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It gives me great pleasure to address the 14th Limassol Economic Forum, thanking IMH for the opportunity to present to the participants the major issues of the energy sector in Cyprus, in the context of the wider developments in the Eastern Mediterranean and internationally.
As you know, the Government, from the very first moment of taking over the governance of the country, has identified the need to accelerate the transformation of our energy sector, given both the energy crisis rocking Europe and the European Union's targets for climate neutrality by 2050.
On the basis of both the ambitious EU reform packages "REPowerEU" and "Fit for 55", we intensified efforts to revise our National Energy and Climate Plan, which provides for policies and actions that promote, inter alia, renewable energy, energy savings and circular practices. A draft of the revised Plan was submitted last July to the European Commission and its comments or observations are awaited for finalization, as the final one should be submitted by the end of June 2024. Our revised Plan aims, precisely, at a detailed mapping of our transition to a competitive low greenhouse gas emission energy system.
A solid foundation has already been laid. 41% of the budgeted resources of the national Recovery and Resilience Plan "Cyprus _ Tomorrow" are earmarked for the green transition, and as the Ministry of Energy, Trade and Industry we have secured some €590 million for the Programming Period until 2027. These funds will be used mainly to provide financial incentives to households, businesses and public bodies for investments in energy efficiency and renewable energy sources.
At the same time, we are undertaking the necessary modernisation of the legislative and regulatory framework of the energy sector, including by digitising the procedures of the newly established Single Service for the licensing of RES projects, which operates under the Business Facilitation Unit of our Ministry.
Allow me at this point to make special reference to the new Grants Scheme we are preparing at the Ministry of Energy, called "Photovoltaics for All". Aiming precisely at reducing the cost of electricity for households and taking into account the inability of some of our fellow citizens to find equity to install photovoltaic systems for net metering or virtual net metering, we have created a new, upgraded Scheme for residential photovoltaics.
The Scheme will be funded by the Renewable Energy and EE Fund. The subsidy for vulnerable consumers is expected to increase to approach 100% of the cost for a system up to 5 kilowatts, while those with the necessary capital will continue to receive a subsidy of up to €1,500, as is the case with the existing Scheme. What changes with our new Plan is that for systems of a certain capacity, corresponding to the coverage of the consumption of an average household, those Cypriot consumers who do not have the initial capital to install the photovoltaic system will be able to install it without paying capital. It is our intention that the beneficiaries of this category will receive a part of the investment as a sponsorship and the remaining cost of the photovoltaic system will be repaid through the electricity bill, once the implementation of net metering is launched and with a charge of, indicatively, EUR 150 per bimonthly period. When the system is fully repaid, the electricity bill will be reduced even further by deducting the 150 euro instalment.
With the "Photovoltaics for All" scheme, which we are trying to make operational at the beginning of the new year, we will give our fellow citizens the opportunity to substantially reduce the charges for the electricity they consume, since they will now be producers themselves. At the same time, we are giving a significant boost to the integration of Renewable Sources in the energy mix of Cyprus.
Friends,
In 2023 our island is still isolated from the European and regional energy networks, and still largely dependent on imported oil products. As a result, the Cypriot economy is much more vulnerable than that of other countries to fluctuations in international oil prices.
It is, therefore, vital for our country to strengthen the security of its energy supply, remove its energy isolation and move forward with the operation of both the competitive electricity market and the internal gas market.
In this context, the "Cyprus _ Tomorrow" Plan includes a €100 million allocation for the Cyprus-Greece-Israel electricity interconnection project, which will end our energy isolation and boost the penetration of renewable energy sources in our electricity grid. At the same time, European funding of €4.7 million has been included for the Competitive Electricity Market Management System, €40 million for the promotion of electricity storage systems and around €120 million for the expansion, upgrading and digitalisation of networks, including the massive deployment of smart meters. The regasification terminal at Vasilikos is expected to be ready around mid-2024, while for the arrival of natural gas to Cyprus from the Eastern Mediterranean, there are ongoing initiatives at the level of states, as well as hydrocarbon and electricity companies, to create the necessary infrastructure, such as a gas transmission pipeline and a liquefaction terminal, modular or floating technology.
Ladies and gentlemen,
As the bridge fuel for the green transition, the arrival of natural gas in our country will have multiple benefits for the Cypriot economy, such as reducing costs and emissions in electricity production, enhancing our energy security and creating conditions for competition in the electricity market through the operation of independent electricity producers.
Given the new business environment that has emerged in the energy sector, we now have an excellent opportunity to accelerate the development of natural gas discoveries in the Cyprus Exclusive Economic Zone (EEZ).
Already, after the stagnation due to the COVID-19 pandemic, all Licensees in our EEZ are proceeding with their exploration program as normal, which is expected to peak in the next 2 to 3 years.
Let me specifically mention that the Eni and TotalEnergies consortium plans to drill an appraisal well on the Kronos discovery around the end of 2023. As a reminder, the consortium had, in 2022, drilled two exploratory wells in Block 6, which led to the "Kronos" and "Zeus" discoveries, with initial estimates of natural gas volumes of 2.5 and 2 to 3 trillion cubic feet, respectively. The "Calypso" discovery was also made in the same Block in 2018, with the cluster of discoveries that has been created expected to help accelerate their development.
Meanwhile, at this stage, the ExxonMobil and QatarEnergy consortium is working on the decisions it needs to take on its next steps, working, among other things, on the data it collected in 2022, both during the appraisal drilling of the "Glaucus" discovery in Block 10, and during the 3D seismic surveys it conducted in Blocks 5 and 10. They are already planning their first exploratory drilling on Block 5 around the end of 2024, while at "Glaucus", I note, was announced in February 2019, a gas reservoir originally estimated between 5 to 8 trillion cubic feet.
Evaluation drilling at the center of the Aphrodite field, in Block 12, was also successfully completed by the licensed joint venture of Chevron, Shell and NewMed Energy, just last July. Designated "A3", it was the second appraisal well in the "Aphrodite" field, for which we knew, to date, of confirmed gas volumes of 4.5 trillion cubic feet. The indications we have from the new appraisal well are quite encouraging.
We are currently consulting with the Aphrodite joint venture on the amendments submitted by the licensee in June 2023 to the approved Development and Production Plan for the field. At the Ministry we considered that the changes do not serve the interests of the Republic of Cyprus and the consultation process, by agreement of both sides, has been extended for another month, until the beginning of November.
Dear friends,
The world we live in today is very different from what it was before the pandemic and the war in Ukraine. The energy sector in particular, globally, is constantly diversifying and facing major challenges not only in terms of prices, sources and routes of energy products, but also in terms of the important measures needed to mitigate climate change.
Just think how much the problem is magnified in relation to the small and isolated energy market of Cyprus.
For the sustainable development of our economy, but also to strengthen our country's position in the new energy environment of Europe and the wider region A strategy that will allow us to accelerate Cyprus' green transition, effectively addressing both the growing threat of climate change and the ongoing energy crisis along the way.
I wish you every success in the proceedings of the 14th Limassol Economic Forum and thank you all for your attention.
(GA)
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