A significant debate is currently unfolding within Cyprus’s energy sector concerning a proposal to re-establish a single-buyer electricity market. This potential paradigm shift, which could fundamentally alter the island’s energy landscape, emerges as a critical technical milestone has been achieved for the ambitious Great Sea Interconnector (GSI). This vital subsea power link is intended to connect Cyprus with Greece, enhancing energy security.
The impetus behind the proposed market reform stems from concerns that the current competitive framework, operational since October 2025, may not be delivering the anticipated benefits of reduced electricity prices for consumers. Proponents of the single-buyer model suggest that the Electricity Authority of Cyprus (AHK) should reassume its former role as the sole purchaser of electricity from all producers. This would represent a considerable departure from the established competitive market where multiple producers actively vie to supply the national grid. Concerns have been articulated regarding electricity generation costs, which are purportedly around five cents per kilowatt-hour but are being procured at significantly higher rates, potentially up to twenty-two cents, raising questions about market efficiency.
Adding complexity, allegations have surfaced that certain renewable energy producers might be experiencing disproportionately large financial gains. In light of these concerns, and referencing European Commission guidance on sector-specific taxation, the possibility of introducing a special levy on renewable energy production has been mooted. Data from the Cyprus Transmission System Operator, however, offers a more nuanced perspective. It indicates that since the introduction of the competitive market, the average generation cost for renewable energy has ranged between approximately eleven and twelve cents per kilowatt-hour, particularly during periods of ample sunshine. This figure contrasts with the higher procurement costs cited by some, suggesting a more intricate reality than a simple dichotomy of high versus low prices.
Concurrently, the GSI project, a cornerstone of Cyprus’s energy security strategy, has reached a pivotal juncture. A crucial deep-sea test for the submarine power cables destined for this groundbreaking interconnector has been successfully concluded in the waters west of Sicily, Italy. French cable manufacturer Nexans conducted this rigorous trial, lowering sections of 525 kV high-voltage direct current (HVDC) cable to depths approaching 3,000 meters. The cables were subjected to extensive electrical testing, operating at voltage levels exceeding standard industry requirements by 30%, and underwent thorough visual inspections to ascertain their integrity and operational readiness.
The successful completion of this deep-sea test is an indispensable achievement for the GSI, which is poised to become one of the longest and deepest subsea power interconnectors globally. It unequivocally confirms the technical feasibility of installing and operating such sophisticated infrastructure at unprecedented depths, thereby assuaging significant engineering and logistical concerns. While the GSI project progresses, internal deliberations regarding Cyprus’s energy market structure continue, highlighting the island’s multifaceted approach to ensuring energy affordability and security. The outcome of the proposed market reform could herald a substantial transformation in how electricity is generated, procured, and ultimately distributed to consumers across Cyprus.