Since January 1, 2026, Cyprus has had an updated regulatory framework for active consumers and self-producers of electricity. New applications for the installation of solar systems for self-consumption are being assessed in accordance with decisions of the Cyprus Energy Regulatory Authority (CERA).
At the same time, the transition from net metering to net billing is continuing. The Ministry of Energy explains that this is necessary to link compensation for surplus electricity generated to actual market conditions and to avoid placing excessive grid costs on consumers who do not have solar panels.
The government does not believe that installing photovoltaic systems in Cyprus has become unprofitable. According to Energy Minister Michalis Damianos, solar systems remain one of the most effective ways for households and businesses to reduce electricity costs, provided that the system capacity is properly matched to actual consumption.
For residential consumers, the current net billing system first provides for the offsetting of meter readings within the billing period, followed by the offsetting of bills. Therefore, for most households, the economic effect does not differ significantly from the previous system.
Why solar generation is curtailed in Cyprus
The main problem at present is not the solar panels themselves, but the fact that during certain periods electricity production from renewable sources exceeds demand or the capacity of the grid. In such cases, the Cyprus Transmission System Operator (TSOC) and the Distribution System Operator impose restrictions in order to maintain the stability and safety of the electricity system. Commercial solar plants and large self-consumption systems capable of gradually reducing output are curtailed first. If that is not sufficient, restrictions may also be extended to smaller installations, including residential systems.
Legislation that came into force in April 2026 provides that the procedure for such restrictions must be based on objective and equal criteria approved by CERA and published for market participants. When a restriction is imposed, the operator must also inform the affected users of the reason.
The issue is particularly relevant for Cyprus because of the rapid growth of solar generation. This is why energy storage systems are regarded as one of the key tools for making more efficient use of renewable electricity. The Ministry is already implementing support schemes for storage systems combined with renewable energy installations.
New support for business energy storage systems
The next step is expected to be a new subsidy scheme for energy storage systems for businesses. The Ministry of Energy has officially included support for business storage systems among its priorities for 2026. According to the published renewable energy support programme for 2026–2028, a separate scheme is planned for businesses, providing subsidies for storage systems operating under net billing. €1 million has been allocated for each year of the programme, with maximum support of €900 per system/application.
Storage systems should allow businesses to retain part of the solar energy they produce and use it when it is actually needed. This increases the share of self-consumption and at the same time reduces the likelihood of losing solar generation because of grid restrictions.
In addition, Cyprus already supports projects that combine renewable generation and storage. For example, under one support category for self-consumption systems operating with net billing, the maximum subsidy amounts to €75,000. Under projects that have already been signed, total storage capacity has reached 12.8 MWh, while the maximum amount of grants reached €852,960.
What this means for solar panel owners
For businesses and owners of large solar installations, the transition to a model that includes energy storage may become particularly important. Instead of feeding surplus energy into the grid during periods of high solar generation, it can be stored in batteries and used later. The government also emphasizes that solar energy remains economically attractive when system capacity is properly matched to consumption. Tax incentives for investments in photovoltaic systems and energy storage have also been in effect since the beginning of 2026.
For large privately owned solar parks, electricity is sold either through bilateral agreements with suppliers or through the Day-Ahead Market with the participation of the Transmission System Operator. The terms of bilateral agreements are commercial information and are not disclosed to the Ministry.
Overall, Cyprus’s energy policy is gradually shifting away from simply increasing the number of solar panels toward a model in which photovoltaics, energy storage and demand management work together. This should help the country make more efficient use of solar energy while reducing the amount of forced generation curtailment.