The European Commission has received revealing data on the penetration of renewable energy sources (RES) in Cyprus. According to the country’s Integrated Energy and Climate Plan, the upper limit for RES penetration was reached as early as 2023-2024 due to technical constraints stemming from the isolated nature of Cyprus' electricity system.

Furthermore, the report highlights that the national grid was originally designed to support large, centralized power plants rather than the decentralized generation model introduced by RES.

As Brief reports, regarding RES infrastructure, it is noted that due to Cyprus' small market size, the cost of most RES systems is relatively higher than in other European countries. Additionally, high land prices combined with limited availability of suitable land restrict the large-scale development of renewable energy projects.

Until the national grid is redesigned, further penetration of commercial renewable energy systems—excluding self-consumption—will often require integration with energy storage technologies. This measure aims to prevent power disruptions, though it significantly increases investment costs, making such projects less competitive compared to conventional natural gas-fired power plants, which are expected to operate from 2026.

The share of RES in Cyprus will continue to come from photovoltaic (PV) systems, wind farms, and biomass and biogas units. However, future increases in RES capacity will mainly be driven by the installation of PV systems, which remain the most competitive renewable electricity generation technology in the country.

By 2030, the total installed capacity of PV systems is projected to reach at least 1,080 MW—more than three times the 318 MW recorded in 2021. In 2025, a newly licensed 12 MW wind farm is expected to be installed, increasing the total wind power capacity to 169.5 MW. Additionally, by the end of the decade, biomass and biogas power generation units are expected to expand, reaching an installed capacity of 27 MW.

The growing integration of decentralized RES units, particularly PV systems, necessitates the development of energy storage solutions to reduce electricity curtailment and maintain grid stability. Cyprus remains disconnected from neighboring electricity networks until at least the end of 2029, further emphasizing the need for storage infrastructure.

Lithium-ion battery storage installations are set to begin in 2026, reaching a capacity of 160 MW by 2030. These systems will provide at least four hours of storage for central storage units and two hours for decentralized systems. Additionally, two 40 MW pumped hydro storage units, each capable of storing energy for eight hours, are planned for implementation between 2033 and 2034. A technical assistance study is already underway to assess existing dams and explore the feasibility of pumped hydro storage projects. Legal and regulatory procedures may soon be launched to facilitate a tender process for these initiatives.

RES electricity generation projects are granted either an operational license or an exemption license from the Cyprus Energy Regulatory Authority (CERA) for a duration of 30 years. Most operational RES projects will maintain their licenses beyond 2030, and no significant renewals are expected before then.

Existing RES projects, with a total capacity of 238.8 MW, currently benefit from feed-in tariff schemes with subsidy contracts lasting 15 to 20 years. Most of these projects began operating after 2010. By 2030, subsidy agreements for approximately 70 MW of PV systems will expire. After their subsidy period ends, these projects are expected to either transition to self-consumption schemes—such as PV systems installed on residential and commercial rooftops—or enter the competitive electricity market.

Additionally, some subsidy contracts include an option to extend energy sales to the Electricity Authority of Cyprus for an additional five years at the avoidance cost rate set by CERA, without further subsidies.