The competitive electricity market has not been tested extensively in smaller markets, such as Cyprus, and therefore "we will see along the way" whether the price of electricity will decrease, Minister of Energy, Commerce and Industry, George Papanastasiou, told CNA.
Asked whether he believes that the transition to a competitive electricity market will result in a reduction in the final price of electricity reaching consumers, the Minister said that historically, in other, larger markets, usually when the competitive market starts, prices remain at the same levels and then, due to competition, there is a drop. “In a smaller market, which has not been tested often, we will see it over time.” In any case, he noted, the Ministry is entitled to intervene “if we see that things are going in the wrong direction.”
CERA announced on Wednesday that the start of commercial operation of the Competitive Electricity Market is set for September 15, 2025, while it set October 1, 2025 as the first Trading Day.
"To reach yesterday's announcement by CERA, a lot of coordination work was done by the Ministry with the TSO and CERA" over the past year and a half, the Minister said, as the TSO had to be staffed and the relevant legislation passed.
He recalled that the trial period began in January 2025 and usually lasts six months, so it is expected to be completed in July 2025. "CERA considered that it is not right to make the transition in the summer when demand is high, so it was postponed to September," so that any minor problems that may arise can be better managed, he said.
Asked to explain what will change in practice with the introduction of the competitive electricity market, the Minister said that energy producers and suppliers are entering an environment that is essentially a stock market, in which every half hour "you make quotes and buy electricity". In Cyprus, the CSE will manage it, while behind it, he said, there will be a bank "with knowledge of the subject" as a general clearing member, in this case Eurobank of Greece.
Then, depending on how "good a price they achieve," the suppliers will sell to consumers. Therefore, the Minister said, they enter "in constant competition."
He mentioned that there are already many companies in production and 6-7 suppliers. "I think that with yesterday's announcement by CERA, those who were unaware or did not show interest will think that if we are not in when it starts, we will be out."
When asked about this, he said that there are already suppliers other than the EAC, who until now have not chosen to go to small consumers, but only sell to large consumers, such as factories, etc. The Minister estimated that with the opening of the competitive market "there will also be interest for small consumers", who will find it easy to switch from one company to another, ensuring a better price.
Referring to the Target Model that was adopted, in which the price base of electricity is the price base produced by the most expensive source, in order to create an environment in which RES can be invested, he said that in a competitive market, conventional electricity generation has a lot to play.
Even with the adoption of storage of energy produced from RES, "the need for conventional energy is not eliminated," he said, noting that suppliers will try to extend their purchases every half hour during hours when there is RES production, but they will also be forced to buy from conventional sources.
"While some hours you are forced to buy from the expensive one, you hope that most hours you buy from the other one who produces with a different technology. This is where the penetration of RES will also increase," he said, noting that these models work better if there is an electrical interconnection. "In a single network, if there is not enough consumption, you would have an electrical interconnection to target consumers in another country."
Responding to what will apply to the remaining charges in the EAC's tariffs, for consumers who choose to contract with another company, he said that the charges related to electricity production and network use will continue to apply. Asked what will happen to the fines for pollutants, he said that pollutants will be charged to the producer's base. "The EAC should show a pattern of writing, reduce costs, reduce pollutants, in order to be a competitive producer of conventional electricity," he said.
Source: KYPE
