Newsroom
A debate has emerged over the structure of Cyprus’s electricity market after Odysseas Michaelides suggested that electricity prices could fall if the country returned to a centralized purchasing system dominated by the Electricity Authority of Cyprus (AHK).
Michaelides argued that allowing a single entity to buy electricity from producers through competitive tenders could lower prices for consumers. Under such a model, AHK would act as the sole buyer of electricity from energy producers and then supply it to the market.
The proposal would represent a major shift from the competitive electricity market introduced in Cyprus, which began commercial operation in October 2025 and aims to encourage competition among producers and suppliers.
Concerns about the competitive market
According to Michaelides, the competitive market may not deliver the expected reduction in electricity costs. He has also criticized the role of renewable energy companies, arguing that some producers may be profiting excessively.
Among the claims raised is that electricity that costs around five cents per kilowatt-hour to generate is being paid at prices closer to twenty-two cents. Michaelides has also suggested that renewable energy production could potentially be subject to special taxation, noting that the European Commission has issued guidance regarding the taxation of certain sectors.
Calls for evidence
However, critics say these arguments require clearer evidence and analysis. They point out that Cyprus operated under an electricity monopoly for decades before market reforms were introduced, and that system did not lead to lower prices for consumers.
Skeptics also question what would change if the country returned to a monopoly model, given the current challenges facing the electricity system. These include the continued reliance on expensive fuel sources, aging generation infrastructure, limited energy storage capacity, and the costs associated with carbon emissions.
Currente electricity production structure
Industry figures suggest that the majority of electricity in Cyprus is still produced by the national utility itself.
According to data referenced in the debate:
- Around 72% of electricity generation comes from AHK production units.
- Approximately 21% of renewable energy generation (including solar, wind and biomass) is sold to AHK Supply under contracts with prices capped at 11 cents per kilowatt-hour.
- Roughly 7% of electricity is generated by private renewable energy companies operating independently.
Critics of the monopoly proposal argue that even if AHK purchased the remaining privately generated electricity, the relatively small share may not significantly affect overall electricity prices.
Market data from recent months
Data from the Cyprus Transmission System Operator indicates that since the electricity market began operating in October 2025, the average generation cost for renewable energy during periods of sunshine has ranged between 11 and 12 cents per kilowatt-hour.
Private electricity suppliers say their retail tariffs are currently 6–8% lower than those offered by AHK Supply, although their customer base is largely composed of commercial and industrial users rather than households.
These figures have led some analysts to question how the claim that electricity costing five cents is being sold for twenty-two cents applies across the market.
The Malta model
During the discussion, Michaelides also pointed to the example of Malta’s electricity system, which operates under a single-buyer model.
However, media reports in Malta indicate that the system depends heavily on large government subsidies that keep electricity prices artificially low, costing taxpayers hundreds of millions of euros each year. Some analysts have described the subsidy system as a potential long-term fiscal risk.
Despite having access to natural gas and an electricity interconnection with Italy, Malta’s electricity generation costs remain among the highest in Europe, with Cyprus ranking as the most expensive.
EU energy market rules
Another key issue raised by the debate is compatibility with European Union energy policy. Cyprus adopted the EU’s target electricity market model through legislation approved by the House of Representatives in 2021, aligning the country with EU directives designed to create competitive electricity markets.
Any shift toward a single-buyer system could require special approval from the European Commission, meaning Cyprus would need to demonstrate that such a model would reduce costs and remain consistent with EU energy policy.
