The prevailing perception in the public debate is that penetration of renewable energy is slow in Cyprus. This is partly correct, although electricity from photovoltaics has been growing very fast lately – it has more than doubled within three years.
A deeper assessment reveals that renewables have already yielded substantial benefits to the Cypriot economy. This is the main finding of a newly released study, authored by Professor Theodoros Zachariadis of the Cyprus Institute. It was prepared for the environmental non-governmental organisation Terra Cypria in the frame of a project funded by the European Climate Foundation.
The study found that renewable electricity has saved the Cypriot economy very substantial resources that would otherwise be spent on even more imports of fossil fuels and even more purchases of allowances for the carbon emissions of power plants. Renewables also help reduce air pollution. As a result, already by mid-2025 renewables deployed over the decade 2015-2024 – mainly solar photovoltaics – have yielded net benefits of 450 million Euros at 2023 prices. Benefits will continue to accrue in the coming years and are expected to cumulatively reach 2.7 billion Euros’2023 up to 2035. If the avoided costs from air pollution are also accounted for, the net benefits may be reaching 4.8 billion Euros’2023. Benefits of solar panels are thus ten to seventeen times higher than their costs, and each Megawatt of solar PVs installed in Cyprus during the last decade is expected to yield net economic benefits of 5-9 million Euros’2023 throughout its lifetime.
The study admits that the corresponding economic benefits from now on will have to be assessed differently, as the electricity system of Cyprus has reached a stage where additional investments on renewables require substantial deployment of energy storage and a further expansion and modernisation of the electricity grid.
Zachariadis stresses that these considerable economic benefits have spread unequally within the Cypriot society. In the absence of real competition in the national electricity market, most citizens and firms have enjoyed much less the advantages of decarbonisation; main beneficiaries were investors who developed solar and wind parks as well as about 20-25% of the Cypriot households who could afford to install photovoltaic panels and had the space to do so.
Finally, the author clarifies that the study has not assessed adverse environmental impacts, for example from the installation of solar panels and wind farms in areas with high agricultural value and in sensitive ecosystems. He provides a rough approximation that the environmental benefit of improved air quality thanks to renewables exceeds the costs of such adverse impacts. In any case, authorities must ensure in the future the compliance of investments with stringent regulations about the buildup of renewables in valuable agricultural land and protected natural areas.
The full study is available here.
