Economy category powered by

Papanastasiou: We are accelerating the transformation of Cyprus' energy sector

Addressing the 14th Limassol Economic Forum, Energy, Trade and Industry Minister George Papanastasiou noted that, as soon as is was elected, the current government had identified the need to accelerate the transformation of our energy sector.

The Minister continued that factors contributing to this need included both the energy crisis plaguing Europe and the European Union's goals for climate neutrality by 2050.

He continued that on the basis of both the ambitious EU reform packages 'REPowerEU' and 'Fit for 55', the government has stepped up efforts to revise Cyprus’ National Energy and Climate Plan, which provides for policies and actions that promote, among others, RES, Energy Saving and circular practices.

A draft of the revised Plan was submitted last July to the European Commission and its comments or observations are awaited for its finalisation, Papanastasiou noted, since the final version must be submitted by the end of June 2024.

The state’s revised Plan aims, precisely, at a detailed mapping of the transition towards to a competitive energy system with low greenhouse gas emissions, he noted.

According to the Minister, solid foundations have already been laid. He noted these included 41% of the budgeted resources of the ‘Cyprus Tomorrow’ national ‘Recovery and Resilience Plan being earmarked for the green transition, while the Ministry has also secured approximately €590 million for the Program Period until 2027. These funds will be used, mainly, to grant financial incentives for households, businesses and public bodies, for investments in energy efficiency and RES.

At the same time, the government is proceeding with the necessary modernization of the legislative and regulatory framework of the energy sector, among other things by digitizing the procedures of the newly established Digital One Stop Shop for the licensing of RES projects, which operates under the Ministry’s Business Facilitation Unit.

Photovoltaics for All

The Minister also made a special reference to the new Grant Scheme the Ministry of Energy is preparing called ‘Photovoltaics for All.’ The scheme aims at reducing the cost of electricity for households and taking into account the inability of some to find equity capital for the installation of photovoltaic systems for net metering or virtual net metering.

The subsidy for vulnerable consumers is expected to increase to approach 100% of the cost for a system up to 5 kilowatts, while those with the necessary capital will continue to receive a subsidy of up to €1,500, as is done with the existing Scheme.

What changes with the new Plan, Papanastasiou explained, is that for systems of a specific strength, which corresponds to covering the consumption of an average household, those Cypriot consumers who do not have the initial capital to proceed with the installation of photovoltaics, will have the opportunity to install it without pay capital.

The government’s intention is for the beneficiaries of this category to receive a part of the investment as a grant and the rest of the cost of the photovoltaic system to be repaid through the electricity bill, as soon as the implementation of the net begins metering and with a charge, indicatively, of €150 per two months. When the system is paid off in full, the electricity bill will be further reduced by deducting the €150 installment.

With the 'Photovoltaics for All' Project, which the government aims to operate at the beginning of the new year, the state will give people the opportunity to substantially reduce the electricity bills they consume, since they will now also be the producers themselves. At the same time, the state will be giving significant impetus to the inclusion of Renewable Sources in the energy mix of Cyprus, the Minister underlined.

Energy isolation

He continued that since, in 2023, Cyprus still remains isolated from the European and regional energy networks, and still depends, to a large extent, on imported oil products, the Cypriot economy is much more vulnerable than those of other countries to international oil price fluctuations.

He said that it was therefore, of vital importance for our country to strengthen the security of its energy supply, to lift its energy isolation and to proceed with the operation of both the competitive electricity market and the internal natural gas market.

In this context, the ‘Cyprus Tomorrow’ Plan includes a fund of €100 million for the electrical interconnection project of Cyprus, Greece and Israel, which will end Cyprus’ energy isolation and will enhance the penetration of RES in its electricity grid.

At the same time, funds have been included for financing from European resources amounting to €4.7 million for the management system of the competitive electricity market, €40 million for the promotion of electricity storage systems and around €120 million for the expansion, upgrading and digitization of networks, including mass deployment of smart meters, Papanastasiou noted.

He also said that, in relation to the internal natural gas market, the Ministry of Energy has intensified efforts both to complete the LNG import terminal at Vassiliko and to supply gas for power generation and export purposes, via pipeline, from fields in the Eastern Mediterranean.

The regasification terminal in Vasiliko is expected to be ready around the middle of 2024, while for the arrival of natural gas in Cyprus from the Eastern Mediterranean, the initiatives being undertaken are at the level of states, but also that of hydrocarbon and electricity companies, are ongoing, to create the necessary infrastructure, such as gas pipeline and liquefaction terminal, modular or floating technology.

Natural gas

As the bridge fuel for the green transition, the arrival of natural gas in our country will have multiple benefits for the Cypriot economy, such as reducing costs and pollutant emissions in electricity production, strengthening the country’s energy security, and creating competitive conditions in the electricity market, through the operation of independent electricity producers, Papanastasiou says.

Given, therefore, the new operational environment that has been formed in the energy sector, Cyprus has an excellent opportunity to accelerate the development of natural gas discoveries in Cyprus’ Exclusive Economic Zone (EEZ), the Minister added.

Already, after the stagnation caused by the COVID-19 pandemic, all Licensees in the country’s EEZ are proceeding normally with their research programme, which is expected to peak in the next 2 to 3 years.

Papanastasiou made particular mention of the consortium of Eni and TotalEnergies planning appraisal drilling on the ‘Kronos’ discovery around the end of 2023.

The Minister recalled that the consortium had carried out, within 2022, two exploratory drillings in Block 6, which led to the discoveries of ‘Kronos’ and ‘Zeus,’ with initial estimates of natural gas quantities amounting to 2.5 and 2 to 3 trillion cubic feet, respectively. The ‘Calypso’ discovery was also made in the same Block in 2018, with the cluster of discoveries that has been created expected to help accelerate their development, he continued.

He also noted that, at this stage the consortium of ExxonMobil and QatarEnergy is working on the decisions it needs to take for its next steps, working, among other things, on the data it collected in 2022, both during the appraisal drilling in the ‘Glavkos’ discovery of Block 10, as well as during the three-dimensional seismic surveys it carried out in Blocks 5 and 10. Their first research drilling in Block 5 is already planned for the end of 2024, while in ‘Glavkos,’ Papanastasiou noted, it was announced in February 2019, that there is an initial estimate of between 5 to 8 trillion cubic feet.

Appraisal drilling in the centre of the ‘Aphrodite’ deposit, in Block 12, was successfully completed by the licensed consortium of Chevron, Shell, and NewMed Energy just last July. According to Papanastasiou, named ‘A3,’ it was the second appraisal well at ‘Aphrodite,’ for which the government is aware, , until today, of confirmed quantities of natural gas in the order of 4.5 trillion cubic feet. He said that indications from the new appraisal drilling are quite encouraging.

With the ‘Aphrodite’ consortium, Papanastasiou continued, the government is currently conducting a consultation on the amendments submitted by the licensee, in June 2023, to the approved Development and Production Plan for the field. He continued that the Ministry considered that the changes do not serve the interests of the Republic of Cyprus and the discussion process, upon agreement of both sides, has been extended for another month, until the beginning of November.

The 14th Limassol Economic Forum is taking place at City of Dreams Mediterranean, Limassol. It has been organised by IMH and INBusiness Magazine, with the support of EKO, the Cyprus Shipping Chamber, and Limassol Chamber of Commerce & Industry. CBN, GOLD Magazine, and ALPHA Cyprus are communication sponsors.

Read More

Tourist arrivals up 5. 4% in the first quarter of 2024, says Koumis
The RE:SOURCE 2.0 exhibition announces the list of participating artists
CySEC empowering youth with Financial Literacy initiatives
Limassol’s Anexartisias to become a one-way street ahead of pedestrianisation as it competes with the malls
The revised FDI screening bill and Cyprus' failure to comply
Prices in construction materials continue downward trend in March
Swiss Six and CSE announce the 'Go live' dual listing of Cyprus EMTN
Cyprus has one of largest increases in RES share in EU, Minister says
SUM urban mobility project workshop takes place in Larnaca
President announces joint visit to Lebanon with von der Leyen