Investment in renewable energy has gained more traction in Cyprus with a proactive government supporting green initiatives and international companies determined to harness the island’s 340 days of sunshine – boosting the diversification of the country’s energy landscape.
Supporting the development of Renewable Energy Sources (RES) and creating a more energy-efficient future is high on the agenda for Cyprus. 2019 is certainly a critical year as far as the EU’s 2020 Renewable Energy goals are concerned, as the country aims to have 13% of its energy consumption coming from renewables by that deadline. In 2017, the percentage of renewables in the gross final energy consumption of Cyprus rose to around 10%, and although there has been some concern Cyprus will not be able to meet its targets, the government maintains it is confident that all the necessary support schemes are already in place to achieve this goal.
Given Cyprus’ electricity isolation and in a bid to introduce more flexibility to its power system, the country aims to introduce new and disruptive smart grid technologies, as well as state-of-the-art control and storage methods to be used in parallel with new market approaches.
Cyprus has the highest potential for solar power of any European Union country, and the island is already one of the highest users per capita in the world of solar water heaters in households, with over 90% of households equipped with solar water heaters and over 50% of hotels using large systems of this kind.
A strong focus on research and innovation is also fuelling Cyprus’ drive to become more sustainable, with three projects winning significant funding from NER300 – a financing instrument managed jointly by the European Commission, European Investment Bank and member states. The Helios Power Project, EOS Green Energy Project and the Green+ Smart-Grid Project have garnered a combined €117.8 million to develop innovative renewable ventures in Cyprus.
Currently, Cyprus operates a scheme for the production of electricity from RES for own use, which includes installations of net-metering photovoltaic (PV) systems with capacity up to 10 kW for all consumers, net-billing RES systems (mainly PV and Biomass) with a capacity of 10 kW to 10 ΜW for commercial and industrial consumers, and off-grid RES systems with no limit in total capacity.For some of these, the government is offering subsidies to consumers, intended to encourage further RES installations by reducing the recuperation period of their investments.
In addition, following a successful support scheme for the installation of RES systems that will operate in the competitive electricity market – approximately 100 MW PV systems, 2.3 MW Biomass systems and 12.5 MW from a wind park – have been approved, and a new scheme was announced for another 200 MW. The RES systems that enter these schemes are expected to be operational before the end of 2020.
Cyprus’ energy policy has created financial support for RES projects, and a special fund was created aiming to support RES and energy saving investments in Cyprus, with revenue derived from consumers paying a ‘green tax’ levied on electricity bills (currently at €0.01 per kWh and €0.005 per kWh for vulnerable groups).
The country’s national grid system needs upgrading as it has certain intrinsic and technical limitations affecting RES penetration and reliability. However, studies by the International Renewables Agency (IRENA) concluded that using the existing system, renewable energy and mostly solar, could provide 25% to 40% of Cyprus’ total electricity supply in 2030 and bring costs down significantly. This can be increased further by implementing RES installations with storage capability through competitive bidding.
The country is also exploring ways to introduce smart grids in the national network and is on the look-out for projects that could facilitate energy storage, and ventures that have production on a 24-hour basis. In addition, the prospective EuroAsia and EuroAfrica Interconnectors could bring more solutions in their wake.
Fossil Fuel Reliance
A key challenge for Cyprus is its high dependency on fossil fuels for energy – with the biggest share within the EU. This makes it crucial for the country to develop both its natural gas, the cleanest of the fossil fuels, and renewable energy sources. The potential of the latter is enormous, both in terms of clean energy and low electricity prices.
Cyprus is reliant on heavy fuel oil and diesel imports for its electricity needs and spends over 8% of its GDP to cover the costs. However, the country has embarked on a plan to import LNG for power generation by 2020 over a 10 to 20-year period so that it can reduce carbon emissions in line with EU targets, and until it can exploit its own gas reserves. The EU agreed in January 2018 to partially fund the cost to build infrastructure at Vassilikos for this purpose to the tune of €101.5 million, constituting about 40% of the eligible amount. The Natural Gas Public Company (DEFA), as the sole importer and distributor of natural gas on the island, announced tenders in 2018 for the construction of the required infrastructure at Vassilikos, with the award decision expected to be made later in 2019. This will be followed by a separate tender for the procurement of LNG. Progressively, the project will include the introduction and use of natural gas by the transport, industry and energy sectors in Cyprus.
Solar Energy Boom
Solar energy is increasingly becoming a boom segment for Cyprus. The European Bank for Reconstruction and Development (EBRD) alone has financed five solar parks across the island with an investment of €10.85 million in a bid to increase photovoltaic capacity in Cyprus by 12%. Scandinavian Solar Parks, a Cyprus company with Swedish investors, has established nine solar power generation parks with a capacity of around 1,300 KW of energy. Local Cyfield runs a 3 MW PV park in Ayios Ioannis, while the Electricity Authority of Cyprus (EAC) operates its own PV park in Tseri with a nominal capacity of 3 MWp, generating some 5,000 MWh per year and avoiding 3,600 tonnes of carbon dioxide emissions per year. The state power company also has an ambitious project planned to self-finance and operate a 20 MW photovoltaic (PV) power station inside the Sovereign Base Area (SBA) of Akrotiri. In addition, a solar field on the island’s southern coast in Pentakomo aims not only to generate electricity but to provide fresh water by powering energy intensive desalination plants. The research facility is a result of a partnership between the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Cyprus Institute (CyI), which is pioneering research in renewable energy systems.
In addition, the EAC forged a deal with the country’s Archbishopric in July 2018 to develop two photovoltaic parks in Nicosia, producing around 66 MW.The project is set to be the largest PV system in Cyprus, contributing to the island’s national renewable energy sources targets.
These are all positive developments, but there continues to be untapped potential in terms of renewable energy production, and international interest in developing the sector in Cyprus is expected to increase considerably in coming years. This investment is also crucial in order for Cyprus to achieve its targets – and further open up the field for companies with expertise in renewables.
Focus on Research and Innovation
The University of Cyprus (UCY) is set to construct its second solar panel park ‘Apollon’ with assistance from the EAC to establish UCY as completely energy self-sufficient. Set to become the island’s first ‘green area’, the photovoltaic park will have a peak output of 10 MW coupled with battery storage of 2 MWh capacity, making it the island’s largest self-sufficient renewable energy facility. The University already covers around 15% of its electricity needs through photovoltaics with around 400 kWp already installed on a number of university buildings and the ‘Phaethon’ PV park made up of 1,645 solar panels with the capacity to produce 632,000 kWh of electric energy annually.
Central to this flagship project is the work of the University’s FOSS Research Centre for Sustainable Energy, which carries out cutting-edge research in the field of renewable sources of energy, with emphasis on solar energy, smart grids, smart buildings, grid integration and enabling technologies. FOSS has been highly successful in competing for funds, so far securing €16 million from more than 50 EU, national and industrial-funded projects. Well-known international players in the field of energy such as Honeywell, Hanwa Q Cells, Gantner Instruments, IBM amongst other leading international brands are already collaborating with FOSS and are testing their products in Cyprus.
FOSS strives to promote cooperation between academia, industry and business sectors, as well as contributing to the transfer of knowledge from advanced European clusters to the region. A key aim is to make Cyprus a hub for solar innovation, technology transfer, industry start-ups and job creation where ideas can grow and achieve their full potential.
More recently, Cyprus was a testing ground for an innovative community project delivered by a German electric utility company Autarsys, where 30 kW/50 kWh was connected to a conventional distribution substation in Nicosia. The project provided the opportunity to interact with real battery systems and gather knowledge about their operation, branding the efforts as a success. State-of-the-art high-voltage lithium-ion batteries were used, and the battery system provided services to the distribution network, such as power balancing, network and frequency support, as well as services that stabilise and protect the seamless operation of the network and are considered essential for modern power networks. The project received funding from the European Union’s Interreg Mediterranean research and innovation programme under the project StoRES.
Additionally, some of the most high-profile solar projects in Cyprus have received funding from NER300. The Helios Power Project in the Doros-Limnatis area in Limassol aims to use a concentrated solar power system plant whereby solar power is used to turn water into steam, which in turn is used to produce electricity. Also using steam is the EOS Green Energy project, a €175 million initiative which uses an innovative graphite-based system to store energy generated by concentrated solar power. Due to be operational by the summer of 2019, the 50 MW capacity EOS (green energy) plant is being developed by Paphos-based Alfa Mediterranean Enterprises Limited on 1.8 million square metres in the Alassa area of the Limassol district. The company secured €60.2 million funding from the European Investment Bank after winning a competition for innovative renewable energy technology held by the European Commission’s NER300 Scheme.
The Concentrated Solar Thermal Power plant (CSP) system is innovative because it uses pure graphite to store solar-generated energy. The plant in Alassa will be the first of its size and type in the Mediterranean basin capable of storing solar-generated energy for 24 hours a day and operating for 365 days a year. It will supply about 5% of Cyprus’ electricity generation – enough for more than 65,000 households – with power on demand even after sunset.
The CSP system works by having solar-heated water pumped through coils of stainless steel pipes in steel tanks containing high purity graphite blocks. The result will produce super-heated ‘dry’ steam which in turn will power a turbine to produce electricity. The main advantage of this system is that it is autonomous and can operate around the clock. The CSP technology, developed by Solastor PTY Ltd, an Australian company, has been tested in Australia and China, but the plant in Cyprus will be the first to proceed as a planned commercial venture.
This technology is also environmentally friendly as the water that evaporates into steam is partly recirculated through the system, thus saving in water consumption. There are no green-house gas emissions involved and no chemicals or batteries are needed.
Meanwhile, the Green+ project involves installing a smart grid in the Troodos mountains, tackling one of the main problems Cyprus faces with its grid system which is already restricted and cut off from interconnections to the trans-European electricity networks – a challenge that is set to be overcome through the EuroAsia Interconnector, which will connect the electricity grids of Israel, Cyprus and Greece via Crete through a subsea DC cable. To further tackle the problem of distribution, the government aims to transform the current networks into smart grids, aiming to attract foreign investments.
Electricity Market Liberalisation
Currently, Cyprus is in a transitional step before full electricity market liberalisation, which is being spurred on by the publication of a binding timetable by the Cyprus Energy Regulatory Authority (CERA), to ensure that the electricity market in Cyprus is liberalised. CERA has worked towards the full opening up of the energy market and granting consumers the right to choose their own supplier. CERA’s proposition is a ‘net pool’ model, where the operations of the state power company, EAC, are unbundled and the production and supply operations separated. EAC production would then enter into bilateral agreements with suppliers for the sale of energy at regulated prices. CERA foresees establishing an electricity exchange where suppliers’ bids for quantities of electricity will be updated every half hour. The exchange will match supply and demand and fix the price for a contract. This will be operated by the Transmission System Operator (TSO).The target date to achieve electricity market liberalisation is December 2021, a move which will further open up the market for renewables, clean energy and lower prices.
Apart from the increasing foreign investment and a competitive energy market unfolding over the next few years, the EAC is contributing to the promotion of electric transport in Cyprus. This constitutes one of the cornerstones in the development of a zero-carbon economy, by installing electric vehicle charging stations on roads across the island by the end of 2019.
Stakeholders envision having solar panels across all schools on the island and although the licences are still cumbersome to obtain, the EAC states it is ready and has the know-how to undertake the project.
Estimates show that RES have the potential to create between 11,000 and 22,000 jobs in Cyprus by 2030. Without any setbacks, RES could provide up to 40% of Cyprus’ total electricity supply in 2030, where solar PV will be the dominant source providing 15% to 27% of the electricity supply.
Cyprus already has the resource of the sun and with new investment and projects in the pipeline, along with a government determined to develop renewable solutions, the country can truly harness its natural potential and become far more energy efficient in the years to come.
For more information, contact Cyprus' investment promotion agency, Invest Cyprus.
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