EAC's monopoly and monopoly, according to the Association, “led us to the current situation with one of the highest electricity prices in Europe”
File photo.
The need for “immediate opening of the Competitive Electricity Market (AAH) and the creation of a regulatory framework that will promote competition, in order to ensure a more stable, healthy and sustainable future for the energy sector in Cyprus”, expresses the Electricity Market Association (SAH).
“The AAH is the answer to all the distortions created by the continuation and extension of the Transitional Regulation of the Market, distortions that favor the EAC at the expense of private individuals participating in the Market”, says the Association, in a statement responding to the announcement of the Administration and Management of the EAC, in view of the meeting it arranged with the EAC on Monday, August 26.
SAH states that “it never intended to engage in a public dialogue with the trade unions or the management of EAC, as the proposals that have been made to the President of the Republic were purely for the benefit of the consumer and the economy to reduce the cost of electricity through the operation of a genuine AAH”.
“Understanding the weight of his responsibility towards the state and society of Cyprus to reduce the cost of electricity, he arranged a meeting with the EAC on Monday 26/08, for a constructive discussion of synergies for the benefit of consumers”, he adds.
The Association states that “it is important to point out that empirical studies lead to the conclusion that dominant firms that responded positively to the opening of the electricity market managed to become more flexible and efficient”.
In this case, SAH “believes that with the smooth start-up of AAH, EAC will be forced to operate more customer-centric and more rationally, in order to cope with the new competitive environment that will be created. This will be for the benefit of consumers (households and businesses) but also more broadly for the competitiveness of the economy”.
In relation to the review of the Functional and Legal Separation of the EAC, SAH states that contrary to what the EAC officially states in its announcement, “the conversion of the Functional Separation of the Network Directorate to a Legal Separation, as applied in the case of the Administrator, must be reviewed of the Cyprus Transmission System (CTS)”.
“The legal separation of the networks with the state utility company has been successfully applied in almost all European countries”, he says and adds that “only in this way will to ensure the independence and therefore the impartiality of the process of making any decisions regarding the activity of the networks”.
It also states that “the fact that the networks in the case of Cyprus remain state property is not a convincing justification for keeping them within the EAC, which holds a dominant position in the competitive parts of the Electricity Market”.
According to SAH, “with the long-term actions of the EAC it has become clear that the functional separation of the EAC cannot bring the necessary transparency to the electricity market under formation, the prevention of any manipulation by the dominant EAC, the prevention of the flow of information from monopolistic activities of the EAC to the competitive activities of the EAC and vice versa and to prevent the flow of all information within the common guild of the EAC”.
“It is now clear that the State needs to move towards the legal separation of the EAC so as to ensure all of the above for the benefit of consumers, who through competitive procedures in the electricity market will be able to choose their supplier,” he adds.
Regarding the licensing of Energy Storage Systems, the Electricity Market Association expresses the “imperative need to accelerate the deployment of energy storage systems, which is now inevitable and directly linked to the viability of several investments”.
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He adds that “the installation of such systems can contribute to reducing fluctuations and increasing flexibility in the management of energy production from renewable sources, while ensuring the reliability and stability of the electricity grid”.
SAH reports that he “never supported the licensing of projects without following the legal procedures in accordance with the Regulations and Legislation of the State”.
“What we are asking is for the relevant bodies to cooperate immediately and establish the minimum requirements and conditions on the basis of which the required licensing for the installation of energy storage systems will be considered given, with the aim of reducing the delay in approving these projects in operation licensed solar parks,” he adds.
With reference to the Grant Scheme for hybrid energy storage systems in combination with RES, SAH states that its position is that “the condition of the Scheme for Phase A for the conclusion of bilateral contracts with EAC Supply is discriminatory, disproportionate, unnecessary and distorts competition, offering unjustified advantages to EAC Supply”. “In view of EAC's strong monopoly position in the market, the need to create a level playing field, which will bring significant benefits to consumers, is even more imperative,” he adds.
In relation to a derogation for the development of energy storage projects by the DSMK, SAH states that “even more paradoxical is the assignment to the DSMK of the management of the central storage systems, which may create a conflict of interest, considering that under Article 71 of the N . 130(I)/2021 the DSMC has been designated as the Electricity Market Operator with specific responsibilities”. dominant position of the EAC, which makes it even more difficult to achieve the goal of establishing a genuinely competitive electricity market with real and substantial competition”.
The monopoly and monopoly of the EAC, according to the Association, “led us to the current situation with one of the highest electricity prices in Europe”.
“Considering that there is interest, licensed projects and readiness from the private sector to develop energy storage projects, the request for a waiver was unnecessary while the process followed to secure the waiver remains unknown,” he adds.
The Electricity Market Association states that “since DSMK is the Market Operator, the question arises as to how it is possible for the Market Operator to be a participant at the same time”.
In relation to electricity cuts, SAH states that ” one of the reasons that the problem of cuts is getting worse is the wrong planning and serious delay in the development of networks and infrastructure”.
He adds that “the non-implementation of projects to adapt, modernize and upgrade the networks is the reason that led to the increase in cuts and by extension to the current situation where more than 28% of green energy from RES ends up in the wastebasket”.
“The electrical grid must have the required capacity and capacity, but also integrate Renewable Energy Sources (RES) into its operation, maintaining its safety and reliability,” he adds.
In addition, SAH states that “the delay in installing smart meters, so that Independent Suppliers can also reach residential consumers and consumers have the option of choosing an alternative electricity supplier, is a further reason that residential consumers cannot benefit from lower electricity prices”.
With reference to the Dekelia Power Station, SAH states that it agrees that the Dekelia Power Station is of strategic importance for the State and “recognizes the need to operate as a second power generation point for the proper operation of the electricity system and the country's security of supply, in particular with the latest events taking place in our neighboring countries”.
On the other hand, the Association states that this does not negate the fact that the upgrading of the power plant in Dekelia by the EAC will further increase its position of power of the already dominant EAC.
“The upgrading of the station can be done by EAC for geographical dispersion of production, but at the same time the power of EAC must not increase, removing from its dynamics older and labor-intensive units in Vasilikos “, he adds.
Finally, the Electricity Market Association reports that the private sector has already moved forward with investments in conventional power generation units without putting more burden on the final consumer.
“On the contrary, its goal is the stability of the electrical system and the reduction of energy costs for the benefit of all”, he concludes.
