Technocrats often fail to make themselves fully understood when they address the wider public. At other times, people with no technical grounding end up exposing themselves — or missing huge chunks of reality — when they try to explain complex phenomena. And electricity is a very complex subject.
Andreas Procopiou, a former senior researcher in smart grids at the University of Melbourne and now a professional executive at a private solar power company, has been making a serious effort — in cooperation with the Archbishopric, and through Philenews — to explain how the electricity market works, a market in which the company he works for also has a clear commercial stake.
Even so, the knowledge one can draw from Procopiou’s articles is still not enough to shift either the general public impression or the central view held by many technocrats: that a competitive electricity market, as applied in Cyprus — a country that is electrically isolated and lacks cheaper conventional fuels than fuel oil and diesel — does not reduce costs for the vast mass of household consumers.
For households without rooftop solar — somewhere in the region of 300,000 to 350,000 homes — and for thousands of small businesses, there is no competitive electricity market. It does not concern them. Or if it does exist, and if it does concern them, it is only in the sense that it pushes up the Electricity Authority of Cyprus’s production and operating costs, which are then passed on to them.
In his latest interesting article, Procopiou calls on everyone to discuss the market on the basis of data rather than opinion.
He himself cites official figures to argue that:
- During hours of solar generation, the weighted average price comes to 11.8 cents per kilowatt-hour.
- Nearly 20% of solar generation hours are cleared at zero prices. In other words, for a significant part of the time, renewable energy in the market is not paid for at all.
This column is not disputing the figures. But how are we supposed to read them?
If the weighted average price in the day-ahead market — the “exchange”, a tiny sliver of the overall market — is 11.8 cents when the sun is shining, to what extent do household consumers and businesses benefit, when even if they wanted to, they cannot currently sign contracts with private electricity suppliers?
What possible meaning does a weighted average price of 12 cents in sunny hours — or even a zero wholesale price for 20% of the time when the sun is blazing, summer excluded — have for hundreds of thousands of households and small and medium-sized businesses, when the household tariff regulated by CERA still leaves the overwhelming majority facing a final cost of 30 or 35 cents per kilowatt-hour?
None, I would suggest. Not even the entirety of the tiny competitive market — tiny in size and tiny in age — is captured by that price, since it does not include the kilowatt-hour rates agreed in bilateral contracts between private suppliers and their large commercial clients.
And even these figures cannot be used reliably at this stage. We need to wait for summer, when output from photovoltaics will have to be constantly reinforced by the Electricity Authority’s more expensive generation. The weighted average price will not be 11.8 cents in summer. It will be much higher. But even then, what difference does that make to the rest of us?
If you have domestic solar panels and even a half-sensible consumer culture, you get by. If you belong to the majority of households that do not, you will struggle badly — and the competitive market will not help you. It simply is not about you, at least not at this stage. Frankly, the war of the unspeakable one and its impact on your pocket matter more to you than private electricity ever will.
Because what we are applying is a market model that does not socialise the benefits of potentially cheaper green energy. Exactly as Theodoros Zachariadis, professor at the Cyprus Institute, put it through Phileleftheros: “The benefits of the green transition” — which he estimates at €1.4 billion in added value to the economy — “have not been distributed fairly across society. The main beneficiaries have been many investors in photovoltaic parks, along with the 25-30% of households that were able to install solar panels. Most citizens and businesses have benefited to a much lesser extent. With more renewables, perhaps some careful interventions in the electricity market, and more large-scale schemes such as energy communities, the benefits of the green transition can be spread more widely across society.”
