsure whether the opening of Cyprus’ electricity grid to private companies will lower people’s electricity bills, adding that in large electricity markets, prices typically remain stable when private first companies are allowed to enter, with them then falling later on “due to competition”.

“In a smaller market, which has not been tested often, we will see along the way,” he said, adding that his ministry can intervene “if we see that things are going in the wrong direction”.

Asked what will change when private companies are allowed to partake, he said energy producers and suppliers will “enter an environment which is essentially a stock market, in which every half hour, quotes will be made, and electricity can be bought”.

In June, the electricity market association (EMA) had expressed its satisfaction with the forthcoming opening of Cyprus’ energy grid to private companies, saying it “welcomes the development” and stressing its “importance for the normalisation of energy prices”.

“With the implementation of the new competitive market, Cypriot consumers will for the first time gain the ability to choose their electricity supplier of choice – a fact which will strengthen competition and lead to fairer and more cost-oriented prices,” it added.