Cyprus urged to see GSI as strategic infrastructure, not just a cost

GSI could turn Cyprus from isolated island into energy hub, says expertCyprus must look beyond the immediate public cost of the Great Sea Interconnector (GSI) and consider whether the project can transform the country from an electrically isolated island into an energy hub for the Eastern Mediterranean, according to energy systems expert and former Cyprus Energy Regulatory Authority (CERA) chairman Andreas Poullikkas. Poullikkas, a professor of energy systems at Frederick University, pointed out that the debate over the Cyprus-Greece GSI project had focused heavily on its financial cost, particularly the contribution required from the Republic. While scrutiny of such a major investment was justified, he argued that cost alone could not determine its strategic value. “The real question Cyprus should be asking is much bigger. What kind of energy infrastructure do we want to hand over to the next generations of Cyprus?” Poullikkas said. He argued that Cyprus needed to decide whether it wanted to remain electrically isolated or use its geographical position as a strategic advantage and develop into an energy hub in the Eastern Mediterranean. Under the agreement between the Cypriot and Greek governments and the relevant decisions on implementing the project, Cyprus’s financial obligation currently stands at €50 million, Poullikkas said. The overall mechanism for recovering the relevant cost under the existing European legislative framework had been analysed in a previous article, he added. Poullikkas said presenting the €50 million solely as another financial burden on Cyprus amounted to an excessively narrow assessment of the project. “The correct way to assess a major energy infrastructure project cannot be to ask how much we are paying today. It must be to ask what we are acquiring for the coming decades,” he said. He stressed that every euro of public spending should be scrutinised, major investments should be subject to transparency and accountability, and risks should be assessed seriously. However, he said there was a distinction between rigorous scrutiny of an investment and failing to consider its broader strategic implications. Cyprus remains the only EU member state not connected to the European electricity network, while its electricity system operates essentially as an isolated system. According to Poullikkas, this isolation carries economic and technical costs, environmental consequences and, above all, an energy security cost. The GSI should therefore not be viewed simply as an undersea cable, but as infrastructure capable of changing the structure of Cyprus’s electricity system. The EU has explicitly recognised that Cyprus’s electrical isolation makes integration into the internal electricity market more difficult and limits the country’s ability to incorporate greater amounts of renewable energy, he said. At the same time, the EU considers the GSI a project that can help end Cyprus’s electrical isolation while contributing to decarbonisation and the resilience of the wider European energy system. Poullikkas said this would become increasingly important as Cyprus’s energy system evolves towards 2040 and 2050. Electric vehicles are expected to increase electricity demand, while the electrification of heating and cooling will alter consumption patterns. Energy storage will also take on a central role, while renewable energy penetration is expected to continue rising. New applications such as green hydrogen production could create additional electricity demand while opening new opportunities for energy exports, he said. “In such an electricity system, interconnection is not a luxury. It is essential infrastructure,” Poullikkas said. He compared storage and interconnection as two complementary forms of flexibility, with storage allowing energy to be moved between different points in time and interconnectors allowing it to be moved between geographical areas. The greater the share of renewables in the electricity system, he said, the more valuable this flexibility becomes. Poullikkas also pointed to the recent entry of French company Meridiam as majority shareholder in Great Sea Interconnector, saying this represented a sign of confidence in the project’s strategic value and created better conditions for its financial and technical development. The project is also taking on a broader geopolitical dimension, he said. An amendment examined by the US Senate Foreign Relations Committee under the Eastern Mediterranean Gateway Act explicitly identifies the GSI as critical energy infrastructure for European energy security and as a potential backbone linking India, the Middle East and Europe through the Eastern Mediterranean, according to Poullikkas. He said the reference indicated that the interconnector was increasingly being considered within a wider international discussion on security, connectivity and the India-Middle East-Europe Economic Corridor, known as IMEC. Cyprus’s geographical position, which for decades was viewed as a disadvantage because of its distance from mainland Europe, could instead become a strategic asset. IMEC should not be understood merely as a trade route, Poullikkas said, but as a wider connectivity initiative incorporating transport, ports, digital infrastructure and energy interconnections. The Republic of Cyprus has itself highlighted the country’s potential to serve as a bridge between India and Europe and as a link between the EU, the Eastern Mediterranean and the wider Middle East. Poullikkas argued that this could represent one of Cyprus’s biggest opportunities. The GSI should not be viewed only as a project connecting Cyprus’s electricity network with Greece and Israel, but as the first major step towards a wider East-West energy bridge, he said. A future energy corridor connecting major renewable energy resources in India and the Middle East with the European market through Israel, Cyprus and Greece was no longer purely theoretical, Poullikkas argued. Recent analyses have examined the technical and economic feasibility of such a scenario, including high-voltage electricity interconnection capable of transporting large quantities of renewable electricity towards the European market. Under such a model, Cyprus could assume a fundamentally different role as an intermediate energy hub. The country could move from importing almost all of its primary energy needs to managing, transmitting and potentially exporting clean energy. It could also move from being an electrically isolated island to becoming a bridge between the European electricity market and the energy potential of the Eastern Mediterranean and Middle East. Poullikkas stressed, however, that such a transformation would not happen automatically. Cyprus’s energy strategy could not be designed solely around the next election cycle or the next electricity bill, but would require a decades-long horizon. This would involve investment in electricity networks, energy storage, renewables, digitalisation and new interconnections, as well as long-term political consistency supported by cross-party agreements. Cyprus also needed to rethink the objectives of its energy policy, he explained. “It is no longer enough to discuss how we will reduce the cost of electricity today. We must plan how we will create a competitive and secure energy system for the coming decades,” Poullikkas stated. He warned that Cyprus should avoid assessing strategic energy infrastructure solely through short-term fiscal considerations because the cost of remaining disconnected was not zero. That cost included continued energy isolation, missed opportunities for cheaper electricity, limited use of renewable energy, the need for additional reserves, greater dependence on imported fuels and greater difficulty in moving towards a fully sustainable energy system. “For this reason, the GSI electrical interconnection must be treated as part of a much larger national choice,” Poullikkas said. He argued that today’s decisions would ultimately be judged not only by their cost to current consumers but also by what they created for future citizens. “Previous generations handed us the infrastructure on which we built today’s Cyprus. It is our responsibility to hand future generations the infrastructure on which they will build their own,” he said. Poullikkas concluded that the GSI could become one such piece of infrastructure, helping Cyprus move from energy isolation to an energy hub, from consumer to energy partner, and from an energy problem of the past to an energy opportunity for the future.