Additional costs savings that will arrive from the early retirement scheme to be concluded later this month and the reduction in electricity demand, will make the EAC a leaner operator that will eventually be able to invest more on production efficiencies and lower cost on the consumer.
The state-owned power generator that has been spearheaded for the fast-track process of the privatisation of semi-government organisations over the next three years has remained a conventional producer with an installed capacity currently at 1477.5MW from its three fuel-powered plants in Vassiliko, Dhekelia and Moni.
However, ever since the explosion at the Mari naval base in July 2011 decimated the 1200MW-capacity Vassiliko power station, the EAC has considered investments in alternative sources of energy, in addition to the EU-wide commitment to switch its crude-fuelled units to natural gas before the end of this decade.
Rebuilding the units at Vassiliko has been rapid, with the multi-million cost burdened on the insurance companies and the reinsurers that had underwritten the risk, while the government has paid half of its obligation for the €49m spent on urgent crude imports and mobile generators rented for almost a year after the explosion.
“We have not burdened the consumer with a single cent from the reconstruction costs,” explained EAC’s Director of Communications, Costas Gavrielides. “The higher costs we have seen so far are due to the premium the island pays for not being connected to a continental electricity grid, as well as because of the higher price tag linked to buying smaller quantities of fuel,” he said. But Gavrielides added that energy regulator CERA’s persistence to lower tariffs further will simply keep the EAC from reporting a profit any time soon, while the trend is also a deterrent for other privateers to invest in the sector.
“About 60 cents on the euro that is paid for electricity consumption goes to fuel costs, with a further 20c is taken by the government in the form of taxes and VAT, as well as to fund various subsidies. That leaves us with a mere 20c to cover operational costs, administration and new investments.”
This will hopefully change once Cyprus starts importing natural gas for power generation, as part of the interim solution until such time as the exploration and production from the offshore gas fields begins, some time after 2020. Gavrielides expects the saving to consumers to be “at least 10%” once natgas is imported for the EAC’s power units. The prospects for an interim solution will be announced by the state gas company DEFA.
The solar park in Tseri was built by the Greek contractor Aktor ATE at a cost of €3.3m and will be tested over the next few weeks, with the aim of producing energy by the end of May or early June. The project employs 12,000 panels spread out over an area of 4.6 hectares owned by the EAC that will also be saving the utility about 3,600 tonnes in CO2 emission credits. This was part of the government’s scheme to introduce 50MW solar production into the market, in addition to the 30.6MWp installed capacity by privately operated solar parks. But beyond EAC’s 3MWp project, only two other new solar parks will come online, each with a design capacity of 1.5MWp. This leaves a further 44MW of unutilised output initially targeted by the government. However, Gavrielides said that the new solar park near Akrotiri’s ‘Ladies Mile’ sand dunes west of Limassol port will have a design capacity of 30MWp and could be operational within 18 months.
“Such projects usually take a full year to be approved by the local authorities and permits to be issued, while the construction phase could last a further six months,” he said.
The cost of this solar park is estimated to be in the region of about €25m and the benefit will be exclusively the EAC’s, as it will be leasing the land from the Church of Limassol.
The only two outstanding issues seem to be the approval from the Western Sovereign Base Areas administration, as it is not too far from the Akrotiri military base and air base, as well as getting the green light from the environment authority, as the nearby bird habitat is protected by the EU’s ‘Natura’ framework.
Gavrielides said that the Tseri and the Limassol solar parks “are not the only ones in the pipeline,” explaining that the EAC is open to proposals for own-operation or joint ventures for other alternative energy use.
According to the transmission regulator’s statistics, nearly 7.4% of all energy production last year came from alternative sources of energy (5.59% wind, 1.06% solar, 0.84% biomass). Total production capacity at all wind parks is 146.7MW, a further 30.6MWp from solar parks and 0.8MWp from photovoltaic panels placed on public buildings, schools, and army camps, with a further 9.7MW capability coming from burning biomass fuels. A further 200 homes of low-income earners will be or have already installed PV panels with an output of 5KW per rooftop for a total capacity of 1MWp, while another 2,800 homes are investing in solar panels as part of the net metering programme.
The Cyprus government’s national strategy for alternative energy sources is to generate 16% of all power production from non-fuel resources by the year 2020, of which 300MW output capacity should be from wind farms, 192MW from solar panels, 17MW from biomass and 75MW from heliothermal units.
Meanwhile, the EAC will proceed with a new early retirement scheme that will see a further 109 staff leaving at a cost of €10m, similar to a package offered to staff at the Cyta telco. This will reduce the total workforce from nearly 2,200 and no new employees will be hired to replace them. Initially, the total workforce was 2,400, but 200 people have resigned for other career opportunities or retired in the past two years.
Source: Financial Mirror