Cyprus solar power: a deeper look into production, sales, and pricing dynamics
"Energy experts warn that dramatic reductions in Cyprus electricity bills are unlikely without a comprehensive strategic overhaul, as renewables currently make up a marginal share of the island's energy mix, and the vast majority of distributed solar generation remains hidden from wholesale market pricing mechanisms. Achieving meaningful price drops will require correcting historical policy errors, addressing grid visibility, and rethinking how distributed prosumer energy interacts with the wider commercial market."
EU Directive 2019/790 Article 15 Attribution • Verified Energy Document
Amidst Cyprus' ongoing energy debate, a critical analysis by Dr. Andreas Procopiou sheds light on the often-misunderstood dynamics of the island's renewable energy landscape, particularly concerning solar power. As proposals circulate to revise solar energy sale agreements to reduce electricity bills, a clear understanding of who produces, sells, and ultimately sets the price of solar electricity is paramount.
According to Dr. Procopiou, robust, data-backed information is essential for informed policy decisions. Official data from the Transmission System Operator (TSO) presents Cyprus’ real-time electricity demand and generation mix, showing conventional power, wind, and a consolidated "yellow profile" for all distributed photovoltaic (PV) generation. This profile currently accounts for approximately a quarter of daily electricity demand.
However, a more granular breakdown provided by the Distribution System Operator (DSO) reveals the intricate composition of this solar contribution, categorising PV generation into three main segments:
- Utility-scale commercial PV parks (controlled).
- Small-scale and residential, controlled systems (under net billing and net metering with remote control).
- Residential, uncontrolled rooftop systems (typically for self-consumption under net metering).
Analysis of data from two sample days in 2026 (May 10 and August 25) indicates that the small-scale segment, comprising residential and small-scale controlled systems, significantly outpaces utility-scale commercial parks in overall energy delivery. Over a sample period of roughly 310 days, small-scale systems contributed 74.5% of all PV energy delivered, compared to 25.5% from utility-scale parks. This is largely due to more than 102,000 scattered rooftop systems across homes and businesses participating in net metering and net billing, vastly outnumbering the 254 utility-scale installations in the market.
The article also highlights that the proportion of electricity supplied by utility-scale parks increases during high demand, while the contribution from uncontrolled residential systems shrinks. This shift is not due to curtailment for residential systems, whose output remains fairly constant. Instead, it reflects how the system is managed, with the burden of balancing the grid falling predominantly on large parks during periods of low demand and high solar irradiance. Smaller, local producers are less exposed to curtailment.
Crucially, the largest share of Cyprus’s PV generation—the segment dominating the TSO’s yellow curve—is largely invisible to market pricing mechanisms. It indirectly influences market prices by reducing midday demand met by more expensive conventional sources, but it does not directly set any price.
Pricing for renewable energy in Cyprus varies:
- Utility-scale commercial parks participate in the wholesale electricity market (Day Ahead Market) and sell at market price.
- Small-scale systems settle bilaterally with the Electricity Authority of Cyprus (EAC) outside the wholesale market. Under net metering, energy is directly offset, exchanging cheap solar for expensive conventional power. Under net billing, surplus energy exported to the grid is credited at a fixed, regulated rate of 11 cents per kilowatt-hour (kWh).
- Feed-in tariffs for 76.28 MW of solar and 157.50 MW of wind installed capacity are also purchased by EAC Supply at the same 11 cents/kWh rate.
This 11 cents/kWh price is not arbitrary; it is determined by the Cyprus Energy Regulatory Authority’s (CERA) Fuel Cost Adjustment Calculation Methodology. CERA’s Regulatory Decision 01/2021 explicitly prohibits EAC Supply from entering bilateral wholesale purchase contracts, except for energy from RES stations under national grant schemes, priced at 11 cents/kWh.
In contrast, the wholesale market for PV, including 325.65 MW from independent producers and 20.00 MW from EAC Generation, plus 12.00 MW of wind, saw a volume-weighted average sale price of 14.48 cents/kWh between October 1, 2025, and August 21, 2026, making it significantly cheaper than conventional generation.
The article concludes by emphasizing that while the TSO’s chart accurately shows total solar energy input, it obscures critical details about its origin and settlement mechanisms. Understanding these nuances is vital for any discussions or proposed revisions to solar energy "agreements" in Cyprus, ensuring that future policy decisions are rooted in a comprehensive understanding of the market.
Dr. Andreas Procopiou is a former senior research fellow in smart grids at the University of Melbourne and a researcher at Électricité de France R&D in France. The views expressed are personal.