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Just months before Cyprus opens up its electricity market to real competition, a government decision to hand a €35 million energy storage project to the state has sparked a fierce backlash from private investors, many of whom have been stuck in limbo for years.
Energy Minister Giorgos Papanastasiou recently secured a special exemption from the European Commission to allow the Transmission System Operator (TSO) to roll out a central battery storage system on EAC substation land, effectively bypassing both the private sector and lengthy permitting procedures.
The bigger concern is what this means long-term: Will Cyprus truly open up its energy sector, or will it continue to favor state-run solutions even when private ones are ready to go?
The move has left licensed private investors, who’ve already sunk time and money into ready-to-go projects, fuming.
“This is a slap in the face,” said a source close to the Electricity Market Association (ΣΑΗ). “We’ve followed the rules, waited our turn, and now the state is jumping the queue, with public money.”
Private projects left out in the heat
Since 2023, 33 private companies have been licensed by Cyprus’ energy regulator (ΡΑΕΚ) to install energy storage systems across the island, with a combined capacity of over 1,000 megawatts. Many of these projects are located next to or near EAC substations, meaning they could be connected quickly and help stabilize the grid during peak demand.
But despite their readiness, most are still waiting for final connection terms. Only eight applications have been granted preliminary terms, and only for autonomous storage systems, not the centralized setups that the government is now pursuing for itself.
What frustrates investors even more is that the government didn’t open the project to competitive bidding, didn’t consult with the regulator, and ignored a written warning from ACER, the EU’s top agency on energy regulation, which said the move would hurt market fairness and reinforce state monopoly.
Minister: We’re saving time
Minister Papanastasiou defended the decision in an interview with Alpha News, saying the exemption speeds things up.
“We believe the derogation gives us the speed we need. A private investor may decide faster, but in this case the public sector can build faster, because the substations already exist and don’t need new permits,” he said.
He also revealed the project would be funded with €30–35 million from the Just Transition Fund, using leftover money from a past tender on hybrid energy systems, another decision that’s angered private investors, who say they were never given the chance to compete for those funds.
What’s really at stake
The competitive electricity market, scheduled to launch this October, was meant to bring fairness, lower prices, and better service to households and businesses. But industry insiders warn that moves like this one send the wrong message at the worst possible time.
“Instead of encouraging investment, we’re scaring it away,” said a representative from ΣΑΗ. “We should be building trust in the new market, not bending the rules to suit the state.”
The bigger concern is what this means long-term: Will Cyprus truly open up its energy sector, or will it continue to favor state-run solutions even when private ones are ready to go?
