On Wednesday, June 11, the Cyprus Ministry of Energy announced a suspension of applications for the installation of solar panels under the old net metering system.
Beginning August 1, 2025, Cyprus will transition to a novel model of private solar generation support: net billing. This marks a significant milestone in the country's energy reform efforts.
The implementation of net billing in Cyprus signifies a shift from a system where consumers exchanged electricity they generated for grid electricity on a kilowatt basis to a new model. Under this new model, surplus energy will be sold at a fixed tariff, and energy consumed from the grid will be purchased at market price. This means that:
- The state will no longer provide financial support for the installation of solar panels.
- Energy storage systems will be required.
- Please note that subsidies will be allocated exclusively for the installation of energy storage systems, not for the panels themselves.
The ministry has committed to presenting the technical specifics of the program, including new tariffs and compensation procedures, in the near future. The precise size of the subsidy for batteries is yet to be determined; however, it is already evident that they will become a pivotal component of the comprehensive home solar generation infrastructure.
The net metering system implemented in Cyprus in recent years has contributed to the growth of solar energy by enabling consumers to offset their electricity consumption with the kilowatt-hours they generate. However, given the rapid advancements in technology and the substantial decrease in solar installation costs, the ministry has determined that this model is economically inefficient and unfair.
The primary reasons for transitioning away from the previous system are as follows:
- Solar panels have become more affordable and are a lucrative investment, even in the absence of government subsidies.
- Subsidies have been shown to create imbalances rather than stimulate development.
- The financial burden of compensating for "green" energy was shouldered by consumers who did not have panels.
Despite its popularity, the net metering approach created hidden costs for the rest of the population.
The supplier incurred a cost to the supplier for green energy fed back into the grid that was less than the retail price at which electricity was sold to other customers. Consequently, a portion of the associated costs were transferred to consumers who did not take part in the program, prompting inquiries into the equitable nature of this approach.
The transition to the new model will balance the interests of all market participants and increase the stability of the energy system through mandatory storage and peak load management. This step will also prepare Cyprus for the future full opening of a competitive energy market.
The transition to net billing will be accompanied by various information campaigns and technical support from the state. The new model is expected to make the market more flexible and sustainable, ensure a level playing field, and open up opportunities for the introduction of smart grids and more efficient energy management at the household level.
Those planning to adopt solar energy should begin preparing for the new requirements and investments in storage systems. While government support will be restricted, significant opportunities for savings and energy independence still exist.
