Households in Cyprus that invested thousands of euros in rooftop solar panels are seeing their expected savings eroded by increasingly frequent cuts to renewable electricity generation, while the shift from net metering to net billing threatens to make new installations considerably less financially attractive.
The existing net-metering system, which has allowed many households to benefit from generating their own renewable electricity, is increasingly struggling to fulfil its purpose. Excess solar power fed into the electricity grid is forcing authorities to curtail generation more frequently, while the newer net-billing system offers significantly less favourable financial terms than those available just a few years ago.
As a result, homeowners who invested in photovoltaic systems to cover their electricity needs are finding that equipment worth thousands of euros is sitting on their roofs without delivering the returns they expected, or would otherwise have achieved.
The underlying problem is straightforward, although finding a solution is far more complicated.
Cyprus lacks a centralised energy storage system capable of absorbing surplus renewable electricity and providing backup power in the event of grid failures at night. Without such infrastructure, excess electricity generated during periods of high solar production goes to waste.
Why net metering is no longer working as intended
Net metering is increasingly unable to operate as originally intended because of the large number of photovoltaic installations and the substantial amount of electricity they generate at times when demand is relatively low.
This is why households applying for new photovoltaic systems from 2026 are being placed under the net-billing system.
However, the change does not resolve the underlying problem.
Households with existing net-metering contracts will continue generating electricity and being billed under the same arrangement until their contracts expire.
Each residential contract lasts 15 years. This means someone who installed a photovoltaic system in 2025 will remain under net metering until 2040, when they will move to net billing or another scheme that may have been introduced by then.
Net metering versus net billing: What changes?
The main difference between net metering and net billing lies in how electricity generated and consumed is calculated.
Under net metering, the number of kilowatt-hours produced by a household’s photovoltaic system is offset against the number of kilowatt-hours drawn from the grid.
For example, if a household generates 30 kWh in a day but consumes only 20 kWh, it effectively retains a credit of 10 kWh, which can be carried forward and offset against electricity consumption on subsequent bills.
In practice, net metering allows households to use the electricity grid as an indirect form of energy storage.
Net billing, by contrast, offsets the financial value of electricity rather than the number of kilowatt-hours.
Under this arrangement, the value of electricity exported to the grid when it is generated is compared with the cost of electricity drawn from the grid at another time, such as during the evening.
This distinction can result in substantially higher electricity bills.
During periods of excess renewable generation, electricity prices can fall to extremely low levels. In the evening, however, when conventional power stations supply more of the electricity needed, prices can rise sharply.
Households may therefore receive relatively little for the surplus solar electricity they export during the day while paying considerably more for electricity purchased from the grid at night.
Who is exempt from solar power curtailments?
Almost all households with photovoltaic systems are exposed to electricity generation curtailments, regardless of whether they operate under net metering or net billing.
There is, however, an important exception.
Households whose contracts were signed when ripple control systems were not mandatory are exempt from these curtailments because their installations cannot be remotely disconnected or have their production reduced through that mechanism.
An estimated 20,000 residential photovoltaic systems were installed before 2020.
Today, approximately 100,000 households have solar installations, meaning that around 70% to 80% of residential photovoltaic systems are subject to curtailments, while approximately 20,000 older installations are exempt.
Households without solar panels bear part of the cost
An estimated 350,000 to 400,000 other homes in Cyprus do not have photovoltaic systems.
The implications go beyond their inability to generate renewable electricity.
Under the net-metering arrangement, these consumers indirectly subsidise the approximately 100,000 households with rooftop solar panels.
The reason lies in the difference between offsetting units of electricity and offsetting their monetary value.
Under net metering, households with solar panels can offset electricity consumed at night against electricity generated during the day, even though the electricity supplied at night is more expensive to produce.
This difference contributes to higher electricity costs across the system, effectively spreading part of the expense among all consumers.
However, this is not the only imbalance.
Net-billing households face a double disadvantage
A further problem arises from the way electricity generation curtailments are applied.
Both net-metering and net-billing customers are subject to curtailments, despite facing very different financial arrangements.
Households under net billing may receive low electricity prices exported during the day but pay considerably more when purchasing electricity from the grid in the evening.
At the same time, their photovoltaic systems are subject to the same production cuts imposed on net-metering installations.
This places net-billing households at a particular disadvantage: they receive less favourable financial compensation for the electricity they generate while also losing potential production when curtailments are imposed.
In effect, they face both higher electricity costs and reduced returns from their investment.
Are solar panels still worth the investment?
Under current conditions, and without centralised energy storage, every group of electricity consumers faces some form of financial disadvantage, although households without photovoltaic systems arguably bear the greatest burden.
For those operating under net metering, curtailments reduce the amount of electricity their systems generate, extending the time needed to recover the initial investment.
Households joining net billing face a more difficult calculation.
They must account for both lost production caused by curtailments and potentially higher electricity bills because of the different pricing mechanism.
Consequently, recovering the cost of a new photovoltaic installation could take considerably longer than it did for households that joined the net-metering scheme.
Those without photovoltaic systems, meanwhile, continue paying prevailing electricity prices while indirectly contributing to the costs associated with existing net-metering arrangements.
October and spring bring the biggest solar power cuts
October and the spring months are the most difficult periods for photovoltaic electricity generation curtailments in Cyprus.
Large commercial solar installations should expect cuts on an almost daily basis during these periods.
Residential installations, meanwhile, can face several hours of lost production on numerous days each month.
There is no straightforward solution.
Homeowners who already have photovoltaic systems, as well as those planning to install them, need to recognise that the time required to recover their investment may be significantly longer because of generation curtailments and the transition from net metering to net billing.
Could home batteries offer a solution?
Residential battery storage and systems designed for zero export or self-consumption during curtailment periods are possible options for households seeking to make better use of the electricity they generate.
However, their financial viability depends on each household’s individual circumstances.
Homeowners need to assess the costs and potential benefits of installing batteries or other energy management systems against their electricity consumption patterns and requirements.
There is no single solution that will deliver the same financial benefits to every household.
