“The elephant is in the room—let’s not hide it behind the simplistic 20%”: This is the title of a statement by the Alma Polites Movement for Cyprus regarding the challenge issued by the leader of Direct Democracy and Member of the European Parliament, Fidias Panagiotou, who, through unsubstantiated social media posts, is calling on President Christodoulides to intervene to lower the price of electricity. As noted, “the discussion in recent days regarding electricity prices began with a real problem, but with an arbitrary figure: that intervention in the solar panel sector could reduce electricity prices by 20%. It would be wonderful if it weren’t so simplistic!”
“Unsubstantiated oversimplifications of complex problems have a serious consequence: they give those who benefit from the current system an opportunity to claim that there is no problem.”
ΣΧΕΤΙΚΑ ΑΡΘΡΑ
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Alma presents a graph from the Cyprus Transmission System Operator (CTSO) covering seven consecutive days, August 19–25. Over 336 half-hour periods, the settlement price did not fall below €180/MWh even once. The lowest price was €181/MWh, and the weekly average was approximately €245/MWh.
“These are not estimates. They are actual market data. We didn’t invent the problem of marginal pricing in Cyprus. Simply put, in this model, the most expensive generation unit needed to meet demand determines the market price. Mario Draghi highlighted this distortion in 2022, noting that natural gas determined the price of electricity in the European Union (EU) 63% of the time, even though it accounted for only about 20% of the energy mix.”
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Alma states that “in Cyprus, with our small and isolated power grid, and the exorbitantly expensive electricity from the EAC—which still burns fuel oil and is burdened by the purchase of emissions allowances— the problem is even more acute.”
“We had already pointed out this very distortion before the launch of the Competitive Market. In 2022, the EU itself imposed a temporary cap of €180/MWh on the market revenues of certain low-margin generators, recognizing that the model could, under extreme conditions, generate excess revenue. In Italy, mechanisms are already in place that aim to limit such distortions, such as two-way contracts for difference, so that when the price exceeds the agreed-upon price, the producer must refund the difference. In Cyprus, former Energy Minister Giorgos Papanastasiou had also publicly acknowledged the distortions in the existing model and had spoken about the possibility of intervention.”
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The party notes that, at the same time, it has proposed examining the “Single Buyer” model—that is, a central buyer purchasing electricity from producers through truly competitive processes and long-term agreements, at prices that take into account costs and a reasonable return.
“The idea is not to return to a closed monopoly, but to shift competition to where it can truly function—among producers—to determine who can offer the cheapest electricity to consumers. So the real question remains: are there or are there not excess profits in the Cypriot electricity market? The producers say there aren’t. This must be proven with data. For example, EAC-Production itself had reported an average cost of approximately €50/MWh for its recent photovoltaic park. Even if the actual cost increases significantly due to cutbacks and other factors, the gap from current clearing prices remains such that it warrants, at the very least, a thorough review.”
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On August 18, Alma formally requested from the Minister of Energy the actual data on the revenues and profitability of the largest electricity producers.
“If there are no excess profits, the data will show it. If there are, we must examine how the excess profits will be returned to consumers without undermining the investments we need in renewable energy and energy storage. And one last thing, regarding the 20%. We have even discussed, based on evidence, a reduction in the price of electricity of up to 22%. However, this would not result from arbitrary intervention in renewable energy prices. Our estimate was based on a specific study by the Cyprus Institute on the savings that could result if we finally had natural gas for electricity generation.”
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As noted, “energy policy is a particularly complex issue. It requires data, analysis, and comparison with the policies implemented in other European countries.”
“We need to know who is profiting, how much they are profiting, and what portion of those profits constitutes a reasonable return on investment. Only then can we have a serious discussion about whether intervention is needed and what form it should take.”
