On an island blessed with so much sunlight, one would think that when it comes to Renewable Energy Sources (RES) the emphasis should be on solar rather than wind-powered ventures. Not so.
Why the paradox? The received wisdom is that solar photovoltaic (PV) systems have a prohibitive start-up cost, even for small-scale domestic units. In a nutshell, wind farms are said to be more cost-effective. Yet the price of PV installations has dropped dramatically in recent years, so much so that the government is now mulling the idea of PV incentive schemes with no subsidisation whatsoever.
Today there are three wind farms with a total installed or (maximum) capacity of 133 MW, 18 large PV parks (less than 150kW each), and 11 units running on biogas, with a total capacity of around 8 MW. The numbers are telling.
Installed capacity (MW) is by no means on a par with the amount of power actually generated (MWh). Generally speaking, wind farms operate at 25 per cent of capacity. Last year for instance wind farms generated a total of 164 MWh of electricity – which is a very poor return on installations with 133MW capacity. Currently, the total installed capacity of PV installations (there are some 800 units in total of all sizes, PV farms and domestic units) is about 9 to 10 MW, yet their total electricity production in 2011 was a far more satisfactory 2,354MWh.
When you install a small PV system, the EAC pays you for the electricity generated. You get paid the feed-in tariff rate (which is higher than the rate charged to consumers by the Electricity Authority of Cyprus) for generating power that goes into the grid, plus a further subsidy that comes out of the RES fund, to which all consumers contribute.
According to data furnished by the Research and Development department of the electricity authority (EAC), the feed-in tariff rates for the various RES schemes (contract valid for 20 years) are: wind 16.6 cents per kWh; PV (up to 20kW) 28 cents per kWh; PV (from 21kW to 150kW): 25 cents per kWh; solar thermal 26 cents per kWh; biomass 13.5 cents per kWh; and biogas (from) 11.45 cents per kWh.
Environment Commissioner Charalambos Theopemptou says the government began accepting applications for PV systems in 2008, when the cost of PV installations was still prohibitive.
Three years later, the cost of PVs had nosedived, with hundreds of applications pouring in. By then, however, the RES fund had essentially emptied, the bulk of the cash having gone to subsidising wind farms.
This left hundreds of PV applications pending, creating a mess, because it’s still unclear what will happen to these when a new subsidisation scheme is announced. The government has stopped accepting new PV applications for about a year now.
A strategic plan for the promotion of RES in Cyprus carried out by the energy regulatory authority (CERA) indicates that PV installations as well as solar thermal plants will play an important role in the electricity mix of Cyprus. The plan takes into account the expected reduction in the capital cost of PVs, and expects a PV contribution of 200MW and solar thermal contribution (with at least 6 hours storage) of 75MW by 2020.
The energy regulator is in the process of announcing a bidding procedure for the installation of a total 50MW in PVs.
Theopemptou says poor planning may have led to the RES fund running out. One example: a number of subsidies went toward installing PV for heating the swimming pools of luxurious villas. Also, there is no satisfactory mechanism to check whether people who get the subsidies actually do install PV systems.
He believes Cyprus should promote PV policies with a greater emphasis on domestic installations rather than on large-scale projects, such as parks.
“This way, people will get used to the idea and more and more will get on the bandwagon as time passes. It is also better for electricity generation to be distributed as widely as possible instead of being concentrated. This works better with the EAC electricity distribution grid.”
And according to Theopemptou, net-metering may be just around the corner. He says the government and the EAC are positively inclined toward the scheme, which will allow you to install a PV panel on your building roof, but without a subsidy. However, prior to installation of a PV system the EAC will come to your house to take a reading of your electricity meter and note down your consumption. If your consumption was, say 1000 kWh, and your subsequent power production with PV comes to 700 kWh, then you would only pay the difference (300 kWh).
Another benefit from net-metering has to do with how the EAC charges its customers. The rates charged per kWh are bracketed and incremental according to consumption. For example, the tariff for the first 120 kWh consumed is lower than that charged for the next 200 kWh, and so on.
Assuming a household consumes around 1000 kWh (going into the higher rates), with net-metering it would be charged only for 300 kWh (as in the above example) and would thus fall within a lower-rate bracket.
It currently costs some €10,000 to €11,000 to install a PV system for domestic use – with an output of about 5 kW. Theopemptou figures that such an investment should pay off in “under seven years”.
But Pantelis Metaxas, former chairman of the Federation of Environmental and Ecological Organisations of Cyprus, has a different take on the Cypriot RES paradox.
“In my experience, there has been an obvious partiality on the part of the state toward large-scale projects, so that at the end of the day the bulk of allocated subsidies go to big business, while the little guy is largely excluded.
“The business ‘sharks’ out there always have the edge over Joe Bloggs…they’ve got the accesses and the connections.”
For several years Metaxas sat on the advisory committee for assessing the environmental impact of projects. In a comment hinting at vested interests and inside information, he tells that in the case of wind farms a certain applicant “was aware of the details of the government subsidy scheme even before the NGOs who sit on the advisory committee knew. Make what you want of it.”
According to Metaxas, his federation had filed a complaint to the Ombudswoman arguing that the wind farm in question should not have been given the go-ahead.
“The Ombudswoman reported back that our complaint was justified, yet the project still went ahead,” he said.
And it seems authorities often put the cart before the horse.
“I’ve heard all about the argument that PV projects do not generate enough interest from the public – because of the high initial costs or what have you – and that this is why most of the cash has ended up in wind farms.
“But that’s just rubbish. What actually happened is that the state decided beforehand to allocate the lion’s share of MW capacity to wind power, and a tiny share to PV projects. What they should have done instead is the exact opposite; before announcing anything, they should have got feedback from the public and then on that basis thrash out their policy.”