We must upgrade our electricity grid

This has now become a top priority for Europe, but for Cyprus too. Kadri Simson, the European energy commissioner, raised the stakes early September in an op-ed in the FT. She confirmed “there is no green future for Europe without an upgraded power grid.”

She admitted that the EU faces a fundamental challenge to ensure energy independence and deliver on climate goals. Electrifying the EU economy must be made easier, cheaper and quicker. There is a need to progress cross-border interconnections where these still lag behind.

Simson stressed that “it is time to shift our attention from targets and rules to what is needed to make things happen. This means placing the issue of grids at the heart of the debate. Upgrading the power grid will plug Europe into a sustainable future.”

These comments apply to Cyprus too and even more so. Our main transmission lines were first constructed in 1953. Sure, a lot has happened since, but nevertheless Cyprus’ grid remains antiquated and outdated. As a result, without serious upgrading it cannot accept the increased quantities of renewable energy needed to transit into a future low-carbon system in line with EU’s climate targets and those enshrined in Cyprus’ ‘National Energy and Climate Plan’ to 2030. And in doing so, bring electricity prices down from their crippling highs that have such a devastating impact on our economy and the cost of living of all Cypriots.

Soon after taking his position, the minister of energy identified this as an issue that must be addressed. He confirmed that “the electricity networks that exist in Cyprus are ancient and cannot withstand the introduction of RES.” He added that smart networks should be created that control and transmit electricity from where it is produced and place it where the demand is.

With Cypriots awoken to the major benefits and much-reduced electricity bills resulting from rooftop solar, they must be encouraged and supported to carry on installing such systems. But our antiquated grid and lack of interconnection are becoming a bottleneck.

The power grid is the backbone of energy transition. Transitioning to clean energy can only go so far if the necessary infrastructure is not implemented to support the intermittent and decentralized nature of renewable energy sources (RES).

Europe gives the lead

The increased in the uptake of RES – and especially rooftop solar – and electric vehicles (EVs) is expected to accelerate this year and next throughout Europe. In order to ensure its energy security, deliver on its climate ambitions and bring energy costs down, Europe must sustain a fast-pace in the rolling-out of renewables and the electrification of its economy.

It is targeting to increase electricity consumption by 60% and the share of renewable energy to 42.5% by 2030. But this would require its electricity infrastructure to be ready. Electrical grids will need flexibility to integrate a large share of intermittent renewables and adapt to a more decentralised electricity system. An energy system running largely on renewable electricity must be made reliable and resilient.

Kadri Simson says that another major limitation is that “across Europe, grid interconnection projects are delayed due to cost overruns, inflation and rising interest rates.” Cross-border interconnection must be accelerated. EU’s target is to achieve 15% interconnection, but it still lacks behind. Once achieved, it would increase security of supply and bring down prices.

Europe’s outdated grids and lack of adequate electricity storage and interconnection mean that every time grids become overloaded, solar panels are the first to be switched off, wasting energy.

In Europe, new regulations have reduced the length of permitting procedures for electricity transmission projects and have accelerated authorisation of new RES projects, helping fast-track progress.

The European Commission (EC) points out that flexible storage and demand response solutions can be crucial in the drive to reinforce the networks. Possible solutions can be found in its “Digitalisation of Energy Action Plan”. It is also offering to provide more technical assistance to member state organisations to speed-up the process.

The EC estimates that by 2030 some €584billion needs to be invested to bring Europe’s electrical grids up to date. Much of this is being provided through the European Investment Bank (EIB). EU’s electricity market reforms are designed to help boost investments.

Without these reforms and investments Europe will miss its climate goals and so would Cyprus.

In Cyprus

The energy minister appears to have recognized the problems with Cyprus’ current electricity system. What must be ensured is that implementation of the required measures to overcome these is accelerated, so that the adoption of renewables, particularly rooftop solar, continues at a fast pace, to avoid curtailing RES energy.

It is also important that implementation of such projects is done through open, transparent and competitive bidding. Cyprus must avoid repeating past mistakes made in the allocation of RES licenses that have led to exorbitant RES charges that currently keep electricity prices high.

This brings another issue. The energy minister is recommending an energy subsidy to assist with the ever-increasing cost of energy, especially to vulnerable households, something the finance ministry is resisting. Such a subsidy could be put in place easily by taxing the exorbitant profits from RES – something the previous and present government have been talking about for almost two years, but have done nothing so far to actually do it.

Approval of and speedy commencement of construction of the EuroAsia Interconnector is essential, given that it requires about four years before it becomes operational. Sooner or later, it will become glaringly obvious that without interconnection, Cyprus will reach a point where further increase in the adoption of renewables will not be possible and reliance on fossil fuels will continue, beyond EU targets. That will make attainment of climate goals impossible, with all this entails, especially in terms of prolonged, crippling, emission allowance charges.

The additional problem of not proceeding with construction of the interconnector now is that the grants allocated to it, €658million from the EC and €100million for the Recovery and Resilience Fund, will simply be lost to Cyprus. It will not be possible to re-allocate them to other projects. EC regulations do not allow that. As a result, at a later stage, when it become obvious that interconnection is essential, without grants, the cost of implementing it will be prohibitive, locking Cyprus into an energy limbo.

Without additional investments in grid upgrading, battery storage and interconnection – and all at the same time – Cyprus will simply not be able to make full use of and get the increasing amounts of RES electricity to where it is needed.

Dr Charles Ellinas is Senior Fellow, Global Energy Center, Atlantic Council