The first contracts for large-scale electricity storage batteries in Cyprus were signed on Tuesday, in an effort to reduce renewable energy cuts and increase the amount of solar power that can be absorbed by the national grid.

Energy Minister Michael Damianos said the agreements, covering 120MW of centralised storage capacity to be managed by the transmission system operator (TSO), represent a decisive move towards addressing one of the electricity system’s most persistent challenges.

The €50 million project is expected to see the batteries delivered in January 2027 and installed within two to three months, allowing them to enter operation by the summer of that year.

“In the summer of 2027, we will have at least 120MW of storage batteries from the TSO,” Damianos said.

“This means that energy from photovoltaics that is currently lost because it cannot be stored will be able to be utilised.”

The storage systems are intended to capture excess renewable electricity during periods of overproduction and release it when demand rises, helping to reduce the curtailments currently imposed on solar generators across the island.

The agreement was signed between the TSO and the Cyprus Telecommunications Authority (CyTA) – both public organisations.

It involves the installation and operation of three battery energy storage systems, located at transmission substations – one in Nicosia, one in Paphos and one in Larnaca.

Executive director at the TSO Stavros Stavrinos said the locations were selected so the storage systems can be directly connected to the transmission system.

He said renewables currently cover around 60 per cent of electricity demand, which he called “a feat”.

He said installed photovoltaic systems have surpassed 1040MW, while average demand in Cyprus hovers at 650MW.

One of the three storage systems boasts grid-forming technology. Its future use, Stavrinos said, signals the introduction of advanced technology suitable for isolated electrical grids like Cyprus’.

CyTA will implement the project in a joint venture with Huawei. The latter will provide so-called Smart Battery Energy Storage Systems (Bess) which utilise AI to optimise, automate, and monitor energy storage. Algorithms predict weather patterns, solar generation and facility demand to dictate exactly when to charge – for example during low-cost or peak solar hours – and when to discharge.

Speaking to Sigma, former energy minister George Papanastasiou said the project had been under development since 2023 in cooperation with the European Commission and was designed to tackle mounting losses from renewable energy production.

According to Papanastasiou, around 160,000 megawatt hours of green energy had already been lost by the end of May this year due to curtailments affecting residential photovoltaic systems, commercial solar parks and wind installations.

“The problem arises because during several hours of the day, electricity production from renewable energy sources exceeds demand,” he said. “Significant quantities of energy cannot be utilised.”

The issue has intensified in recent years as solar capacity has expanded faster than the infrastructure required to manage surplus generation.

Data from the distribution system operator showed that around 306 gigawatt hours of renewable energy were curtailed in 2025, up from approximately 167 gigawatt hours the previous year.

Papanastasiou acknowledged criticism that storage infrastructure had not been developed alongside the rapid expansion of renewable generation but argued that regulatory and funding challenges had delayed implementation.

“Production and storage had to go together,” he said.

“Storage has lagged behind production almost everywhere.”

Alongside the state-backed project, additional storage investments are being pursued by the electricity authority (EAC) and private developers.

The latest figures show 36 applications for battery storage projects with a combined requested capacity of around 925MW.

The EAC has submitted applications for storage facilities in Dhekelia and Moni with a combined capacity of 180MW, while private sector projects totalling more than 150MW have advanced through various stages of the approval process.

Papanastasiou said the state-owned battery system would not operate on a commercial basis but would instead support grid stability and energy security.

“Its role will be to support the stability of the grid, storing energy during periods of overproduction and channelling it when there is a deficit or risk of outages,” he said.

He added that privately operated storage systems could eventually help lower electricity costs by allowing operators to store cheaper renewable energy and supply it during periods of higher demand.