Cyprus electricity market and energy policy transitions

Cyprus is undergoing significant shifts in its electricity market and energy policy following the opening of a competitive market on October 1, 2025. As part of this transition, the Electricity Authority of Cyprus (EAC) ended subsidies for storage heaters on May 1, 2026. To assist consumers using both storage heaters and photovoltaic systems, the Cyprus Energy Regulatory Authority (RAEK) introduced a mechanism to offset energy consumed by heaters against solar production.

Political debate has intensified regarding electricity costs and the management of renewable energy sources (RES). MEP Feidias Panagiotou has alleged that RES companies produce energy at a cost of 5 cents per kilowatt-hour but sell it for 27 cents. An Audit Office report highlighted historical obstacles preventing the EAC from penetrating the RES market, suggesting a lack of cooperation between the EAC and RAEK has favored private interests regarding land allocation for solar parks. Discussions have expanded to include the potential taxation of excess profits and the urgent need for energy storage systems.

Former Energy Minister Giorgos Papanastasiou has emphasized that increasing RES penetration requires better infrastructure and storage to ensure availability outside of peak production hours. He identified the failure to complete critical infrastructure, such as the Vasilikos natural gas terminal, as a primary challenge. The Cyprus Chamber of Commerce and Industry (KEBE) has called for reforms including accelerating natural gas use, upgrading distribution networks, and simplifying RES licensing.

In response to economic pressures, government officials noted that electricity prices decreased by 15% in the second half of 2025 compared to 2024. Mitigation efforts include a VAT reduction on electricity from 19% to 5% for households through March 2027, direct subsidies, and a €35 million plan for energy storage and grid upgrades.