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Tuesday, May 21, 2024

They started to make money: Many of the photovoltaics were connected to the EAC

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Several of the photovoltaic parks that were approved under the first plan of the Ministry of Energy have already been completed and connected to the electricity network and already produce “green energy” but also the first good profits for their owners.

The information of “Politis” from the EAC states that about 35% of the total power that was licensed (ie 35 megawatts out of 101) has been installed and produced. The owners of the parks are paid by the EAC the respective “avoidance cost” for each kilowatt hour that is channeled to the network. That is, they are remunerated with the fuel cost that the EAC would have to produce this power from its units.

It is of little use

In the case of these parks, the impression that consumers have is that electricity from the sun is much cheaper than production from oil. The kilowatt hours produced by these parks will cost the consumer as much as the kilowatt hours produced by EAC oil, with the difference that their production does not pollute the environment. However, in the final analysis, the consumer will have some small economic benefit from the production of the parks, since the fixed (inelastic) cost of the EAC is not added to it.

They are very interested

For the owners of these parks the production is significant to extremely profitable. This is because for May 2020 the avoidance cost (ie the purchase price from the EAC of electricity produced by RES parks) is about 11.2 cents per kilowatt hour (around 11 cents was almost all of 2019-20, but the following months will obviously fall), while the cost of producing these photovoltaics is estimated to be 5-6 cents per kilowatt hour. There are estimates that the cost in some cases may be lower, but also estimates (mainly of businessmen) that it is approaching 7-8 cents per kilowatt hour.

The widespread impression in the energy sector is that these parks are a golden investment, but & # 8230; not forever. The specific plan of the ministry stipulates that when the competitive electricity market operates (to be precise, one year later) the purchase of electricity from the EAC stops at the level of the respective avoidance costs and these parks must join the competitive market and cooperate. with suppliers to make the production available at prices that will be shaped by the market. Given that the earliest competitive market is expected to be operational in October 2021, it is estimated that by then these parks will have amortized much, if not all, of their investment.

Why not bidding

The prospect of integrating these parks into the competitive market was the main reason why the Ministry of Energy and CERA did not agree to announce a tender for the installation of RES. As it was pointed out at the time, a tender could provide lower prices for the consumer than the current cost of avoidance, but would trap a large part of the RES market in multi-year contracts with the state and limit the participation of private producers in competitive market, the operation of which is an irreplaceable goal of the state. In addition, it was argued that multi-year contracts run the risk of yielding more per kilowatt hour to producers in the future than & # 8217; what they would get from avoidance costs or prices in competitive conditions.

On the other hand, strong views were heard in favor of announcing a tender for 50-60-70 megawatts, in order to private producers and to directly benefit the consumer and leave another part of the needs to be met by the participation of RES in the competitive market.

Source: politis.com.cy

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