Opinion
By Yannos Stavrinidis
Cyprus pays the highest price per kilowatt-hour in Europe not because of some exceptional set of circumstances, but because of an energy model built on complete dependence on heavy fuel oil for electricity generation. Natural gas, sufficient storage, and an electricity interconnection are all missing from the country’s energy mix.
This model did not emerge overnight. It is the product of successive failures. And the discussion of the Energy Ministry’s budget before the House Finance Committee laid bare precisely that approach.
As expected, the debate focused on natural gas, prompting the minister to declare that the Vasiliko terminal is a “key priority” and that a new contract will be awarded before the summer of 2027, with gas expected to arrive in 2030.
So the project that was supposed to deliver swift reductions in costs and emissions still has no contractor—and, at best, will have one in eight or nine months. Put simply, even if the timetable is met, the benefits are being pushed into the 2030s.
Michalis Damianou may have laid out his vision for the next decade, but he went to Parliament without an interim plan to reduce the cost of dependence on heavy fuel oil. He did not even address why a supposedly priority project is still being put back out to tender under a government that has been in office for almost four years.
And, of course, he was not asked whether the 2030 target is realistic or how much Cypriot consumers will pay between now and then.
The minister then turned to the Cronos and Aphrodite gas fields, which will be developed through exports to Egypt. And yes, you understood correctly: The liquefied natural gas arriving at Vasiliko in 2030 will be imported. There is no clear strategy linking the development of Cyprus’ gas reserves to cheaper electricity.
On the Great Sea Interconnector, the discussion revealed that Cyprus had committed to the project without managing the risks or setting a ceiling on costs. Although the minister acknowledged that “additional funding” would have to be found if costs rise, he failed to ease concerns about the absence of a consumer protection clause or the geopolitical risks that leave the project politically vulnerable, with no Plan B.
As for the only solution currently available, the minister announced 120 megawatts of storage capacity during 2027 to address the curtailment of solar power—the cutting back of electricity generated by photovoltaic systems.
He also acknowledged that, for years, we subsidized solar installations without requiring storage, leaving generation exceeding consumption. Now, that flawed government planning will leave consumers paying twice: once to subsidize the solar panels and again to subsidize the batteries needed to prevent their output from being cut.
For 2027, development spending is falling from €94.2 million to €35.8 million—a reduction of 61.9%. The official explanation is a change in Recovery Plan funding arrangements and supplementary budget allocations made in 2026.
At a time when Cyprus needs both storage and an upgraded electricity grid, the ministry responsible is presenting a sharply reduced development budget.
The government did not present a plan to bring costs down today. Instead, it presented a timetable: a new contractor at Vasiliko before next summer, some storage capacity during 2027, and gas in 2030.
