By Charles Ellinas
The latest Eurostat report on EU electricity prices paints a bleak picture for Cyprus, particularly for long-suffering households. Cypriot consumers have been hit with skyrocketing electricity bills, and this report serves as a stark reminder of the ongoing crisis.
According to the report, Cyprus ranks 7th in the EU for household electricity prices, clocking in at a steep 33 cents/kWh. The EU average hovers around 28 cents/kWh, meaning Cypriots are paying a premium. Greece, on the other hand, boasts significantly lower prices, ranking 17th with a rate of just over 20 cents/kWh. This disparity can largely be attributed to the difference in renewable energy adoption; while Cyprus only utilizes around 22% renewables, Greece has embraced renewables with a whopping 52% share.
The situation becomes even more concerning when examining prices adjusted for Purchasing Power Standards (PPS). Cyprus tops the list alongside the Czech Republic, with both nations exceeding 35 cents/kWh. Malta and Luxembourg, on the other hand, boast the lowest PPS prices, hovering around 14 and 15 cents respectively.
Adding fuel to the fire are the hefty taxes and levies imposed on electricity bills in Cyprus. These government-imposed charges account for almost 35% of the total cost, placing Cyprus as the fourth highest in Europe, far surpassing the EU average of 23%. Notably, Greece only levies around 15%.
Intriguingly, four EU member states have completely eliminated additional taxes and levies beyond VAT. Moreover, five countries have implemented ingenious “negative taxes,” effectively subsidizing consumer electricity bills instead of imposing taxes. These approaches highlight the flexibility within the EU system to alleviate the burden on consumers.
The situation isn’t any better for Cyprus businesses. Cyprus holds the dubious distinction of being the second most expensive country in the EU for industrial electricity prices, at approximately 25 cents/kWh. Again, taxes and levies play a significant role in this exorbitant cost.
Burning diesel and mazut for electricity generation comes with a hefty price tag. Not only are these fuels expensive, but Cypriot producers also face the additional burden of emission allowance costs. A switchover to natural gas could significantly reduce pre-tax electricity prices – by as much as 35-40%.
Unfortunately, Cypriot consumers are bearing the brunt of the failed LNG import project at Vasilikos. This costly blunder has left Cyprus dependent on expensive and polluting fossil fuels.
However, there is a flicker of hope on the horizon with the imminent return of the Prometheus FSRU to Cyprus. Energy Minister Giorgos Papanastasiou has expressed confidence that project completion is within reach by the end of 2025, with LNG imports commencing early 2026. This timing could be fortuitous, as experts predict a substantial drop in LNG prices by then due to a surge in global supply.
In the meantime, the Cypriot government could provide much-needed relief to struggling households by slashing taxes and levies to Greek levels – a reduction to 15% of the total price. This alone could bring electricity prices down from their current painful 33 cents/kWh to a more manageable 25 cents/kWh. Doing so wouldn’t merely be a gesture; it would be an essential lifeline for Cyprus consumers.
Interview Transcript: Time.news Editor and Dr. Elena Christodoulou, Energy Policy Expert
Time.news Editor: Good morning, Dr. Christodoulou! Thank you for joining us today. With the release of the latest Eurostat report on electricity prices, Cyprus is facing a significant challenge. How do you assess the current situation with electricity costs for Cypriot consumers?
Dr. Christodoulou: Good morning, and thank you for having me. Yes, the report presents a concerning picture. Cyprus ranks 7th in the EU for household electricity prices at 33 cents per kilowatt-hour, much higher than the EU average of around 28 cents. This has serious implications for consumers, especially those already struggling with the cost of living.
Time.news Editor: It’s quite alarming. The data shows a substantial difference in renewable energy adoption between Cyprus and Greece. Can you explain how this impacts the pricing?
Dr. Christodoulou: Absolutely. The difference in renewable energy utilization is a significant factor. Cyprus relies on renewables for about 22% of its energy mix, compared to Greece, which harnesses over 52%. Renewables generally lead to lower long-term costs and stabilize prices. By not fully embracing renewables, Cyprus is missing out on potential savings and is more exposed to fluctuations in global energy markets.
Time.news Editor: The report also details how taxes and levies heavily impact electricity bills in Cyprus. Can you elaborate on this?
Dr. Christodoulou: Certainly. In Cyprus, taxes and levies account for close to 35% of the total electricity cost, making it the fourth highest in the EU. This is in stark contrast to Greece, which keeps such figures around 15%. These high governmental charges exacerbate the financial strain on consumers. It’s crucial for policymakers to explore ways to reduce these charges or shift toward more sustainable funding mechanisms.
Time.news Editor: Some EU member states have eliminated additional taxes, and others have introduced negative taxes to ease the burden on consumers. Should Cyprus adopt similar measures?
Dr. Christodoulou: Absolutely. Looking at innovative strategies from other EU countries could be beneficial for Cyprus. Reducing or eliminating excessive taxes can provide immediate relief to households and businesses. Moreover, implementing negative taxes could significantly enhance consumer welfare by subsidizing electricity costs, making energy more affordable.
Time.news Editor: What other long-term solutions do you think should be prioritized to tackle this energy crisis in Cyprus?
Dr. Christodoulou: Long-term strategies would need to focus on three key areas: increasing renewable energy adoption, investing in energy efficiency, and diversifying energy sources. Transitioning towards a more sustainable energy policy not only helps in controlling costs but can also bolster energy security and reduce environmental impact.
Time.news Editor: It sounds like there’s a lot of work ahead for policymakers. What role do consumers themselves play in addressing these challenges?
Dr. Christodoulou: Consumers can play a pivotal role by advocating for policy changes and pushing for more sustainable energy practices. Additionally, by becoming more aware of their energy consumption and investing in energy-efficient appliances or even renewable energy solutions like solar panels, they can help mitigate costs. Collective consumer action can create the momentum needed for necessary changes.
Time.news Editor: Thank you so much, Dr. Christodoulou, for your insights on this critical issue. It’s clear that while the challenges are significant, there are also pathways forward that could lead to a more sustainable energy future for Cyprus.
Dr. Christodoulou: Thank you for having me. I hope this discussion sparks further dialogue on how we can tackle these pressing issues together.
