How does the Pollutant Fund work – There are economic and geopolitical risks – Natural gas and RES for an immediate reduction in electricity costs
The €25 million investment from the Pollutants Fund to support the Great Sea Interconnector is a sound investment, since the project promotes the increase in the use of Renewable Energy Sources (RES), Energy Expert Charles Ellinas told KYPE . must be promoted.
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How does the Pollutant Fund work
Mr. Ellinas explained that Cyprus pays approximately 200-300 million per year to the EU as emission allowances due to the use fuel oil. From this amount, Europe returns around 90% to the country and keeps the rest for investments.
He noted that the emissions trading system requires countries to use at least 50% of the money returned to invest in climate projects of change. However, he stated that such a thing does not happen in Cyprus.
For this reason, he characterized as positive the possible decision of the Government to give 25 million euros a year from this fund for Great Sea Interconnector.
“I support this because this money should be used for climate change. The interconnection is a climate change project, so it's a good investment,” he said.
Mr. Hellinas said the project would not work before 2030, so the benefits will be long term. However, as he said, with its operation there will be benefits such as an increase in the use of Renewable Energy Sources (RES), the export of surplus clean energy to other countries, but also the import of such energy at low prices.
« I believe that the interconnection will lead to a significant reduction of RES prices and will lead to competition, which currently does not exist in Cyprus”, he reported. He added that at the moment there is a collusion between the RES producers who sell energy at a price very close to that of the EAC, about 10% lower and so there is no benefit.
Mr. Ellinas also said that the interconnection will also help in case there is a electricity deficit in Cyprus. He cited as an example the possibility that the Dekelia station will not be ready in time, resulting in insufficient electricity supply in Cyprus and blackouts.
At the same time, he expressed the assessment that by 2030, Cyprus will not be able to significantly increase the use of RES and will continue to have income from the refunds of the polluter fund, around 100-150 per year, maybe more.
Economic and geopolitical risks exist
Mr. Ellinas expressed the opinion that Cyprus should participate as a shareholder in the Great Sea Interconnector, because it is a very important project for Cyprus and should have a say in its management.
He added, however, that it is not clear how much the project will cost. The €1.9 billion cost he said was calculated when Quantum Energy was responsible. He himself, he said, asked for the cost to be updated, which was not done.
“There is a possibility that the cost will be more and if it is more, Cyprus as a shareholder will definitely need to contribute to its coverage”, he said. He added, however, that this might not be necessary if the company that took over the management of the project can make a loan.
When asked if there are investors for the project, he said that although at the moment there are no investors, several companies have shown interest and it is expected to be seen if this interest will translate into investments, when the project is approved by the Republic of Cyprus.
When asked about the risk, Mr. Ellinas said that there is a possibility that the cost to go up, as it does in all great projects that last years.
The positive, he said, is that Nexans has agreed a price for the project of around 1.4 billion euros, and he said that largely underwrites the cost, but there is no guarantee that it will not increase.
< p>Regarding geopolitical risk, he said it is not clear. As he said, nothing has been done by Turkey to endanger the project directly and stop the investigations.
The European Commission, he added, has stated that it will proceed with the necessary decisions so that the cable is not endangered Turkey. Nevertheless, he said that the geopolitical risk exists and it is not clear whether it is small or large.
However, Mr. Ellinas noted that the benefits of the project are significant, since all European countries are now interconnected and are already seeing the benefits. He noted that Cyprus is far behind in the use of RES in relation to Europe's goals.
Natural gas and RES for an immediate reduction in electricity costs
Stating that the Great Sea Interconnector will bring benefits to Cyprus in the long run, he noted that at the moment Cyprus should immediately promote the import of natural gas.
To do this, he added, it should be freed the floating unit “Prometheus” located in Shanghai. He noted that with the transition from fuel oil to natural gas at the end of the year, the price of electricity can be reduced between 30-40%.
He also mentioned that even if the market is opened to private individuals, the ” Prometheus” and create the infrastructure so that private individuals can import liquefied natural gas.
“Without the infrastructure, market liberalization is useless,” he added.< /p>
At the same time, he noted that photovoltaics should be further promoted in homes, which brought a significant reduction in the cost of electricity, and the network should be upgraded at the same time.
He stated that the money returned from the pollution rights they can also be used to upgrade the network. These, he said, are urgent projects with an immediate and clear return on cost reduction for consumers.
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