Yesterday’s launch of the third and potentially final “dress rehearsal” for Cyprus’s competitive electricity market should be viewed as a positive development, regardless of one’s opinion on whether this specific market model (the EU’s Target Model) can actually deliver lower prices for all consumers.
Given that the state decided about a decade ago to implement the model used by most EU countries (which have very different electricity market profiles), it’s encouraging to see another step towards implementing this long-suspended decision.
Perhaps it would have been more useful to reassess the situation, considering the failure to implement other directly related decisions on time.
For instance, we’re moving towards a competitive market that facilitates charging green kilowatt-hours at conventional electricity rates, without having achieved the introduction and utilisation of natural gas.
In other words, we haven’t managed to reduce EAC’s prices (through cheaper and more efficient fuel with fewer emissions), which solar producers will frequently use as a benchmark for their own pricing – pricing that bears no relation to their actual production costs.
We’re also proceeding with the competitive market based on the Target Model without achieving electrical interconnection, which might have helped reduce prices through imports and increased competition.
Previous regulatory decisions and state commitments set 2026 as the operational year for interconnection, but the timeline has now shifted to 2030. And, frankly, no one believes the interconnection will be commercially operational by 2030.
Without natural gas in 2025 or 2026, and without electrical interconnection for the next 5-7 years, implementing the Target Model – which the EU itself has already decided to modify – is a risky choice for Cyprus’s small and isolated market.
It’s more likely to remain at the mercy of green private sector oligopolies than to see price reductions for the majority of household consumers and SMEs.
It would be helpful to hear or read the positions of the current Government – particularly the relevant ministry – CERA, and the Cyprus Transmission System Operator regarding the competitive market as it’s being promoted today. We’d like to know if these Authorities truly believe that the competitive market – if the third trial succeeds and is implemented in the second half of 2025 – will provide the solution for cheaper electricity.
Even more useful would be the publication of a recent study on how the Target Model can be implemented in Cyprus to serve the need for cheaper electricity.
We conducted due diligence for the Cyprus-Crete cable (which shocked some people), albeit with significant delay. Why not commission an expert study for this competitive electricity market?
What we see and hear around us isn’t optimism or conviction from the relevant Authorities that the competitive market’s success is guaranteed, but rather concern from many technocrats that with this major change, household consumers and small businesses won’t benefit, at least in the short to medium term.
If we correctly understand that neither the Government, CERA, nor the TSO can confirm – much less with an expert study – that the EU’s controversial Target Model will free the country from expensive energy, then someone should explain to the public why modifications aren’t being discussed.
These modifications could ensure that cheap private electricity production from renewables feeds into the grid for all consumers, without the current windfall profits from the distorted transitional regulation of the past 6-7 years – profits that are likely to remain intact under the proposed new regime.
