The Minister of Energy sees the Great Sea Interconnector as both challenges and benefits

A large project with many challenges characterized the electrical interconnection Great Sea Interconnector o Minister

Screenshot 6 11 Great Sea Interconnector, MINISTRY OF ENERGY

The Great Sea Interconnector was described as a big project with many challenges by the Minister of Energy, Trade and Industry Giorgos Papanastasiou, speaking after the session of the Energy Committee of the Parliament which discussed the issue. However, he expressed the opinion that it will ultimately contribute to the reduction of energy costs in Cyprus.

At the same time, he stated that pending the decisions of the Republic of Cyprus on whether or not it will participate in the share capital with 100 million euros, the project is in progress. As the Minister said, they have been informed that approximately 50 kilometers of the cable have already been built and it is stipulated that there will be further studies, with a seabed survey that will be done in the next 1-2 months by ship from the company that undertook the construction of the cable. He noted that the cable is also the biggest cost of the project and the cost, together with its punctuation, amounts to around 1,4 billion euros.

He added that approximately 160 million euros have already been disbursed out of the 657 million euros that the project received as a subsidy from the European Commission. As the Minister said, the amount remaining from the total cost of the project is about 1,3 billion which will be found by investors in the form of a loan. These 1,3 billion euros will be asked to pay, according to the regulatory decision that existed for the project in the past at 35% Greek consumers and 65% Cypriot consumers.

What is expected, as the Minister said, around the end of June is the cost-benefit study which will focus on the Cypriot electricity consumer and is expected to be submitted by the project manager, i.e. the Independent Electricity Transmission Operator (ADMIE) of Greece . After receiving this study, as he mentioned, the Minister will be evaluated with agencies within Cyprus as well as with a specialized recognized house abroad.

"Once we have the results and as long as these results will be positive towards making a final investment decision, the Republic of Cyprus will decide whether it enters the equity capital of this project, of this infrastructure and while it is in the equity capital it will be able to contribute to decisions around the operation of this infrastructure that directly concerns the Cypriot consumer", he said.

Asked about concerns expressed to the Commission, Mr. Papanastasiou said that a project of such scope and with a horizon of 30-40 years has too many challenges and some assumptions. Based on these assumptions, as he said, the studies are done and evaluated. He noted that the assumptions may be wrong and that there are certainly challenges and concerns but this is no different than any other grand project.

However, the Minister stated that the project is of particular interest to the Republic of Cyprus and it has already been decided by the European Commission that it is a project of common interest, since its decision is the electrical interconnection of all member states. Cyprus, he added, is the only member state that is not yet interconnected.

Answering a question, Mr. Papanastasiou clarified that regardless of the decision for the participation of KD as a shareholder in the project, the project is regulated, the decision has been taken in the past and its construction is proceeding.

"It is a private project at the moment, but it concerns the KD. It goes without saying that it directly concerns electricity consumers," he said.

He added that it can be considered another source that will supply electricity to the KD, as well as the same cable can be used to export electricity.

Mr. Papanastasiou noted that the Cypriot consumer will be called on the basis of previous decisions and on the basis of the arrangement that exists in the agreement to pay 63% of this cost and the Greek consumer 37%. He added that CERA will decide when it can begin to recover this cost and expressed the opinion that it will be very careful given the accuracy that exists.

Asked about the system's capacity to absorb energy from the Great Sea Interconnector which is currently limited, the Minister said that the DSMC said it can handle up to 500MB if the network remains as it is today, which is no small amount. However, the Minister noted that the network will not remain as it is today.

The energy, he said, from the Great Sea Interconnector will be an additional source which in a competitive market will further reduce the cost of electricity for the consumer. This, as he said, is expected and has recently been presented by the implementing body.

However, the Minister noted that they are evaluating this study based on the assumptions that have been received, the instructions and the terms of reference given to the companies that did the study that was preliminarily presented to them by ADMIE, in order to confirm that the numbers are justified through the study that were given.

Local electricity production should be protected

In response to a question as to whether if cheaper electricity is produced from Greece it will be preferred to that produced in Cyprus, the Minister noted that there may be electricity cheaper than that produced in Cyprus, however the local electricity must somehow be protected production in Cyprus. This sector, he said, cannot be left free even in a competitive market, since production within Cyprus can be consumed immediately or held in reserve in case it is used in case something happens.

At the same time, he expressed the opinion that having another source of energy, such as that of the Great Sea Interconnector, would push prices lower.

He said that the only way for the project not to materialize is to not find investors.

However, according to information, it is considered that the decision of the Republic of Cyprus to participate in the project as a shareholder, will be considered as a guarantee for the viability of the project and will push investment funds to proceed with the financing of the project.

Ministry of Finance concerns pending cost-benefit study

Speaking to the Energy Committee, the Director General of the Ministry of Finance, Giorgos Pantelis, said that the interconnection can help the Cypriot economy under conditions that have not been fully clarified. He added that what the Government wants is to ensure sufficient energy at the best possible price and with the least pollution.

He said that the concerns of the Ministry of Finance concern the investment participation of the KD and the obligations that may arise. He also mentioned that there are concerns about the technical part and for this purpose the cost-benefit study is expected.

The President of CERA Andreas Pullikkas stated that the investment file was submitted for the project to the regulatory authorities in 2017 by the previous implementing body and was evaluated with the then EU methodology. Based on these, as he said, the two regulatory authorities issued a cross-border cost sharing agreement . This agreement, he said, means that those projects of common interest that are too difficult and not sustainable can turn to the Connecting Europe Facility to secure funding as it did. He noted that the project only concerns the Cyprus-Crete interconnection and not the Israel part. He added that the original agreement called for a total expenditure of 1,5 billion euros and this has changed to 1,9 billion euros.

He also referred to a gap of 100 million euros that exists in the financing and asked the ADMIE to submit written recommendations on the methodology of revenue recovery.

The Executive Director of the Cyprus Transmission System Operator Stavros Stavrinos stated that the flow of this interconnection will be determined by the market and that the TSO can only set a limit, which with the specific capabilities that exist is 500 MB, in order to ensure its stability systemic. He added that if and when conditions change, this limit must be reviewed.

The President of EAC Giorgos Petrou stated that they asked the ADMIE to create two technical committees to discuss the matter, since they could not give answers to technical questions during the presentation given to them.

Concerns of individuals

On behalf of the Electricity Market Association, Fanos Karantonis stated that they have not yet seen the technical operating parameters of the project and wondered how these negotiation terms can happen, after commitments with a financial impact were first entered. He expressed concern about the commitments given by the state which, he said, do not take into account what the consumer will pay in the end.

On behalf of the domestic investors, Giorgos Chrysochoos, stated that they are horrified by what they hear from ADMIE and that the study suffers from all sides. He added that ADMIE will recover all costs from consumers and is under no pressure to be careful with costs. He also stated that the project will cause dependence on Greece and local production will be destroyed.

On behalf of consumer associations it was stated that they will wait for all the data to evaluate the efficiency of the project which should be to the benefit of the Cypriot consumer. They also demanded complete transparency in the agreements for the project.

Questions and concerns of Members of Parliament

The Chairman of the Energy Committee, DISY Member of Parliament Kyriakos Hatzigianni, stated in his statements that the large electricity interconnection between Israel, Cyprus and Crete, a project that is a private investment, is not an infrastructure project. He added that as it became clear today, none of the authorities involved are elementary read. He spoke of the tragedy and danger of the whole management.

He added that they have dealt with only a part of the whole project and have distributed benefit rights with a disproportionate burden on the Cypriot consumer.

He also spoke of an incredibly dangerous project since the technology does not give answers as to how feasible it is to lay a cable at a depth of 3 kilometers. He added that he is not negative about the project but it bothers him that KD entered a project whose uncertainty is endless. At the same time, he noted that Cypriot consumers should start paying for the project from the moment they get electrons and not earlier.

He also called it a distortion to set a maximum limit of 500MB, since at certain times of the year there will be full dependence on the cable.

He also stated that there is no contact with Israel for the project.

AKEL Member of Parliament Andreas Pasiourtidis spoke in favor of electrical interconnection as a matter of principle, stating however that it should not be at the expense of the consumer and the Cypriot state.

He said there would need to be quantifiable data on whether the cost the consumer would pay for the project would be lower than the cost of non-electrical interconnection. It cannot be accepted, as he said, that electricity bills increase.

Speaking to the Committee, DIKO Member of Parliament Chrysis Pantelidis referred to statements by former President Nikos Anastasiadis in 2022 who described the project as historic, stating that the construction will be completed by the end of 2027 and will be put into operation in the first half of 2028. He was asked what has changed in the last 19 months regarding the project.

The Member of Parliament of the Ecologists - Cooperation Movement Stavros Papadouris asked for information on what the Cypriot consumer has paid so far for this idea, as he described the project.

Source: KYPE