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& nbsp & nbspEvagoras Prokopiou & nbsp; & nbsp;
Interview with Evagoras Prokopiou
With the war in Ukraine raging energy prices took the & nbsp; rising at a very fast pace and there is hardly anything that can stop this upward trend. The Cypriot Government is implementing short-term and long-term measures to deal with the effects, said the Minister of Energy, Trade and Industry, Natasa Pileidou. In an interview with Insider, in addition to the Ukrainian, the Minister outlines the general energy planning of the state but also the course for the transition to green energy. & Nbsp;
The war in Ukraine changes the Government energy planning?
One of the serious consequences of the war in Ukraine is the spike in gas and oil prices on the world market. Through the strategy and planning of the Government, both short-term and long-term measures are implemented to deal with the effects such as:
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Reduction of excise duty on gasoline by 7 cents per liter and 8.3 cents on diesel.
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Extension for another two months of the reduced VAT rate on electricity to 5% for vulnerable consumers and 9% for other households.
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Horizontal reduction of 10% in the electricity tariffs of all consumers (households and businesses) for the months November – December 2021 and January – February 2022.
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Implementation of a Sponsorship Plan for the replacement of energy-intensive appliances by vulnerable energy consumers, with new appliances of low energy consumption, totaling € 5 million
The compass of the Government's multidimensional energy strategy remains the dependence on fossil fuels and the transition to a green economy through the financing of households and businesses for a turn towards RES and savings, but also large projects such as energy storage systems and electricity. with neighboring countries. Our Ministry has models and tools through which it monitors the implementation of our strategy and goals, and adjusts it where appropriate.
When does the electricity market in Cyprus open and what benefits are expected from it in relation to the perfect storm in the global energy market?
A competitive electricity market offers more options to end consumers at more competitive prices. In Cyprus, the competitive electricity market is expected to operate in October 2022, giving the right to every consumer of electricity, whether domestic, commercial or industrial, to choose the supplier of their choice. The interest for investments in the field of production and supply of electricity is already encouraging for the future efficient operation of the market, since during the transitional period, the Cyprus Energy Regulatory Authority (CERA) has issued 20 supply licenses, with two of these suppliers electricity, in addition to “EAC Supply”, to have been active. In short, the more participants in the wholesale electricity market in terms of production and demand (suppliers), the greater the benefit to the consumer in the final price of electricity. The other big benefit of the competitive market is the facilitation of the further penetration of the Renewable Energy Sources (RES) in the energy balance of the country, so that they can participate in the market without guaranteed prices.
Where is the Republic of Cyprus in terms of achieving Europe's clean energy targets and what do you think needs to be done more in this direction? What is the current share of RES in the electricity generation mix on the island?
In relation to our country's targets for 2020, Cyprus has managed to exceed the overall target for a 13% share of RES in final energy consumption, reaching 17%. In addition, in heating and cooling the share of RES exceeded 38.5%, with our indicative target being 23.5%. We have also exceeded our mandatory target for cumulative energy savings in end-use, while our national indicative targets in relation to primary energy consumption and final energy consumption in 2020, at percentages of 100% and 120% respectively.
Currently the installed RES capacity for electricity generation amounts to 469 MW – 39% from wind farms, 51% from photovoltaic systems and 10% from biomass.
There is no doubt that we have made significant progress in a decade, with electricity from RES having increased by 162% from 2011 to 2020, while in addition to the 127 commercial RES projects, with an additional capacity of 237.8 MW, are under implementation . These projects, together with the net-metering, net-billing and self-generation systems, will increase the installed capacity from RES to 726 MW, ie approximately 16% of the electricity generation, by the end of 2022.
At this stage, we are working intensively, in cooperation with the relevant Ministries and all stakeholders, to review upwards, within 2022, the goals we set for 2030, through the National Plan for Energy and Climate, in line with the “Fit for 55” legislative package, which aims to achieve climate neutrality by 2050.
It is in this context that the Ministry of Energy is promoting, among other things, a plan for energy storage. Specifically, on October 14, 2021, we forwarded to the European Commission a proposal for the implementation of an aid scheme for large electricity storage systems, which will be connected to the electricity transmission system. Once we receive the relevant approval, we will proceed immediately with the announcement of the Plan. At the same time, we are preparing a Plan for RES systems in combination with storage systems. The total amount that is expected to be allocated for the above Storage Plans, for the period until 2029, is expected to exceed € 80 million.
Which projects are running and which projects are coming up regarding “green” energy and where are they financed or will they be financed?
On the basis of our National Energy and Climate Plan, but also in response to the challenges posed by the pandemic and the global energy crisis, we are implementing a multidimensional strategy for the transition to green energy, which is funded, until 2027, in addition to € 500 million from the Recovery and Sustainability Mechanism, the European Structural Funds, the Fair Transition Fund and, of course, the national budget.
In this context, in 2021 we announced sponsorship plans for energy upgrades and RES beyond of € 40 million, while within 2022 the total amount that will be announced in projects will be more than double and will exceed € 90 million. Specifically:
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Plans for energy upgrades of € 40 million will open in March,
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; and for energy upgrading of local authorities and wider public bodies, € 9 million.
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; The plans for the installation of a photovoltaic system for charging an electric vehicle will follow in March-April, € 1.5 million,
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; and for installation or replacement of solar water heater, € 450 thousand,
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; while in April – May will open the Plans, € 7 million, of the RES and FDI Fund for installation of photovoltaics and thermal insulation of the roof, including virtual net metering.
– & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; In the 2nd half of 2022, the Plan for energy upgrading of houses will also be re-announced, for total sponsorships of € 35 million.
NATURAL GAS, EUROASIA INTERCONNECTOR AND EEZ
< p> Regarding natural gas, when is it expected to arrive in Cyprus? Will it play a significant role in electricity prices?
The infrastructure for the import of natural gas in Vasiliko is expected to be delivered in July 2023. And the adjustment in the cost of electricity production by combustion of natural gas instead of fuel oil and diesel, depends on a number of parameters, the most important of which is the purchase price of natural gas. medium-term gas agreement. As you know, at this time gas prices are rising and fluctuating internationally, mainly due to increased global energy demand, without a corresponding increase in production and, of course, as a result of the war in Ukraine. An important factor in shaping the price of electricity is the cost of purchasing greenhouse gas emission allowances, the price of which is imposed per tonne of CO2 – and therefore applies to both oil and gas. With the use of natural gas, there will be a reduction in the emissions of industrial NOx and SOx pollutants, as well as in the CO2 greenhouse gas emissions. What we expect is that any benefit to the price of electricity will come from reduced greenhouse gas emissions, with the percentage of the benefit dependent on the price of the emission allowances, compared to the purchase prices of natural gas. & Nbsp;
To what extent does the EuroAsia Interconnector project contribute to the rapid transition of the Republic of Cyprus to clean energy, which is the central pillar of the Ministry's national strategy? What's its significance?
The electric cable that will connect the networks of Cyprus, Greece and Israel, the EuroAsia Interconnector is, exactly, the cornerstone of our efforts for transition to a green economy and sustainable development. The project has recently been approved for funding of € 657 million by the EU. With the implementation, the energy isolation of Cyprus is terminated and the stability of our country's electricity network is strengthened, thus facilitating the integration of additional RES projects in our energy mix. According to studies conducted in the framework of our National Energy and Climate Plan, the electrical interconnection, in combination with the use of storage systems, may by 2030 lead to the penetration of RES in the energy mix of Cyprus that will exceed 50%.
It is therefore a project fully in line with our environmental policies, which will play an important role in fulfilling our commitments to reduce carbon dioxide emissions, upgrade our energy security and create prospects for new investments in the green energy sector, for greater competition in the electricity market and for reducing the price of electricity for consumers.
Cyprus, Greece and Israel, recognizing the multiple benefits of the project for all parties, we have expressed in practice our strong political support to the EuroAsia Interconnector, signing a year ago, in March 2021, a relevant Memorandum of Understanding. We have worked in coordination to establish the general framework of cooperation and facilitate timely licensing and approvals for the project, and we consider a great success, a consequence of our good cooperation with the Implementing Agency and the competent authorities of our countries, the recent approval of funding for the project. Cyprus – Crete. In conjunction with the completion of the licensing, we hope that this development will allow the construction work to begin around the end of 2022.
What is the significance of granting a exploration license for block 5 to the ExxonMobil and Qatar Energy consortium? , the Block 5 agreement also strengthens the already excellent cooperation between Cyprus and ExxonMobil and Qatar Energy, while enabling the consortium to explore interesting prospects linking deposits 10 and 5. ExxonMobil and Qatar Energy are the first from our licensees who, after the inevitable delays due to a pandemic, proceed from the beginning of January with drilling evaluation in deposit 10. The new licensing in Unit 5, therefore, as it comes at a difficult time for the global oil and gas industry, is another practical proof of confidence in the prospects of the Cypriot EEZ. At the same time, however, it further strengthens the relations that Cyprus maintains with both the United States and Qatar.