Decisions on connecting Cyprus power to Greece due in next few weeks

Decisions regarding the mooted electricity connection between Cyprus and Greece need to be taken sometime in the next few weeks, Energy Minister George Papanastasiou stressed on Tuesday.

He was referring to the Great Sea Interconnector – the commercial name for the subsea electricity cable linking Cyprus to the island of Crete.

“It is something we’ve been working on over the last few years, and it’s time that decisions are taken in the next few weeks,” the minister said.

Cyprus, he noted, is the only remaining EU member state not connected to the common electricity market. In addition, the Great Sea Interconnector (GSI) has financial backing from the European Commission, to the tune of 30 per cent of the total estimated cost of the project.

The EU has pledged €657 million in grants for the GSI, the total cost of which reaches €1.9 billion.

Papanastasiou also underlined the issue of security of energy supply for Cyprus, an island which he said is located in a region fraught with turmoil and armed conflict.

In his comments, the minister described the interconnector as one of the three ‘pillars’ of government policy to bring down electricity costs.

In Cyprus, the retail price of electricity is 33 cents per kilowatt-hour, compared to the EU average of 15 cents.

“You realise, then, that this is a killer for industry, a killer for households and the economy,” he remarked.

The second pillar is importing natural gas to generate electricity. And although natural gas “is not the cleanest fuel”, Papanastasiou said, it would help cut greenhouse gas emissions by anywhere from 40 to 45 per cent.

The third pillar involves a surge in the use of renewables and solar power. Here the aim is for households and industry to engage in self-production of electricity through the provision of incentives to install photovoltaic systems and storage batteries.

“The goals we have promised Europe [concerning electricity production from renewables] are not easy,” said the minister. “But if you don’t set high goals you can never attain them. At the end of the day, the goal is to use 100 per cent electricity generated from renewables.”

In the interim, Cyprus has to combine “conventional and expensive power” with “cheap solar energy”. But to do that, the country needs a competitive electricity market. The objective is to have that in place by July 2025.

Meanwhile regarding developments with the interconnector, media reports say the Cyprus energy regulator is under immense pressure – both from the European Commission and the project promoter – to consent to electricity consumers here paying a fee toward the project before the cable goes live. Under a prior decision, the energy regulator (Cera) had said Cypriot consumers should chip in but not before the interconnector becomes operational – expected in 2030.

According to Phileleleftheros, so far Cera has not buckled under the pressure. Representatives of Cera stood their ground during a conference call taking place last Friday, when reportedly the European Commission tried to force a ‘yes or no’ answer from the regulator.

The project promoter – Greece’s independent power transmission operator or Admie – wants consumers both in Greece and Cyprus to start contributing toward the cable project while it’s under construction. That would ensure a steady stream of revenue, helping draw in other investors like banks.

But the other aspect is the geopolitical risk – possible interference with the laying of the cable by Turkish warships in the Aegean. Admie seeks explicit commitments in writing that should any events occur that are beyond its control – such as interference by Turkey – it will be able to recoup all its expenses up to that point.

Phileleftheros reports that Cera’s position is that the cost of the geopolitical risk is not a matter concerning the regulators, but rather the EU and the governments of Greece and Cyprus. In other words, the governments should undertake the geopolitical risk in some way.

Although last week the European Commission provided written assurances that it would “use all the diplomatic means at its disposal” to protect the interconnector project, it did not also undertake responsibility for the potential loss of hundreds of millions of euro should the endeavour get scuttled.