Cyprus re­new­able en­ergy tar­gets by 2020: a night­mare or not?

By An­thi Char­alam­bous

Financial Mirror (Cyprus) - - CYPRUS -

The bind­ing na­tional tar­get of Cyprus re­gard­ing the share of re­new­able en­ergy in the fi­nal en­ergy con­sump­tion by 2020 is 13%. There is also an­other bind­ing tar­get by 2020, which usu­ally not men­tioned, that of the use of bio­fu­els in the trans­port sec­tor 10%.

Ac­cord­ing to the Na­tional RES Ac­tion Plan, the over­all 13% tar­get can be achieved by the three sec­toral tar­gets which are: 23.5% share of RES-heat­ing and cool­ing to the fi­nal en­ergy con­sump­tion, 16% RES elec­tric­ity and 4.9% the use of bio­fu­els for trans­port.

But what has been achieved un­til now? What is the progress? Can Cyprus fi­nally achieve the 2020 tar­get and avoid the “fines”? Ac­cord­ing to re­cent data of the En­ergy Ser­vice, Min­istry of En­ergy, Com­merce, In­dus­try & Tourism, that has been also pre­sented in Par­lia­ment, the progress to­wards 2020 tar­gets can be sum­marised in the ta­ble be­low:

The con­tri­bu­tion of the so­lar ther­mal sys­tems (so­lar hot wa­ter heat­ing sys­tems) con­trib­ute the most to the to­tal share of RES in the Cyprus En­ergy Bal­ance by 46.84%, fol­lowed by biomass uti­liza­tion for heat­ing 21.33% (mainly wood stoves and fire­places), elec­tric­ity gen­er­a­tion from wind farms 13.22%, elec­tric­ity gen­er­a­tion from PV sys­tems 8.61%, bio­fu­els due to im­port obli­ga­tion 6%, elec­tric­ity gen­er­a­tion from bio­gas 3% and geo­ther­mal heat pumps 1%.

There are of­ten dis­cus­sions of the “fines” that Cyprus will be obliged to pay in case it fails to reach its 13% tar­get by 2020, which is of­ten called com­pli­ance cost. This is a lump sum or penalty pay­ment im­posed by the Court of Jus­tice of the Eu­ro­pean Union pur­suant to an ac­tion brought by the Eu­ro­pean Com­mis­sion.

The daily “fine” has not yet been de­fined, how­ever the Eu­ro­pean Com­mis­sion in 2013 brought a case against Cyprus for fail­ing to trans­pose the Re­new­able En­ergy Di­rec­tive. The Di­rec­tive aims at en­sur­ing a 20% share of re­new­able en­ergy in the EU by 2020. The Di­rec­tive had to be trans­posed by the Mem­ber States by 5 De­cem­ber 2010. A rec­om­mended penalty pay­ment was EUR 11,404.80 for each day that Cyprus had not fully trans­posed the Di­rec­tive.

Cyprus, how­ever, has also the op­tion to use the so-called “sta­tis­ti­cal trans­fers”, in­tro­duced by Ar­ti­cle 6 of the 2009 Re­new­able En­ergy Di­rec­tive. In a sta­tis­ti­cal trans­fer, a spec­i­fied amount of re­new­able en­ergy is de­ducted from one coun­try’s share of re­new­able en­ergy in gross fi­nal en­ergy con­sump­tion and added to an­other’s. This is an ac­count­ing pro­ce­dure and no ac­tual en­ergy changes hands. Fur­ther, Mem­ber States can only sell sta­tis­ti­cal trans­fers if they have al­ready ex­ceeded their na­tion­ally bind­ing tar­get, as the Di­rec­tive states that “a sta­tis­ti­cal trans­fer shall not af­fect the achieve­ment of the na­tional tar­get of the Mem­ber State mak­ing the trans­fer”.

Through this mech­a­nism, the Cyprus govern­ment could pur­chase re­new­able en­ergy cred­its from coun­tries that have al­ready ex­ceeded their 2020 tar­gets. This cost has not been how­ever prop­erly cal­cu­lated. Take the case of Ire­land as an ex­am­ple, where the Uni­ver­sity Col­lege Cork es­ti­mates that cov­er­ing a three per­cent (3%) short­fall could cost Ire­land be­tween EUR 68 mln and 315 mln.

Thus, the Cyprus Govern­ment must de­cide, ei­ther to reach the tar­gets of 2020, by mak­ing at least a last-minute com­pre­hen­sive plan to be im­ple­mented by 2020 or to pay the fines of non-com­pli­ance.

In 2017 MECIT an­nounced a so-called Sup­port Scheme for large RES projects that can en­ter the elec­tric­ity sys­tem with “avoid­ance cost” and goal their en­try to com­pet­i­tive elec­tric­ity mar­ket, by the time it will be opened to com­pe­ti­tion. The in­ter­est was high, and a lot of ap­pli­ca­tions (391.2 MW) have been re­ceived.

The cur­rent sit­u­a­tion re­gard­ing the elec­tric­ity tar­get - as ex­plained be­fore Cyprus is lag­ging be­hind the 2020 RES elec­tric­ity tar­get – can be sum­marised in the ta­ble (see right).

Thus, in or­der to achieve the 2020 tar­gets, the in­vestors that have showed in­ter­est and have gained the rel­e­vant li­censes, should be en­cour­aged to im­ple­ment the projects, without de­lays and bu­reau­cracy.

The RES 2020 bind­ing tar­gets are com­bined with the CO2 emis­sions re­duc­tions and en­ergy ef­fi­ciency na­tional tar­gets. It seems that Cyprus will achieve the na­tional tar­gets for CO2 emis­sions re­duc­tions, how­ever for en­ergy ef­fi­ciency it’s not yet very clear.

Ac­cord­ing to na­tional leg­is­la­tion on the pro­mo­tion of re­new­able en­ergy sources, a Spe­cial Fund has been cre­ated, which sup­ports projects re­lated with re­new­able en­ergy tech­nolo­gies and en­ergy ef­fi­ciency. The in­come of the Fund re­lies mainly on a levy that is im­posed on all elec­tric­ity con­sumers in Cyprus (res­i­den­tial, com­mer­cial and in­dus­trial).

Based on ac­tual an­nual elec­tric­ity con­sump­tion the an­nual bud­get of the Fund in 2016, ap­prox­i­mately EUR 43 mln, and some ex­tra funds have been trans­ferred from the state bud­get due to Emis­sion Trad­ing Scheme rev­enues (ap­prox­i­mately 4 mil­lion).

The an­nual bud­get and sup­port ac­tions of the Fund are sub­ject to ap­proval by the cab­i­net and the par­lia­ment. The cur­rent an­nual ex­pen­di­tures of the Fund and obli­ga­tions ac­cord­ing to signed con­tracts for RES-e for feed in tar­iffs, are wind 59%, PVs 24%, net me­ter­ing PV for vul­ner­a­ble res­i­den­tial con­sumers 6%, other PV 6% and bio­gas 5%. An­thi Char­alam­bous is head of the En­ergy & En­vi­ron­ment Ser­vice at the Cyprus Em­ploy­ers and In­dus­tri­al­ists Fed­er­a­tion

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