Chrysanthos Manolis
The Ministry of Energy is opening a window for the conduct of tenders, by the EAC or other -private- electricity suppliers, in order to ensure electricity production at the lowest possible prices from photovoltaic parks.
In the context of her multi-page response to a letter sent to her by the Secretary General of AKEL, Stefanos Stefanou, on the hot energy issues that concern the country, the Minister of Energy, Natasa Peleidou, refers primarily to the issue of frequent tenders, which AKEL, as a request, in its public interventions. AKEL's position is that with the tenders, a method followed in many EU countries with excellent results for consumers, it is possible to provide RES electricity at much lower prices than those provided by RES producers through existing agreements with the state. . There were even examples of EU countries that secured production from 1.5 cents per kilowatt hour to 3.4, 4.5 cents, while today in Cyprus a number of photovoltaic parks are compensated by the EAC at 18 cents per kilowatt hour, ensuring a huge profit.
In her answer to Mr. Stefanou, the minister leaves no room – and justifies why – for the state to hold tenders, before the start of the competitive electricity market, possibly next October. However, it opens a window for these tenders to be conducted today by the electricity suppliers themselves, including the EAC.
In particular, Ms. Pileidou states: “Apart from the above, the ministry considers that the conduct of bidding today, can be implemented by the electricity suppliers themselves, including the EAC, in order to ensure the lowest possible wholesale price of electricity from RES and, subsequently, the wholesale price to be reflected in the retail price of electricity of consumers “.
This is the first time that the Ministry of Energy, under Anastasiadis's government, leaves open the possibility that the EAC will be more active and direct in the electricity market from private RES parks, through tenders. Our information indicates that there is enough interest from private producers but also aspiring producers for direct cooperation with the EAC.
Advice for cheaper RES
Elsewhere in her reply letter to the secretary general of AKEL, the Minister of Energy states that he recently sent a letter to the Attorney General, asking for his views on whether the ministry is legalized to modify the Plan for the Production of Electricity from RES (s.s. of 2018), so that the EAC Commission to buy RES energy from the producers involved in the project at the avoidance cost in force at the time the project was announced (it was about 7 cents per kilowatt hour, compared to 18 cents today), in order to reduce the price of electricity to all consumers.
However, Ms. Pileidou adds in her letter that “according to CERA calculations, the contribution to the total cost of electricity of the projects included in the aforementioned plan is in the second tenth of a cent per kilowatt hour and therefore does not significantly affect the cost of electricity for the consumer “. It follows from the above that if the Prosecutor General allows the modification of the agreements made in 2018 with private RES owners, the very large percentage of profit of these entrepreneurs will be dramatically reduced, but the benefit, per electricity consumer, will be very small. per kilowatt hour.
“It does not happen now”
Regarding the broader issue of bidding, Ms. Pileidou mentions to Mr. Stefanou in general terms that based on Chapter 3.3.2 “Operating aid granted for the production of energy from RES”, of the EU, any bidding that will carried out by the state before the opening of the market would be contrary to EU rules on state guarantees.
“It states that under the EU guidelines, aid is granted as a surcharge, in addition to the market price at which producers sell electricity directly on the market.” He goes on to explain that “any result of a tender relates to an amount in addition to the market price (surcharge) and not to the total price received from the projects participating in the tenders”.
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CHEAPER OR EXPENSIVE ELECTRICITY IN THE COMPETITIVE MARKET?
In the same letter, Ms. Pileidou refers to the estimates of AKEL (s.s. and others) that the operation of the competitive market will not lead to a reduction in electricity prices. “I mention”, the minister writes to Mr. Stefanou, “that with the operation of the Transitional Regulation of the Electricity Market, new electricity suppliers have been active, which have already offered lower electricity costs to the consumers who have contracted with them, instead of the EAC (s.s. obviously means some very large industrial – commercial consumers, who actually secured a reduction of about 10% from private suppliers, who are also producers of RES). With the construction and operation of new RES electricity generation projects “, the minister adds,” which have been included in the Transitional Regulation of the Electricity Market, the ability of the new suppliers to serve more consumers increases, while at the same time the competition is strengthened “.
