A scathing report by the Audit Office has cast a harsh spotlight on Cyprus's renewable energy source (RES) policy, alleging it has fostered an energy oligopoly and resulted in substantial financial losses, including over €276 million in unbilled electricity supplied to occupied areas. The findings, which implicate regulatory bodies and past government decisions, suggest a system designed to enrich a select few investors at the expense of both consumers and the state-owned Electricity Authority of Cyprus (EAC).
The Audit Office's investigation reveals a decade-long pattern where the regulatory framework, overseen by Cera (the energy regulator), appears to have actively hindered the EAC's participation in renewable energy development. Instead of fostering competition as intended, Cera's decisions allegedly created a favourable environment for a handful of private entities. Permits for photovoltaic (PV) parks were reportedly granted without competitive tenders, a practice that secured a fixed, above-market electricity price for the owners of these installations. This guaranteed income stream, coupled with the relatively low cost of obtaining licenses, has allowed these businesses to generate immense profits, with licenses initially costing a modest sum but later being resold for millions.
Crucially, the policy ensured that large-scale solar producers were guaranteed a price for their electricity set just below the EAC's own conventional generation costs. This effectively insulated these private investors from market fluctuations and prevented the EAC from leveraging the precipitous global decline in solar energy costs, which has fallen by approximately 90 percent between 2010 and 2024. While the rest of the world has witnessed substantial reductions in renewable energy expenditure, Cyprus, according to the report, has largely missed out on these benefits, with consumers bearing the brunt of consistently rising electricity rates. The report highlights that a significant portion of private RES capacity, around 420 megawatts, was allocated to just four or five investors under these preferential terms.
Compounding these domestic concerns is the staggering revelation of the unbilled electricity supplied to the occupied northern areas of Cyprus. Power has been supplied to these regions since 1964, but by the end of 2022, the accumulated cost of this energy, for which no payment has been received, had ballooned to over €276 million. The report points to a political decision as the root cause of this ongoing financial drain. A specific instance cited is the mixed village of Pyla, where electricity supplied to Turkish Cypriot properties has not been metered, leading to an estimated value of €1.3 million in unbilled energy for 2022 alone. This lack of proper metering prevents accurate billing and collection, creating a precarious financial situation for the EAC and potentially exposing the Republic to legal challenges concerning equal treatment and state aid.
The Audit Office's findings paint a picture of systemic shortcomings, where regulatory decisions may have inadvertently, or perhaps deliberately, served to concentrate power and profit within a small segment of the business community, while the broader public and the national energy provider have faced escalating costs and significant financial shortfalls. The report's implications extend beyond mere financial mismanagement, raising serious questions about governance, transparency, and the equitable distribution of benefits from national energy policies.