01 – INTRODUCTION

1. The Scheme includes calls for proposals for EU grants targeting hybrid energy systems (combining renewable energy and storage installations) under the Just Transition Mechanism (JTM), Pillar I Just Transition Fund (JTF). The regulatory framework for this EU Funding Programme is set out in Regulation 2021/1056 (JTF Regulation).
2. The Scheme will consist of two main calls based on the interest received (Phase A and Phase B) and will be managed by the Ministry of Energy, Commerce and Industry (MECI) with the support of the Electricity Authority of Cyprus (EAC) for Phase A.
3. Phase A of the scheme will be supported by EAC Supply, the Distribution System Operator (DSO), and the Transmission System Operator (TSO). It will include only investment aid for supporting storage facilities without operating aid.
4. Phase B of the scheme will be supported by the two Grid Operators (DSO & TSO) and funded by the Renewable Energy Sources and Energy Conservation Fund (the RES Fund). Based on the available budget, it will include mainly operating aid in two-way Contracts of Difference (CFDs). MECI will be responsible for overseeing the Scheme’s operation and functionality.

1.1    Scope of support

1. Investments in relation to renewable energy in accordance with Directive (EU) 2018/2001 of the European Parliament and of the Council, including the sustainability criteria set out therein, and in energy efficiency, including for the purposes of reducing energy poverty. The surge in energy prices following the Russian aggression against Ukraine has underscored the critical need to diminish reliance on imported fossil fuels and accelerate the energy transition. This involves expanding the cost-effective availability of renewable energy in alignment with the REPowerEU Plan. The measure also aims to bolster existing renewable energy projects to minimize power curtailments, which are currently exacerbated by the insufficient interconnectors and centralized energy storage facilities in Cyprus. Additionally, it seeks to advance the deployment of new renewable energy generation projects with storage, which are essential for progressing towards a net-zero economy.
2. Since Cyprus is not yet interconnected to Greece (Crete), its energy system operates independently without a wholesale electricity market (including forward, day-ahead, intra-day, and balancing markets). As a result, neither electricity producers nor suppliers are required to submit half-hourly or daily bids for their electricity production for customer loads. The System Operator dispatches units aiming to minimize costs while maximizing the contribution of renewable energy sources (RES) and ensuring the island’s energy supply security. Consequently, there is no established wholesale electricity price. Instead, the system operator calculates the monthly (or bi-monthly) local electricity price based on the methodology approved by the Cyprus Energy Regulatory Authority (CERA)[1].
3. The local electricity price for the EAC, the only regulated supplier, is determined based on the variable costs of conventional power units and the Regulatory Decision 112/2023[2], which stipulates the average cost of supported renewable energies under bilateral contracts with the EAC. As such, the dominant supplier EAC, purchases all generated electricity from all RES technologies at this avoidance cost, while all RES production is acquired at a fixed price through a one-way CfD, with the cap price set currently at 11 cents/kWh according to the afore-mentioned regulatory decision. Independent suppliers procure electricity from renewable sources via monthly bilateral contracts with producers. In the transitional market, any surplus energy from these suppliers is sold to EAC Supply, potentially incurring a minor penalty if it surpasses a specified threshold. Conversely, if their demand outstrips their supply, they purchase additional energy from EAC Supply at a fixed monthly price determined monthly by the Regulator.
4. Despite Cyprus’s rich RES, about 80% of its electricity is still generated by thermal power plants using diesel and heavy fuel oil, leading to significant economic and environmental impacts. The development of new RES installations has largely halted in recent years, primarily due to grid saturation^[3]. Applications for new grid connections for RES projects have not been approved as many areas have reached their system hosting capacity limits.
5. Without further investment in interconnections, (Cyprus-Crete interconnection is expected by 1st January 2030), Cyprus acknowledges that the current RES contribution – estimated at about 20% of the annual electricity demand – can only be increased by (i) integrating stand-alone storage facilities to assist new RES projects, and (ii) enhancing existing RES installations with additional storage capabilities.
6. The current call of the Scheme will focus on point (ii) above. Interested stakeholders are invited to read the call documentation, in particular the scheme’s Operation manual once they are available on MECI’s website at least six weeks before the official day of initiating tender submission.

1.2         Overview of Documents required

The following documents serve to enhance the transparency and understanding of the application process, ensuring applicants have all the necessary information for a smooth submission:

1. the Call for Proposals Document outlines the background, objectives, scope, activities that can be funded and the expected results
2. timetable and available budget
3. admissibility and eligibility conditions (including mandatory documents)
4. criteria for financial and operational capacity and exclusion
5. evaluation and award procedure
6. award criteria
7. legal and financial set-up of the Grant Agreement
8. the manual outlines the procedures to apply and register and submit proposals online via the Application Submission Portal
9. recommendations for the preparation of the application
10. the Grant Contract contains detailed explanations on all the provisions in the contract you will have to sign to obtain the grant (including cost eligibility, payment schedule, additional obligations, etc).

[1] www.cera.org.cy

[2] CERA – Αποφάσεις

[3] RES-E Hosting Capacity (eac.com.cy)

Τέλος