Audit report criticizes solar policy and exposes monopoly of private companies on solar energy
Audit report criticizes solar policy and exposes monopoly of private companies on solar energy
A new report by the Court of Audit sheds a critical light on the rapid expansion of solar energy in the country. Although renewable energy capacities have increased significantly, this has not yet led to lower electricity prices. Instead, the economic benefits are concentrated with a few private investors, while households continue to bear rising energy costs.
The study analysed the interaction between the Electricity Authority (EAC), the Energy Regulatory Authority (Cera) and the Ministry of Energy. The report concludes that regulatory decisions were more focused on promoting competition than on concrete benefits for consumers.
The focus is in particular on the limited role of the state-owned EAC in the expansion of renewable energies. Between 2020 and 2024, the majority of new capacity was allocated to private investors. Currently, around 420 megawatts of solar and wind energy – excluding private rooftop systems – are operated by private companies, while only about 20 megawatts are owned by EAC. Five large investors control around two-thirds of private capacities.
We note that delays in the integration of renewable projects into EAC's production capacity have given private suppliers a significant competitive advantage. So far, this has not resulted in any measurable advantages for consumers.
Instead, households were burdened by additional costs. Between 2020 and 2024 alone, emission certificates worth around 955 million euros were purchased and passed on through electricity bills.
The study analysed the interaction between the Electricity Authority (EAC), the Energy Regulatory Authority (Cera) and the Ministry of Energy. The report concludes that regulatory decisions were more focused on promoting competition than on concrete benefits for consumers.
The focus is in particular on the limited role of the state-owned EAC in the expansion of renewable energies. Between 2020 and 2024, the majority of new capacity was allocated to private investors. Currently, around 420 megawatts of solar and wind energy – excluding private rooftop systems – are operated by private companies, while only about 20 megawatts are owned by EAC. Five large investors control around two-thirds of private capacities.
We note that delays in the integration of renewable projects into EAC's production capacity have given private suppliers a significant competitive advantage. So far, this has not resulted in any measurable advantages for consumers.
Instead, households were burdened by additional costs. Between 2020 and 2024 alone, emission certificates worth around 955 million euros were purchased and passed on through electricity bills.
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Auditor General Andreas Papaconstantinou is critical of the energy policy development. The insufficient integration of renewable energies into EAC's electricity production has led to consumers not being able to realize potential savings. Competition is not an end in itself, but must ensure affordable and transparent prices.
The report describes the global price decline in solar energy as a missed opportunity. According to a study by the International Renewable Energy Agency, the average cost of large-scale solar systems worldwide fell by about 90 percent between 2010 and 2024. In Cyprus, however, it has not been possible to pass on this development to consumers in a noticeable way.
Criticism is also directed at the regulatory authority, which has given priority to the expansion of private capacities and at the same time restricted EAC's participation in order to strengthen competition. Correspondence shows that between 2019 and 2022, the EAC was asked to suspend the expansion of renewable energies while regulatory frameworks were reviewed. A draft decision from 2022 even indicated that no further licenses would be granted to the authority.
Cera rejects the accusations and emphasizes that measures were necessary to prevent market abuse and to create a functioning wholesale electricity market. This also included capacity restrictions for the EAC.
At the same time, the ACA criticises previous EAC bodies for not reacting quickly enough when private investors secured land and permits. A significant proportion of suitable land for solar parks is now in private hands. Some licence holders have not yet implemented projects and are now charging millions for the transfer of permits that originally cost only a fraction.
The ACA recommends revoking unused licences and – as far as legally possible – re-awarding them to EAC or other investors.
The report describes the global price decline in solar energy as a missed opportunity. According to a study by the International Renewable Energy Agency, the average cost of large-scale solar systems worldwide fell by about 90 percent between 2010 and 2024. In Cyprus, however, it has not been possible to pass on this development to consumers in a noticeable way.
Criticism is also directed at the regulatory authority, which has given priority to the expansion of private capacities and at the same time restricted EAC's participation in order to strengthen competition. Correspondence shows that between 2019 and 2022, the EAC was asked to suspend the expansion of renewable energies while regulatory frameworks were reviewed. A draft decision from 2022 even indicated that no further licenses would be granted to the authority.
Cera rejects the accusations and emphasizes that measures were necessary to prevent market abuse and to create a functioning wholesale electricity market. This also included capacity restrictions for the EAC.
At the same time, the ACA criticises previous EAC bodies for not reacting quickly enough when private investors secured land and permits. A significant proportion of suitable land for solar parks is now in private hands. Some licence holders have not yet implemented projects and are now charging millions for the transfer of permits that originally cost only a fraction.
The ACA recommends revoking unused licences and – as far as legally possible – re-awarding them to EAC or other investors.
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Beyond the renewable energy sector, the report highlights structural weaknesses in the electricity sector as a whole. Fuels and emission rights account for around 70 percent of EAC's operating costs. Delays in the introduction of natural gas, a lack of electricity storage facilities and outdated power plants in Vasiliko and Dhekelia are driving up costs and environmental pollution.
According to data from Eurostat, Cyprus ranked second highest in Europe in terms of electricity prices in terms of purchasing power in the second half of 2024.
In addition, the audit identifies deficits in corporate governance and operational processes – including a strong dependence on negotiation awards, poor accessibility in customer service and weaknesses in the internal control system.
Papaconstantinou concludes that the continued lack of cooperation between regulators and energy suppliers ultimately benefited private interests in the field of renewable energy projects – and worked to the detriment of consumers.
Author: MFRadio.de Editors
Source: CyprusMail.com
Source: CyprusMail.com
