Electricity
The consecutive days of extremely high temperatures, exceeding 40 degrees Celsius in early June, coupled with meteorologists’ predictions of an exceptionally warm summer in the Mediterranean, no longer allow the competent authorities in Cyprus to rest on the assessment of “barely sufficient” electricity supply.
According to information obtained by Phileleftheros, the President of the Republic and the Minister of Energy have made it clear to the Chairman of the EAC (Electricity Authority of Cyprus) that the ongoing procedures for installing two new flexible generators (gas turbines) at the Dhekelia Power Station, with a total capacity of 80 megawatts, must be expedited.
This move aims to ensure an increased electricity supply for the summer of 2025.
However, Phileleftheros sources state that the State Aid Control Commissioner has issued an opinion, following a request from the Ministry of Energy, indicating potential issues with EU state aid rules if the cost of installing the two generators at Dhekelia is covered by all electricity consumers and not just EAC customers.
Initial information suggests that the Commissioner considers that if the customers of private electricity supply companies (mainly large commercial and industrial consumers) are called to bear the cost of EAC’s new generators, it could be deemed as an irregular state aid to EAC.
As previously reported by Phileleftheros, EAC believes that the investment of approximately €80-90 million for the two new generators at Dhekelia, using conventional fuel (diesel or natural gas), is not economically viable for EAC and would financially burden its customers.
This is due to the continuously increasing percentage of photovoltaic penetration in the country’s energy mix.
EAC has long requested that the cost of installing the two new generators be covered by all consumers, both its own customers and those of private companies, through a small surcharge in the form of a Public Service Obligation (PSO). This approach aims to avoid increasing only EAC's electricity tariffs and burdening solely its residential customers.
EAC argues that the installation of the two generators is not a matter of its own investment policy but an urgent need for the country’s electrical system, as without these generators, there will be electricity supply issues and, more importantly, problems with system stability.
It has been officially confirmed that the electricity needs of Cyprus cannot be safely met without sufficient generation capacity from Dhekelia, the only power plant in the eastern part of the region.
In essence , EAC believes that the urgent need for the two generators at Dhekelia warrants an exception from EU legislation, so the cost is shared by all consumers and not just its own customers.
As previously mentioned, the State Aid Controller has reportedly issued an opinion that this could conflict with state aid rules.
However, she has also pointed out that the Republic of Cyprus has the right to approach the competent authorities of the European Commission to obtain a derogation due to the serious electricity supply issues.
This would allow the Dhekelia generation capacity enhancement to proceed without any regulatory hurdles, which is the President of the Republic’s reported desired outcome as per the instructions given to EAC.
