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The purchase of greenhouse gas emission allowances corresponds to a quarter of the production costs of the Cyprus Electricity Authority (AEK), said the Authority's President, Despina Panagiotou.
At the same time, informing the Parliamentary Finance Committee about the Authority's budget for 2022, Panagiotou highlighted the continuous increase in the cost of purchasing emission rights, saying that the estimated price for 2022, at the time the budget was prepared, was €62 per tonne, on 2 February it rose to €88, while today it is €94 per tonne.
"So there is already a big increase," she said, adding that the expected greenhouse gas emissions for 2022 are 2.96 million tonnes, compared to 2.91 million tonnes in 2021.
"With today's data, the contribution of the purchase of allowances to the cost of production is at 25%," Panagiotou added.
She noted, however, that the actions that AHK is promoting to offset this cost are the development of renewable energy projects, adding that "we believe that the advent of natural gas will also help because using it instead of fuel oil will reduce carbon dioxide emissions by about 28%."
For renewable energy, Ms. Panagiotou said that AHK has been licensed by RAEK for the construction of a 12 Mega watt photovoltaic park in the Akrotiri area, a request has been submitted by AHK for the transfer of the existing photovoltaic park in Cheri to the regulated production activities, while another series of renewable energy projects is being developed with the ultimate goal of increasing the share of renewable energy in the production mix.
She noted that AHK is in consultation with RAEK to determine how AHK will participate in RES, so that generation from AEPs can be included in AHK's generation mix.
However, Panagiotou said that the licensing process for RES projects is complex and time-consuming.
Moreover, according to a note submitted by AHK to Parliament, the Authority's expenditure for 2022 is budgeted at €1.76 billion, with the largest expenditure of €1.10 billion relating to fuel, electricity purchase and market operator costs.
Included in the expenditure was an amount of €230 million as unforeseen expenditure, which results from constantly changing exogenous factors, such as oil and greenhouse gas allowance prices on the international market, the exchange rate between the euro and the US dollar, the electricity units to be purchased from renewable energy producers and the total units to be produced by the conventional generation units of AHK.
As Panagiotou said, in case these costs are incurred, this amount will be recovered through tariffs and/or charges to the Market Operator.
As mentioned, AHK's revenues are budgeted at €1.44 billion, with a budget deficit of €88 million, which is covered by existing cash or borrowings. Panagiotou said that the Authority has completed the conversions of units 1, 2 and 3 at the Vasilikos power plant, so that all units are available for natural gas combustion, while the development of the common infrastructure, quantity measurement, pressure regulation and temperature regulation of FA for units 1, 2 and 3 remains, which is expected to be completed in June 2022.
AHK, he added, is in full cooperation with DEFA and the Ministry of Energy to contribute to the successful implementation of the long-term FA supply contract and the development of the FA gasification infrastructure.
It is recalled that AHK has a 30% stake in the capital of the Natural Gas Infrastructure Company (ETYFA), a subsidiary of DEFA, with an amount of €43 million paid in 2020.
Saying that in recent years, AHK has successfully faced very important challenges, Ms. Panagiotou stressed that "today it is a healthy organization, operationally and logistically separated, able to proceed with the realization of investments and infrastructure for the modernization of the electricity system."
€54.5 million returned to society
She recalled that in the midst of the coronavirus pandemic, AHK in 2020 returned to society and the economy an amount of €32 million. approximately through a 10% reduction in electricity tariffs for six months, and repeated this move by granting a 65% reduction on the tariffs for the use of the Transmission and Distribution Systems in the tariffs of all consumers for the period November 2021 to February 2022, which corresponds to approximately 10% on the bill of the average household consumer.
"This reduction corresponds to an amount of approximately €22.5 million, contributing this time to mitigate the impact on consumers of the large increase in the price of Fuel and greenhouse gas emission rights," he concluded.
Source: CNA
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