Minister slams claims solar energy is loss making

Assertions that photovoltaic/solar systems are loss-making are misleading and only serve to discourage investment in ‘clean energy’, the energy minister said in a letter made public on Monday. Michalis Damianos was responding to a formal query submitted by Akel MP Christos Christofides. The MP asked questions about the policy of cutbacks to solar systems at times when supply exceeds demand. Given the lack of storage systems, the surplus energy is lost. Approximately 300 gigawatt-hours of solar energy was wasted in 2025 due to grid constraints and a lack of battery storage, amounting to nearly half of the distributed renewable generation. The trend has continued into 2026, with Cyprus curtailing 162 gigawatt-hours in just the first five months. Damianos noted that the authorities responsible for curtailments are the Transmission System Operator (TSO) and the Distribution System Operator (DSO). Cuts are made to ensure grid stability, particularly at times when production from renewables exceeds demand and/or the technical limits of the grid. They are not intended to discriminate against any group of producers or consumers, the minister stressed. According to practice, curtailments to renewables are at first instance implemented for large commercial systems (solar farms) and large own-consumption systems, which are capable of gradually scaling back their production. If necessary, at a later stage curtailments are enforced on smaller systems, such as rooftop solar installations. “The spreading of inaccurate claims, such as that photovoltaic systems are loss-making, creates unwarranted insecurity among consumers, discourages new investments in clean energy, and adversely impacts businesses engaged in the renewables sector,” Damianos said. Addressing another issue – the switch from net metering to net billing – he said this was deemed necessary for two reasons: first, so that compensation for surplus generated electricity can reflect real market conditions, and secondly, so that consumers without solar do not get disproportionately burdened by increased grid costs caused by net metering. Nevertheless, the net billing regime, as currently applied by the Electricity Authority of Cyprus, includes first net metering within the billing period, and then net billing – and as such at this time, given that most household consumers are served by the EAC, the financial benefit for these consumers “does not differ materially from the previous regime”. Despite this, even where constraints apply on the exporting of energy (by installing a zero-export device), provided that the sizing of a PV system is done correctly in relation to a household’s consumption profile, this can still yield savings on energy costs. A zero-export device prevents excess solar energy from being exported to the utility grid. The minister added that as part of the competitive electricity market – officially launched in October 2025 – electricity suppliers may shape their commercial products as they see fit and offer customers more favourable mechanisms of utilising the generated energy, “including netting schemes other than the basic net billing, provided these are compatible with the applicable regulatory framework”. Responding to another question put to him, Damianos said that in the context of the competitive electricity market, large commercial solar parks trade in one of two ways: either via bilateral contracts with suppliers (the forward market), or directly contracting with the TSO (the day-ahead market). A day-ahead market is a financial and physical wholesale electricity market where power producers and buyers trade energy one day before the actual delivery. Using daily blind auctions, participants submit hourly bids and offers, establishing binding schedules and clearing prices to balance supply, demand, and grid limits. “The provision of generated electricity via bilateral contracts between producers and suppliers falls under private commercial agreements, and as such their content is confidential and is not known to the ministry,” said Damianos. Concluding, the minister said that soon the government will publish a new grants scheme for energy storage for businesses.