Independent audit of electricity costs proposed in Cyprus
In Cyprus, an initiative by Member of the European Parliament Fidias Panayiotou to reduce electricity prices by 20% sparked a public debate. The government, professional associations and market participants questioned his calculations, particularly regarding the prices received by solar power plants. In a Cyprus Mail column, Charles Ellinas proposed conducting an independent regulatory and financial audit of the entire electricity value chain.
Ellinas notes that the dispute over the calculations should not distract from the broader question: why Cyprus, despite significant solar resources and growing renewable energy generation, has some of the highest electricity prices in Europe.
Breakdown of payments
According to the author, the audit should show where every 100 euros paid by households or businesses goes. He proposes analysing spending on generation, fuel, CO₂ emission allowances, renewable energy sources, grids, system balancing, suppliers, regulated charges, taxes and investor income.
Separately, Ellinas proposes reviewing conventional oil-fired generation, which, according to him, remains the largest source of electricity in Cyprus. Data presented during public debates indicate that plants required to operate for system stability account for approximately 34% of the energy sold on the market, and their cost during the period under review amounted to about €264 million. The author stresses that such plants are currently necessary for the stable operation of the system.
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Renewable energy and competition
The author also believes that the audit should cover different categories of renewable projects: older facilities with fixed tariffs, projects under other support schemes, commercial solar power plants, and household net-metering and net-billing systems. For each category, he proposes assessing capital expenditure, subsidies, financing, operating costs, actual revenues, generation curtailment and investment returns.
Ellinas calls for calculating the monetary cost of renewable electricity curtailment, when available solar generation is not used and the country continues to burn expensive fuel. Among possible ways to reduce costs, he names energy storage, grid upgrades, flexible generation capacity, natural gas and demand management.
In his view, the review should be conducted by an international company independent of market participants. The CERA regulator, DSO/TSO operators, EAC, renewable and conventional energy producers, as well as suppliers, should provide data but should not assess the audit results.
