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Cyprus formally opened its competitive electricity market Wednesday, a milestone in the country’s effort to liberalize the energy sector and give consumers more freedom to choose how they buy power.
The launch ushers in a system where households and businesses are no longer tied to a single supplier. Instead, they can shop around for tariffs as providers compete on price and services. Officials say the change aligns Cyprus with broader European energy policy and is designed to improve efficiency while strengthening the consumer’s role.
“This is a significant step forward, though the impact will be gradual,” said Konstantinos Varnavas, operations director at the Cyprus Transmission System Operator. “The immediate benefit is that consumers are free to select their supplier.”
How the market works
Under the new structure, suppliers can buy electricity from all producers, including the state-run Electricity Authority of Cyprus (EAC), and resell it to customers. Wholesale prices will fluctuate by time of day, depending on supply and demand, allowing suppliers to create different tariff options.
The system includes three separate trading platforms:
- Forward Market, for long-term bilateral contracts.
- Day-Ahead Market, where suppliers secure energy for the following day.
- Real-Time Balancing Market, a 24-hour mechanism used to stabilize the grid by adjusting production and consumption.
Prices are determined every half-hour. The most expensive offer accepted in each round sets the so-called clearing price for all participants.
Who’s participating
Seventeen entities are part of the market at launch, including producers, suppliers, renewable energy aggregators and solar companies. Among them are the EAC, BIOLAND companies, Petrolina Electric, Vassiliko Cement Clean Energy Supply and several renewable operators.
The commercial rollout follows a trial phase that began in January, during which no money changed hands. Most participants were already active under a transitional market arrangement introduced in 2021, which covered about 10% of the island’s electricity needs.
What it means for consumers
Officials say competition should translate into a wider range of tariff options. Choices may include fixed rates, fuel-adjusted prices, dynamic tariffs tied directly to wholesale markets, and packages bundled with other services such as energy efficiency programs.
Consumers who generate their own power, individually or through energy communities, will also be able to take part indirectly, consistent with the European Union’s push to strengthen consumer participation.
Opportunities and risks
The move is expected to spur investment in energy storage and flexible generation units, which can help balance the grid and keep costs down by storing power when prices are low and releasing it when demand spikes. Renewable sources, meanwhile, are set to play a critical role by lowering costs when production is high.
But challenges remain. Authorities acknowledge that technical hiccups are possible in the early stages, particularly with system communications. Tariff complexity could also confuse some consumers, while price swings driven by supply-demand dynamics may affect monthly bills.
Still, regulators and operators say they are prepared to address these hurdles. “This is about creating a modern, resilient electricity market that ultimately serves the consumer,” Varnavas said.
