Interview with Neoklis Sylikiotis, General Coordinator of AKEL’s Policy Areas and member of the Political Bureau of AKEL
● AKEL has submitted a package of proposals on expensiveness and energy sufficiency
● “Last year we paid about 250 million euros in pollutants, while this year the cost is estimated to reach 300 million euros”
● “In 2013 there was a comprehensive plan for energy in place that unfortunately was dismantled by the DISY government, which engaged for ten years in improvisations and communication games, leading us inevitably to major deadlocks, the most important being the high price of electricity.”
Saturday 15 April 2023, “Haravgi” newspaper
QUESTION: How did we get to the position we are in today?
NS: In 2013 there was a comprehensive plan for energy in place, which was unfortunately dismantled by the DISY government, which for ten years engaged in improvisations and communication games, leading us inevitably to major deadlocks, most importantly to the high price of electricity.
QUESTION: What are the factors behind the high price of electricity?
NS: It is due to a number of factors, such as our heavy dependence on oil, which is very costly, pollutants, the delay in the arrival of the natural gas and the delay in further integrating renewables into the energy balance.
QUESTION: The extension of the electricity subsidy measure has recently been announced. Will this help?
NS: The high price of electricity is not only limited to electricity bills, but affects the whole economy. Inflated bills lead to increases in all products and services, resulting in consumers paying multiple times more for the expensiveness in electricity.
As AKEL, we have proposed measures with a defined intervention, which have been implemented in other European countries, such as the reduction of VAT on electricity from 19% to 9% and the abolition of charges such as the Renewable Energy Fund and the public utility fee. These measures would provide relief to both households and businesses, while at the same time contributing to curbing the price of other goods and services.
QUESTION: But how will renewables be promoted if the charge on electricity bills is ended?
NS: This is where we have put forward specific and costed proposals.
On the basis of an EU Directive that has been incorporated into Cypriot legislation, 50% of the state’s revenue from greenhouse gases must be used for the green transition, to contain the cost of electricity for the benefit of consumers and the economy and to tackle energy poverty. Instead, the government is putting the money into the state’s coffers. For example, last year we paid around EUR 250 million in pollutants, while this year the cost is estimated to reach EUR 300 million.
We have also proposed the launch of competitive tenders for the purchase of energy from RES. This was done just once in Cyprus, in 2012 [under the Demetris Christofias government]. Back then – when the costs for companies were even higher than today – we had secured prices which were between 7.5 and 9.4 cents per kilowatt hour, whereas today they are several times higher. We do not need to reinvent the wheel. Almost all EU countries are running competitive tenders with excellent results. For example, in Portugal it is 1.5 cents a kilowatt hour, in Greece 3.3 cents, in Germany, which has half the sunshine of Cyprus, it is 5 cents.
The absence of competitive tendering has resulted in consumers paying a very expensive price for electricity, while at the same time resulting in exorbitant profits for certain companies. By way of example, I would like to mention that currently the avoidance cost is 22.5 cents per kilowatt hour. We are talking about many millions of euros.
As AKEL, we have tabled a legislative proposal in Parliament to tax at least these windfall exorbitant profits, as has been done in other EU countries. Unfortunately, the government is reluctant to do so.
QUESTION: How do you comment on the allocation of government/state-owned land for the development of renewable energy projects?
NS: In the way it is being done today, it constitutes a violation of the public interest. First of all, there should have been spatial planning and the state should have decided where these developments would be located, taking into account a number of factors such as agricultural land, environmental issues, protection zones, etc.
As AKEL, we have also proposed that the allocation of land for the development of RES projects should take place within the framework of a competitive tendering procedure. This would ensure the greatest possible benefit for society, the economy and consumers.
QUESTION: Can the system sustain more RES?
NS: This is yet another failure of the DISY government, which the new government has inherited. There are grave responsibilities for the fact that the grid/network remains outdated, and the fact that the country does not have a storage system that can make the most of renewable energy production without compromising electricity supply.
The Cyprus Electricity Authority (AHK) is a public body and its board members are appointed by the government. For that reason there are responsibilities for the delay in upgrading the grid and for not involving the semi-governmental organisation further in renewables. We should also note that we have seen other state bodies, such as the Cyprus Energy Regulatory Authority (RAEK), putting obstacles in the way of AHK in this direction. In addition, the government has left AHK understaffed, resulting in a serious delay in the implementation of the modernisation of the electricity generation units.
As AKEL, we have repeatedly stressed that the possibility of AHK’s participation in the tenders for RES and the storage sector, which must proceed with a sense of urgency, must be ensured. The government has had EUR 100 million from the Recovery Fund at its disposal for 18 months, but the tender for the construction of storage projects has not proceeded.
There is no more time to lose. By way of example, I would like to mention that production from the power stations in Dhekelia must be replaced immediately, which polluting and are currently operating with EU exemptions. We are talking about around 360 megawatts.
QUESTION: What should a comprehensive energy plan include?
NS: It should have as its central axis the EU roadmap up to 2050, with intermediate points in 2030 and 2040. It must provide answers related to expensiveness/price hikes and ensure the country’s energy security in an absolute way. We must not forget that we are an isolated island, with no possibility of electricity interconnection with another country.
The planning must also have the environment and climate change as its central pillar. We are suffering as a country from climate change and this has a heavy cost both in economic terms and in terms of issues relating to the environment and citizen’s health.
Furthermore, this planning must cover all aspects of energy strategy in electricity, gas, transport, energy saving, the reduction of pollutants and the achievement of the targets we have undertaken towards the EU, the optimal way of integrating renewable energy sources and natural gas into the energy balance, etc.
The government should call on all stakeholders (AHK, RAEK, Natural Gas Public Company DEFA etc.) and proceed immediately with the elaboration of a comprehensive energy plan. The very high costs currently being paid by households and businesses, and the serious issues raised in terms of energy security and environmental and climate change issues, leave no room for further delay.
QUESTION: You have requested a meeting with President Nicos Christodoulides. What will you convey to him?
NS: As AKEL, we consider energy issues as of major importance for the country, the economy and citizens. A similar meeting was held with the former President Nicos Anastasiades, again on our initiative. Back then, we submitted specific proposals. Unfortunately, the necessary actions were not taken by the government, which has led to the current impasse.
We have also been submitting proposals over time on the issues that arise.
Recently, the General Secretary of AKEL, Stefanos Stefanou, sent a letter to President Nicos Christodoulides requesting a meeting in the presence of the relevant government officials. We are looking forward to a comprehensive briefing on what is going on and the prospects of power generation in our country. At the same time, we will present our concerns and proposals. That is, everything we have mentioned above and some other issues, which relate to the expensiveness of electricity, ensuring the adequate and uninterrupted supply of energy, environmental issues and climate change, etc.
QUESTION: How does the delay in the arrival of natural gas affect the price of electricity?
NS: The recipe for reducing the price of electricity involves two parameters. The first is the effective integration of a large amount of renewable energy into the energy balance and the second is the issue of natural gas.
The delay in the arrival of natural gas poses three major problems.
The first is the cost of pollutants. For example, last year the Republic of Cyprus paid around EUR 250 million, while this year the cost is estimated to reach EUR 300 million.
The second is the cost of avoiding AHK, which is very, very high and is linked to electricity bills. Today the cost is 22.5 cents per kilowatt hour. As long as we remain trapped in oil products, the avoidance costs cannot be reduced. Renewables must be increased.
The third problem that arises is that huge investments have been made by AHK in the plants in Vasilikos so that they can run on natural gas. However, we do not have natural gas and these investments remain unused, resulting in unbearable costs for consumers and major structural problems at AHK, which raise major issues for the country’s energy security.
We have seen many announcements and fiestas surrounding the issue of natural gas. There was also a decision by the Council of Ministers that natural gas would be available for electricity generation from 1 January 2020. We are now in April 2023 and the necessary infrastructure has not yet been built, and we hear that there are also problems with the construction of the Floating Storage Regasification Unit (FSRU) for importing LNG, as the company is asking for several million more.
QUESTION: How can the problem arising from the fact that the country is isolated be resolved?
NS: Under the government of Demetris Christofias, the effort began with the submission of a proposal to the EU for the financing of the Eurasian Interconnector, which concerns the interconnection of the electricity networks of Cyprus, Greece and Israel. The EU’s decision to support the project has created the conditions for its implementation. However, more political support is required, which we have not seen from the DISY government. The eventual implementation of the project will have many benefits for Cyprus, as it will end the energy isolation.
It will also have benefits mainly in terms of energy security and the smooth integration of RES into the system. For example, if we produce more energy from RES than required for internal consumption, we could channel it through the EuroAsia Interconnector. In this way, the additional production would be utilised, while at the same time maintaining the necessary balance in the system to avoid energy security problems.
QUESTION: Is there any prospect of exploiting the natural gas deposits in the Exclusive Economic Zone (EEZ) of the Republic of Cyprus?
NS: First of all, the only confirmed field that does exist is the ‘Aphrodite’ field, for which the procedures began under the Demetris Christofias administration. There have been some other discoveries in other plots, but the only confirmed deposit is ‘Aphrodite’.
Unfortunately, for ten years the DISY government did not even manage to do the basics. Indicatively, the conclusion of a coexploitation agreement with Israel is still pending, so that it can move forward, as part of the field extends into the Israeli EEZ.
We have seen a lot of announcements and communication fiestas on the issue of natural gas from the Cypriot EEZ, but so far that are no tangible results whatsoever. On the contrary, the government keeps giving extensions to the companies regarding the contractual obligations they have undertaken, while the drilling programme remains at a standstill.
Worse still, it appears that we have been left out of the plans that are being promoted in the region. The companies involved in ‘Aphrodite’ are proceeding with investments in other blocks where they have rights in Israel, as well as with the installation of a floating liquefaction plant in the ‘Leviathan’ field in Israel. There is now almost no mention of Cyprus. The EU has also gone ahead with the conclusion of an agreement with Israel and Egypt for the import of natural gas, leaving Cyprus out.
In 2013 there was a comprehensive energy plan in place, which included the prospect of an onshore liquefaction terminal in Cyprus. If this plan had proceeded, the conditions would be created for our country to become an energy hub. Instead, the country is now hanging on by a thread.
I note that the natural gas issue – in addition to what we have mentioned – is also linked to the prospect of a solution to the Cyprus problem. And that makes it even more important.