11 – FINANCIAL SUPPORT

AID SCHEME FOR INSTALLATION OF ENERGY STORAGE SYSTEMS IN COMBINATION WITH RENEWABLE ENERGY SOURCES
  1. In relation to the financial support for projects under Part A of the Scheme, the following options will be considered:
    1. For existing renewable energy generation projects, currently receiving a fixed subsidy rate, investment aid will be granted in the form of payment in EUR/kW for the power storage capacity per category as indicated in ANNEX I. The aid amount will cover the requested storage cost of successful applicants and will be independent of the system’s output[1].
    2. For new hybrid projects, the investment aid will only cover the cost of the storage component in the form of payment in EUR/kW for the power storage capacity. Only financial bids that result in a total generation and storage cost per kWh of power injected to the grid, under one-way CfD with a ceiling bid price of less than 0.11 Euro/kWh, will be considered eligible. The above price cap maybe adjusted in future calls based on new Regulatory Decision.
    3. It is noted that, based on the application of the General Exemption Regulation (Regulation 2023/1315), both the generation and storage units should constitute components of a single integrated project. The storage component shall absorb at least 75% of its energy from a directly connected renewable energy generation installation, on an annual basis. Compliance with the thresholds set out in Article 4 of Regulation 2023/1315 will be verified considering all investment components (generation and storage).
    4. The Scheme will provide investment aid covering up to 125,000 Euro per MW of power storage capacity as proposed in the applicants’ bids. Additionally, the sale price of energy from the hybrid station will be established through a one-way CfD, which should be below the System Marginal Cost (SMC) or the price set by CERA Regulatory Decision 112/2023, without additional operating aid (PART A). The established cap ensures that the proportion of the investments funded by EU contributions (co-financing of eligible costs) will not exceed 70% for both categories in PART A. This accounts for the energy losses due to roundtrip efficiency, restrictions on additional revenues from ancillary services, and other indirect costs associated with the project, such as the application approval process, related studies, additional land availability, indirect costs related to the project guarantees, and the operation and maintenance of the storage system. Therefore, no further remuneration is allowed outside the context of the Scheme.
    5. In relation to the financial support for projects under Part B of the Scheme, the following rules will be considered
      1. The operating aid will be granted to new renewable energy and storage hybrid projects until 1.1.2030 or can be extended up to 10 years until the interconnector is operational. It is limited to the minimum needed for carrying out the aided project. Therefore, the payment will cover the difference between the successful bid price and the average market selling price, but not higher than the cap price (maximum selling price). The bidding for energy sale price for new projects will be in the form of a two-way CfD, whereby the generators sell their electricity either (1) directly on the market or (2) to EAC supplier[2]. Since the market in Cyprus is not yet functional, a ceiling price will be defined based on the Regulatory Decision of CERA (112/2023). In addition, the ceiling prices (per category) should consider the Greek spot market prices[3] and be compatible with the treaty provisions on State aid once Cyprus is electrically interconnected with Greece. To avoid any confusion, once Cyprus is interconnected the ceiling prices for RES hybrid projects will be defined based on the lowest price between Greek Spot Market and the cap price of the Regulator in case such price still applies (particularly during the transitional period and after the market in Cyprus is fully operational).
      2. In cases where the Cost of Avoiding Thermal Production of Cyprus System, as calculated based on the Calculation Methodology for the Adjustment of Fuel Basic Pricing and the Cost of Avoiding Thermal Production of Conventional Production, is below 11€cent/kWh then the Purchase Price from RES-e will be equal to the respective price of the said Cost of Thermal Production or the Spot Market of Greece (whichever is lower). This threshold will apply for both Part A and Part B of the scheme.
      3. The number of applications to be selected in each category will be determined as indicated in ANNEX I designed to operate transparently and automatically.

[1] Some applicants may install systems that surpass the minimum capacity threshold established by the scheme, without seeking funding for the additional storage capacity.

[2] It should be noted that individual suppliers are eligible to participate in this Scheme, provided that the information submitted demonstrates that there is no aid to the supplier. This is applicable in scenarios where the prices from RES projects are higher than the average avoidance costs and higher than the fixed reference price. In such cases, the supplier acquires electricity at a cost lower than its system value and below the cost of production in a counterfactual scenario.

[3] based on LV, MV and HV prices

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