MEP Fidias Panayiotou has challenged President Nikos Christodoulides to act on the high cost of electricity, arguing that cheaper renewable generation should translate into lower prices for consumers.
In a video posted on Instagram, he said government intervention could reduce electricity prices by about 20 per cent. Market sources say the debate centres on profit margins for renewable energy production and whether the Electricity Authority of Cyprus (EAC) can secure more low-cost solar power for its customers.
Panayiotou’s proposal
Panayiotou said electricity from solar farms and other renewable energy installations costs approximately seven to eight cents per kilowatt-hour to produce. He argued that there is scope to limit company profit margins and make this electricity available at lower prices.
He called on Christodoulides to take immediate action, saying he was prepared to maintain the pressure for “100 or 200 days, as long as it takes”. He referred to the persistence that, according to him, Elon Musk demonstrated in pursuing his own objectives.
According to information obtained by Politis, the MEP’s initiative followed a meeting with EAC trade union representatives. The discussions covered electricity pricing, the operation of the competitive market and the possibility of making greater use of cheaper solar energy for the benefit of consumers.
Two main issues emerged from those discussions: whether prices and profit margins in renewable energy production can be regulated, and whether EAC can obtain cheaper green energy so that the benefits reach a much larger number of consumers.
The gap between production costs and prices
The first issue concerns the potentially wide gap between the cost of producing electricity from solar power and the final price at which it is sold on the market.
EAC electricity prices reflect several factors, including the cost of conventional fuels and carbon emission allowances. As a result, the overall charge can reach about 25 cents per kilowatt-hour, depending on the period and the individual charges applied.
The situation is different for large solar farms, where production costs can be considerably lower.
According to sources familiar with the matter, the question is whether a mechanism could be introduced to limit excessive profit margins when electricity is produced at a very low cost.
In practical terms, if a kilowatt-hour costs five or six cents to produce, the discussion concerns whether a reasonable profit margin could be established instead of allowing the selling price to remain close to the much higher rates prevailing across the market.
Such an intervention cannot be decided by EAC. It would require a political and regulatory decision and would have to comply with the institutional framework governing the electricity market.
Can EAC secure cheaper green energy?
The second issue concerns whether EAC could purchase electricity from large solar farms through supply agreements at lower prices and incorporate it into the energy mix offered to its customers.
According to the same information, if EAC could obtain larger quantities of solar electricity at prices significantly below the cost of generation using liquid fuels, it could reduce its overall electricity procurement costs.
The greater the share of cheaper energy in the mix, the lower the dependence on more expensive conventional generation. This could, in turn, create greater scope for reducing final electricity prices.
This is particularly significant because EAC continues to supply the vast majority of residential consumers.
Within the competitive market, newer suppliers have a stronger incentive to attract large commercial customers. These businesses have higher electricity bills and can be offered discounts compared with EAC prices.
As a result, the benefits of competition may currently be more apparent among certain large consumers without reaching households to the same extent.
The central argument is that if EAC, as the country’s largest electricity supplier, could secure low-cost solar energy on a larger scale, the benefit could be distributed more broadly across the market and reach a far greater share of consumers.
