Cyprus' Next President to Inherit Critical Energy Crossroads
"As Cyprus approaches the 2028 presidential election, the nation's energy sector stands at a critical juncture. The incoming administration must urgently shift from reactive crisis management to a definitive, long-term strategy to resolve systemic grid issues, ensure energy security, and lower exorbitant electricity costs for consumers."
EU Directive 2019/790 Article 15 Attribution • Verified Energy Document
As Cyprus gears up for the 2028 presidential election, the incoming administration faces a daunting array of energy challenges that will shape the nation’s economic and developmental trajectory for decades to come. From persistently high electricity prices and precarious energy security to the contentious rollout of natural gas, the increasing curtailment of renewable energy sources (RES), and the long-anticipated interconnection with Europe, the decisions made during the next presidency are set to be pivotal.
The current energy landscape is at a critical juncture. Consumers continue to grapple with exorbitant electricity costs, while the national grid strains to maintain generation adequacy. Compounding this, the growth of renewable energy capacity is outstripping the system's ability to absorb it, leading to significant curtailment. Storage and grid infrastructure development remain delayed, the much-anticipated natural gas supply has yet to materialise, and the Vasilikos LNG import project is incomplete and beset by issues. For too long, Cyprus has lacked a cohesive, long-term energy strategy, hindering effective implementation and leading to reactive crisis management rather than proactive planning.
From Crisis to Coherent Strategy
Successful energy nations define their 20-year energy vision first, then commit to the investments required to achieve it. Cyprus, conversely, often selects projects – whether LNG, RES, storage, or interconnection – in an ad-hoc manner, responding to immediate problems without a clear, integrated plan. This approach has resulted in costly delays, budget overruns, duplicated efforts, and a lack of accountability. The ultimate cost to consumers remains opaque, further exacerbated by persistent concerns over corruption, which demand rigorous attention.
A critical priority for the next government must be the establishment of a binding energy plan extending to 2040. This plan must explicitly outline future generation requirements, the retirement of aging power plants, the development of new conventional and renewable capacities, necessary storage solutions, and the definitive roles of natural gas and the Great Sea Interconnector (GSI). Crucially, this strategy needs clear timetables, designated responsibilities, and robust accountability mechanisms. Cyprus is not short of options, but rather effective planning and implementation.
Transforming the Electricity System
The island's heavy reliance on petroleum products and the escalating cost of carbon allowances continue to burden electricity prices and energy security. However, these are no longer the sole culprits; the cost of systemic delays is increasingly significant. The absence of natural gas, the failure of the electricity market to foster genuine competition, the slow development of energy storage, and the need for grid reinforcement all contribute to the problem.
In 2025, RES curtailment surged by 83 percent, starkly illustrating that renewable energy development has outpaced the grid's capacity. The solution is not merely to install more solar PV but to invest in large-scale storage, upgrade and digitalise the grid, implement better demand management, and create a truly competitive market. The benefits of cheap solar electricity must ultimately translate into lower bills for consumers, not just profits for energy producers and suppliers. Curtailing renewable energy is not just a technical flaw; it represents a tangible economic loss, highlighting deep-seated issues in market design and operation.
The Great Sea Interconnector: A Commercial Endeavour
The entry of Meridiam as a majority investor has fundamentally transformed the Great Sea Interconnector (GSI) into a commercial project, with a major international infrastructure investor assuming significant risk and capital commitment. Greece’s independent power transmission operator (Admie) remains a strategic shareholder and technical leader. While challenges remain—including securing final financing, regulatory approvals, marine surveys, and addressing geopolitical risks—the project's commercial viability marks a significant step forward.
European projects like the GSI should not be subject to a de facto veto from Turkey. Strong political and diplomatic support from the EU, the US, and France is essential to mitigate such risks. Transparency in project costs and financing, alongside clear allocation of cost overrun risks, is paramount to protect consumers from unlimited liabilities. The GSI promises substantial benefits, including enhanced competition, access to the European electricity market, improved utilisation of renewables, reduced reserve requirements, and greater energy security. Even under conservative estimates, its direct impact on consumers is expected to be neutral, while its broader strategic advantages are considerable.
Vasilikos and Cyprus' Gas Discoveries
The Vasilikos LNG import project presents a more complex problem. While technically feasible, its completion hinges on additional costs, timelines, and contractual risks. The natural gas infrastructure company (Etyfa) must prioritise selecting a robust international contractor with proven experience, clear scope of work, and defined contractual responsibilities. Even if completed, a reassessment of its economics is crucial. Soaring costs raise questions about its ability to meaningfully reduce electricity prices if recovered through gas tariffs. Furthermore, the FSRU Prometheas should not be deployed simply because it has been acquired; the decision must be based on lowest future cost and supply reliability compared to other options.
On a more positive note, Cyprus' indigenous gas discoveries are finally moving into development. The final investment decision on Cronos is a significant milestone, with first production anticipated in 2028 via Egypt. However, expectations for government revenues should be tempered due to substantial commercial concessions. Aphrodite is expected to follow around 2031, with Glaucus and Pegasus later. The goal should be to maximise economic returns for Cyprus, with Egypt's existing infrastructure offering the most immediate export route. Domestically, the government should explore whether a local discovery, particularly Calypso, could supply the domestic market long-term. A subsea pipeline from Calypso to Vasilikos, if viable, could provide 0.7-1 bcm of natural gas annually for power generation by 2032-2034, potentially making LNG a transitional, rather than permanent, solution.
A Decisive Decade Ahead
By the end of the decade, Cyprus needs to cement three irreversible changes:
- An integrated energy plan extending to 2040, featuring clear responsibilities and accountability for implementation.
- A fundamental transformation of the electricity system, incorporating large-scale storage, stronger grids, and a truly competitive market to ensure affordable solar energy for consumers.
- Definitive decisions on energy security, encompassing natural gas, generation adequacy, and an end to Cyprus' energy isolation.
All the essential components of the energy puzzle are present. The challenge for the next administration lies in transforming these options into concrete decisions, those decisions into impactful projects, and ultimately, those projects into tangible benefits for Cypriot consumers, the economy, and the nation as a whole.