The European Union will fund a 49 million euro contract for the supply and operation of central energy storage systems to be developed by the Transmission System Operator of Cyprus (TSOC), according to a letter from the Energy Ministry’s director general, Kyriakos Iordanous. Iordanous was replying to Giorgos Chrysochos, president of the Electricity Market Association, on TSOC’s development of central storage.
The money will come from the ‘THALIA 2021-2027’ cohesion policy programme, after the request was examined by the Directorate General for Growth and with the agreement of the Commissioner for State Aid Control. Connection works and related infrastructure, costing 10 million euros, will be included in the ten-year transmission system development plan.
Exemption from tendering
Iordanous referred to a derogation, or exemption, written into the national electricity market law in 2025. It allows TSOC to own, develop, manage and operate energy storage facilities without an open, transparent and non-discriminatory tender. TSOC must first secure approval from the Cyprus Energy Regulatory Authority (CERA), after which the minister grants permission by notice in the Official Gazette. The exemption applies until Cyprus’s transmission system is connected to those of other EU member states through interconnectors.
It was deemed appropriate because there was no competitive electricity market at the time and “the development of storage systems by private investors was uncertain”, he wrote.
The derogation does not negate the role of private initiative in developing storage, nor does it exclude private storage systems from the competitive electricity market, according to the letter.
CERA’s role
Under article 82(5) of the law, CERA must hold a public consultation at regular intervals, or at least every five years, on existing storage facilities to assess their potential availability and interest in investing in them. If the consultation and CERA’s assessment show that third parties can own, develop, operate or manage such facilities cost-effectively, CERA will phase out TSOC’s activities in this area within 18 months, the letter says.
In June 2025, CERA decided that once storage facilities are active in the electricity market, they will be given priority in providing related services to TSOC.
Cabinet decision
Also in June 2025, after amending a grant scheme for energy storage combined with renewable energy projects, the cabinet decided to use the 25 million euros left unspent after the phase A1 auction and the 5 million euros earmarked for phase A2 to fund a storage system integrated into the grid, Iordanous wrote.
The decision was conditional on approval from the Finance Ministry’s Directorate General for Growth and the Office of the Commissioner for State Aid Control. It took into account limited interest in the scheme’s call for applications and the timetable for disbursing grants through THALIA.
