09/06/2026
Renewable Energy in Cyprus: Gone with the wind
By Panayiotis Iona
Director, Chelco VAT Ltd
[email protected]
My ‘two pennies’ on a very prominent discussion within the EU and its implementation in Cyprus.
The European Commission has set ambitious targets for reducing carbon emissions and environmental impact. Being the bureaucratic and technocratic machine that it is, it has introduced various tax reforms and regulatory measures aimed at pushing the public towards “greener” alternatives.
I will not discuss whether European “greening” efforts can have a meaningful global impact while major economies, such as India and China, still rely heavily on coal-fired energy production. That is a matter for scientists and environmental experts to evaluate and prove one way or the other.
My concern today comes from a more practical and pragmatic perspective.
Allow me to draw from personal experience. Cyprus is blessed with up to 340 days of sunshine per year, with an annual average of around 300 days. This makes our small island nation an ideal candidate for transitioning energy production from fossil fuels to renewable alternatives such as solar, photovoltaic (PV), and wind energy. Indeed, this has been the stated aim of successive governments for several years.
The transition has been promoted aggressively through marketing campaigns, but also through regulatory intervention. New building regulations now require all newly constructed residences to include PV systems and meet specific energy-efficiency ratings. Attractive financing schemes have also been introduced, allowing homeowners to repay PV installation costs through their electricity bills, often coupled with government subsidies.
In addition, generous feed-in tariffs and incentives were offered to private investors to encourage the development of larger PV parks. Various subsidy schemes were also introduced to promote the electrification of transport through the purchase of battery electric vehicles and electric bikes.
All of this sounds excellent in theory.
The problem, however, is that policymakers focused almost exclusively on increasing green electricity production while largely ignoring the distribution and management side of the equation.
As a result, all this additional electricity production is being fed into an outdated distribution network originally designed around energy input from just two conventional power plants. From the outset, Cyprus has therefore faced a serious infrastructure problem regarding energy absorption, storage, and distribution management.
The second issue lies in balancing electricity supply with actual demand. Cyprus still relies heavily on steam turbine generation, which comes with significant operational limitations. These turbines require a minimum production threshold and are relatively slow in responding to fluctuations in energy demand. Consequently, oil-burning turbines are effectively given priority within the network in order to guarantee grid stability and energy security.
What does this mean in practice?
During the months of April and May, when sunshine is abundant but demand for heating and cooling remains relatively low, the distribution network operator has been shutting down PV systems through ripple-control mechanisms for more than 50% of the time. Reviewing the production analysis of my own residential PV system for those months shows forced shutdowns ranging between 13 and 16 days per month. This is not an isolated issue; virtually all systems connected to the network are facing the same problem.
The stark reality of poor planning is therefore that up to 50% — if not more — of green energy production is effectively thrown away, gone with the wind, without ever being utilised.
Private individuals were encouraged to invest in residential PV systems based on financial projections that are no longer achievable under current operating conditions. Households that financed these systems through bank loans are now finding themselves paying both loan instalments and unexpectedly high electricity bills due to forced production cut-offs. Combined with rising energy prices, many households are facing unnecessary financial strain and increasing difficulty in remaining financially stable.
And because poor planning apparently knows no limits, the government continues issuing approvals and licences for even more PV installations, further exacerbating the imbalance within the network on a daily basis.
The only realistic way forward is:
• A substantial upgrade of the electricity distribution network;
• Large-scale deployment of energy storage infrastructure across the grid;
• A temporary freeze on new PV licensing and approvals until network balance is restored;
• Strict enforcement of licensing obligations for commercial PV parks, particularly where energy-storage commitments were part of the original approval conditions.
Where operators have failed to deploy the required storage infrastructure, those parks should be suspended from operation until full compliance is achieved, with meaningful financial penalties imposed for non-compliance.
Cyprus certainly has the potential to become a leading example in the transition towards green energy production. However, such efforts are doomed to fail when policymakers approach the issue in a fragmented rather than holistic manner.
What is perhaps most disappointing is that a VAT advisor can identify these structural issues, while the officials and experts supposedly responsible for the sector have failed so profoundly in their planning and execution.
And, as always, the system neither penalises nor holds accountable those responsible for failures that ultimately cost the wider economy significant amounts of capital.
To add the final layer of irony to the situation, Cyprus continues paying enormous amounts every year under the EU Emissions Trading System (ETS) because of its dependence on oil-fired electricity generation. Recent estimates place the annual carbon-emissions cost for electricity production at well over €200 million, a burden that is ultimately passed directly onto households and businesses through electricity prices.
In other words, the country is simultaneously wasting a substantial portion of the renewable energy it already produces while continuing to pay hundreds of millions for carbon emissions that proper infrastructure planning could have significantly reduced.
That, perhaps more than anything else, highlights the true cost of policy failure.
In the words of Clark Gable, frankly, my dear, the powers that be don’t give a damn.
