Nicosia was one of just three European capitals where household electricity prices fell in August, but new data show the city relies more heavily on raw energy costs than any other European capital, leaving Cypriot consumers unusually exposed to swings in international fuel and carbon prices.
According to the Household Energy Price Index (HEPI) for August, energy costs, including the cost of carbon emissions allowances, made up around 80 per cent of the final electricity price for a typical Nicosia household, the highest share among the 33 European capitals covered by the index. Network and distribution charges accounted for around 13 per cent, energy taxes and related charges for around 2 per cent, and VAT for around 5 per cent.
The highest share in Europe
The 80 per cent figure compares with an EU capitals’ average of 53 per cent, according to HEPI. The share was 73 per cent in Valletta, 70 per cent in Athens, and 65 per cent in both London and Rome, while it was just 14 per cent in Budapest.
Because Cyprus’s final electricity price is driven so heavily by energy costs and so lightly by taxes and regulated charges, changes in production or supply costs have a proportionally larger effect on consumer bills than elsewhere in Europe, exposing the country to geopolitical developments beyond the state’s control.
August’s price movement illustrated the pattern. Nicosia recorded a 2 per cent fall compared with July, which HEPI attributed to a decline in international oil prices since July that reduced the fuel costs built into the electricity price. Nicosia, Prague and Luxembourg were the only three of the 33 capitals to record a decrease in August.
Limited scope for tax cuts
Energy taxes and VAT together account for around 7 per cent of Nicosia’s final electricity price, compared with an average of around 20 per cent across EU capitals, according to the HEPI breakdown. Because taxes make up such a small share of the bill in Cyprus, further reductions would affect only a limited portion of the total price.
VAT on domestic electricity in Cyprus is currently reduced to 5 per cent, a rate that has applied since May 1, 2026 and remains in effect until March 31, 2027. Before May 1, 2026, the rate stood at 9 per cent, and at least two years before that it was 19 per cent. The state has therefore already cut VAT on electricity from 19 per cent to 5 per cent over the past three years, but because energy costs now account for 80 per cent of the final price, tax policy on its own has limited scope to move the bill any further.
Nicosia is the eighth most expensive capital
Adjusted for purchasing power, the picture is harder still for Cypriot households. Nicosia’s final electricity price in August stood at 33.38 PPS per kWh, making it the eighth most expensive of the 33 European capitals and well above the EU average of 28.79 PPS per kWh, HEPI figures show.
Higher prices were recorded in Bucharest (54.37 PPS/kWh), Prague (43.76), Warsaw (40.25), Vilnius (37.37), Rome (36.35), Brussels (35.00) and Berlin (34.52). Athens was lower, at 30.67 PPS/kWh, while Valletta (13.54), Budapest (13.19) and Oslo (11.70) were markedly cheaper.
The PPS measure adjusts for differences in the general price level between countries, giving a clearer picture of the real burden of electricity costs relative to household purchasing power in each country.
30.49 cents per kilowatt-hour
In nominal terms, without adjusting for purchasing power, the final electricity price for households in Nicosia stood at 30.49 cents per kWh in August, against an EU average of 26.40 cents per kWh. On this measure, Nicosia ranks tenth most expensive among the 33 capitals.
Higher nominal prices were recorded in Brussels (39.29 cents/kWh), Bern (38.95), Dublin (38.72), Berlin (38.55), London (36.90), Prague (36.63), Rome (34.77), Vienna (32.60) and Bucharest (30.81). Athens stood at 24.92 cents/kWh and Valletta at 12.32 cents/kWh.
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