COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Cyprus Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Third Report on the State of the Energy Union
Date: 2017-11-23
Institutions: European Commission, Secretariat-General
Subjects: Cyprus, climate change policy, competitiveness, economic and social cohesion, energy cooperation, energy policy, innovation, investment, regional cooperation, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.11.2017 SWD(2017) 387 final  COMMISSION STAFF WORKING DOCUMENT Energy Union Factsheet Cyprus Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK  Third Report on the State of the Energy Union {COM(2017) 688 final} - {SWD(2017) 384 final} - {SWD(2017) 385 final} - {SWD(2017) 386 final} - {SWD(2017) 388 final} - {SWD(2017) 389 final} - {SWD(2017) 390 final} - {SWD(2017) 391 final} - {SWD(2017) 392 final} - {SWD(2017) 393 final} - {SWD(2017) 394 final} - {SWD(2017) 395 final} - {SWD(2017) 396 final} - {SWD(2017) 397 final} - {SWD(2017) 398 final} - {SWD(2017) 399 final} - {SWD(2017) 401 final} - {SWD(2017) 402 final} - {SWD(2017) 404 final} - {SWD(2017) 405 final} - {SWD(2017) 406 final} - {SWD(2017) 407 final} - {SWD(2017) 408 final} - {SWD(2017) 409 final} - {SWD(2017) 411 final} - {SWD(2017) 412 final} - {SWD(2017) 413 final} - {SWD(2017) 414 final}  
 
 
                              Energy Union – Cyprus 

  Cyprus 
                        Energy Union factsheet1 

1.  Macro-economic implications of energy activities 

Energy  and  transport  are  key  sectors  for  the  overall  functioning  of  the  economy  as  they  provide 
important input and service to other sectors. The combined activity of these two sectors2 accounted 
for 9.1% of the total value added of Cyprus in 2015. Similarly, their share in total employment3 was 
4.7% in 2015, of which 4.3% in the transport sector and 0.4% in the energy sector.  

(source: Eurostat) 

The  decarbonisation  of  the  energy  and  transport  sectors  will  require  significant  investments  and 
economic  activity  beyond  the  remit  of  these  sectors  themselves.  The  energy  transition  implies  a 
structural  shift  in  economic  activity.  Energy-related  investment  and  jobs  will  in  part  migrate  from 
traditional  fossil  fuel  based  activities  towards  construction,  equipment  manufacturing  and  other 
services related to the deployment of low carbon and clean energy technologies. At the moment, the 
efforts related to the low-carbon and clean energy transition in sectors beyond energy can only be 
partially quantified and are therefore not included in this analysis. 

In the case of renewable energy sector, both the direct as well as the indirect effects on employment 
are being estimated. According to EurObserv'ER, in 2015, the share of direct and indirect renewable 
energy related employment in total employment of the economy in Cyprus was at about 0.17%, well 

1  
The indicators used in this country factsheet largely build on indicators developed for the Commission 
Staff  Working  Document  "Monitoring  progress  towards  the  Energy  Union  objectives  –  key  indicators" 
(SWD(2017) 
https://ec.europa.eu/commission/sites/beta-political/files/swd-energy-union-key-
indicators_en.pdf  
2 Gross value added and employment in NACE sectors D-Electricity, gas, steam and air conditioning supply and 

final) 

32 

H-Transportation and storage 

3 National accounts, Eurostat 

1 

 
 
 
 
                                                            
 
                              Energy Union – Cyprus 

below the EU average of 0.54%. The turnover of the renewable energy industry in the same year was 
estimated at around EUR 65 million, with wind and photovoltaic contributing most.  

(Source: EC based on Eurobserv'Er and Eurostat) 

Cyprus is nearly fully dependent for its energy consumption on the imports of fossil fuels, currently 
almost  exclusively  refined  petroleum  products.  This  dependency  has  led  to  a  much  larger  trade 
deficit  in  energy  products  than  for  the  EU  as  a  whole.  The  energy  trade  deficit  as  share  of  GDP  in 
2015  is    4.1%  of  GDP,  and  thus  almost  1  percentage  point  of  GDP  lower  than  in  2006  (5%).  The 
decrease  is  almost  completely  accounted  for  by  the  trade  deficit  for  petroleum  products.  The 
underlying structural causes for this decrease are lower prices of fuels and increase in re-export of 
fuels. 

(Source: Eurostat) 

2.  Energy security, solidarity and trust 
2.1. Energy Mix and security of supply 

Renewable energy (wind, solar and biomass) represented a share of 6.5 % of primary energy gross 
inland  consumption  for  Cyprus  in  2015;  the  rest  comes  essentially  from  oil  products  (92.8%).  This 
unbalanced energy mix exposes Cyprus economy to the fluctuations of international oil prices, and 
creates  vulnerability.  There  are  plans  to  supply  the  island  with  natural  gas,  which  would  make  the 

2 

 
 
 
 
                              Energy Union – Cyprus 

energy sector cleaner and less expensive, but no final investment decision has been made public to 
date. 

(source: Eurostat) 

2.2. Import dependency  

Cyprus has no known oil resources and no refineries; therefore all oil products are imported. In fact, 
Cyprus  imports  more  oil  products  than  it  consumes,  because  a  non-negligible  amount  is  used  in 
refuelling  ships  and  planes  and  also  for  maintaining  emergency  oil  stocks  on  national  territory. 
Developing  Cyprus'  substantial  RES  potential  would  certainly  improve  dependency  as  well  as  trade 
deficit, air quality and employment in renewable energy industry. 

A significant gas field (Aphrodite) was discovered a few years ago within Cyprus Exclusive Economic 
Zone (EEZ). However no final decision on exploitation of the Aphrodite field has been made public to 
date. Further exploration activity is in progress.  

 (source: Eurostat) 

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3.  Internal market 

3.1. Interconnections and wholesale market functioning 

3.1.1.  Electricity 

(sources: EC services based on Eurostat)   

The  island  is  not  interconnected  with  any  other  country;  there  is  no  wholesale  electricity  market 
either,  since  the  public  electricity  supplier  (EAC)  operates  as  a  de  facto  monopoly.  A  few  RES 
generators  sell  all  production  to  EAC  by  means  of  long-term  Power  Purchase  Agreements.  Supply 
prices are regulated by the Cyprus Energy Regulatory Authority.  

Cyprus  has  a  potential  in  terms  of  energy  resources  in  the  Eastern  Mediterranean.  Given  its 
geographical location and isolation from EU grids and in line with EU energy policy and the goals of 
the Energy Union, Cyprus identified four projects within the Project of Common Interest (PCI) process 
since 2013.  

Since  2014,  a  total  EUR  15.8  million  has  been  granted  under  Connecting  Europe  Facility  (CEF)  to 
investigate  the  feasibility  of  a  subsea  electricity  cable,  "EUROASIA  Interconnector",  composed  of 
three  sections  connecting  respectively:  Israel  to  Cyprus;  Cyprus  to  Crete  and  Crete  to  continental 
Greece. When materialized the project will end Cyprus' electricity isolation and greatly improve grid 
reliability and stability and enhance security of energy supply.  It could also facilitate the transmission 
of  electricity  generated  using  gas  from  the  fields  in  the  Eastern  Mediterranean  and  electricity 
produced from Renewable Energy Sources.  

As far as natural gas is concerned CEF supports three projects: a) a pipeline from offshore Cyprus to 
Greece  mainland  via  Crete,  known  as  the  EastMed  Pipeline:  b)  an  LNG  storage  facility,  currently 
known as the “Mediterranean Gas Storage”; c) an action aimed at removing internal bottlenecks in 
Cyprus  to  end  isolation  and  to  allow  for  the  transmission  of  gas  from  the  Eastern  Mediterranean 
region.  

3.1.2.  Gas 

As  stated  above,  currently  there  is  no  natural  gas  in  Cyprus  and  therefore  no  market.  Following  a 
decision  taken  by  the  Council  of  Ministers,  the  Cyprus  Natural  Gas  Company  (DEFA)  is  investing 
potential options to import Liquefied Natural Gas (LNG) to Cyprus by the year 2020.   

4 

 
 
 
 
 
                              Energy Union – Cyprus 

3.2. Retail electricity and gas markets 

As already explained, there is no natural gas in Cyprus and therefore no market. Electricity Authority 
of Cyprus (EAC) is currently the sole supplier; therefore there is no retail electricity market either and 
no switching.  

3.2.1.  Electricity 

The  largest  share  of  Cyprus  electricity  is  generated  in  oil  burning  power  plants;  as  a  consequence 
retail  prices  depend,  although  indirectly  on  fluctuations  in  world  oil  prices,  by  means  of  a  "Fuel 
Adjustment Clause" incorporated in the tariff structure. Prices dropped substantially in 2016, and are 
now below prices paid in most EU countries.   

There are plans to start the implementation of the mass rollout of smart meters at the end of 2017 / 
beginning of 2018. Reading is currently manual, except for large consumers. 

(source: ACER) 

(source: Eurostat)  

(source: Eurostat) 

3.2.2.  Market performance indicators 

The  periodical  survey  of  the  European  Commission  shows  a  Market  Performance  Index  of  73.2, 
slightly lower than for the EU average. This shows a perception of the quality of the services received 
on electricity retail markets lower for Cypriot customers than for the EU average consumer. No data 
is available for natural gas since there is no gas retail market. 

(source: DG JUST survey) 

5 

 
 
 
 
 
 
 
 
                              Energy Union – Cyprus 

3.3. Energy affordability  

In Cyprus, warm climate conditions imply heating needs limited to a few months per year. In spite of 
that  EU-SILC  survey  (Eurostat)  mentions  that  49.2%  of  the  population  at  risk  of  poverty  claim  an 
"Inability to keep home adequately warm". 

Overall, the share of energy expenditure in total budget for the poorest consumers in Cyprus is much 
lower than for the EU average, notably reflecting the specific weather conditions.  

EAC,  the  sole  retail  supplier  provides  for  a  "Special  Tariff  for  Specific  Categories  of  Vulnerable 
Customers". 

*data for energy affordability in Cyprus are from 2005 and 2009  
 (source: ad-hoc data collection of DG ENER based on HBS with the support of Eurostat and national statistics) 

4.  Energy efficiency and moderation of demand 

Since 2005, Cyprus' primary energy consumption decreased from 2.47 Mtoe in 2005 to 2.25 Mtoe in 
2015. Over the same period, final energy consumption also decreased from 1.8 Mtoe in 2005 to 1.66 
Mtoe in 2015.  

The  2020  indicative  target  of  2.2  Mtoe  primary  energy  (and  1.9  Mtoe  final  energy  consumption) 
appears  within  reach,  provided  that  the  energy  efficiency  policies  adopted  in  Cyprus  will  be  more 
intensively implemented in the following years.  In this context, the national energy efficiency plans, 
actions and programs need to be effectively implemented in order to meet the indicative target for 
primary energy for 2020 as well as the obligation for cumulative energy saving requirements by 2020, 
stemming from Article 7 of the Energy Efficiency Directive. 

6 

 
 
 
                              Energy Union – Cyprus 

(source: Eurostat) 

Transport (road and aviation) represents the largest share (52%) of Cyprus final energy consumption 
and  it  would  make  sense  to  concentrate  there  the  efforts,  provided  that  this  would  be  technically 
feasible and economically effective.  

Cyprus  aims  to  reduce  the  building  sector’s  energy  demand  to  a  very  low  level,  for  both  new  and 
existing buildings, by implementing all financially and technically feasible measures, in particular as 
regards leading Cyprus into a smooth transition towards Nearly Zero Energy Buildings.  

(source: Eurostat) 

(source: Eurostat)  

(source: Eurostat)  

  (source: Odyssee database) 

7 

 
 
 
 
 
 
 
                              Energy Union – Cyprus 

In  the  transport  sector,  the  final  energy  consumption  decreased  over  the  period  2005-2015,  while 
GDP increased by 0.4% per annum on average. This hides significant differences in trends between 
passengers and freight transport activity. Passengers transport activity increased by 26% compared 
to 2005, while freight transport activity decreased at 40% of what it was in 2005. Overall, this led to a 
decrease in energy consumption by the transport sector. However, the share of collective passengers 
land transport has decreased, indicating a higher use of private transport. 

(source: Eurostat)  

        (source: Eurostat and DG MOVE pocketbook) 

(source: Eurostat)  

Transport policy merits attention as Cyprus is highly reliant on private road transport, as it is among 
the Member States with the highest motorisation rate in the European Union. The country is aiming 
to fulfil the commitments on GHG emissions through the reduction of its dependency on fossil fuels, 
including  in  transport.  This  involves  the  promotion  of  renewable  energy  sources,  energy  efficiency 
and  climate-friendly  technologies.  Cyprus  is  currently  promoting  the  use  of  LPG  in  vehicles.  A 
relevant new law has come into force and a very small number of owners are currently using LPG for 
their vehicles. 

One  objective  is  to  shift  passenger  traffic  from  private  cars  to  public  transport,  where  particular 
emphasis is given to the use of intercity and rural buses by upgrading and modernizing the bus fleet, 
merging and expansion of the private bus companies, planning of new bus stations at the outskirts of 
the urban areas, and adopting integrated ticketing. Moreover, with the adoption of the “Sustainable 

8 

 
 
 
 
 
 
 
  
                              Energy Union – Cyprus 

Urban  Mobility  plans”  Cyprus  intends  to  promote  the  use  of  sustainable  modes  of  transport  (e.g. 
walking, cycling, public transport) and discourage the use of private cars. 

5.  Decarbonisation of economy 

5.1. GHG emissions 

According to its projections, Cyprus will achieve in 2020 its greenhouse gas emission reduction target 
in the sectors outside the EU ETS by a margin of 9.5 pps.  

(source: EC and EEA)   

(source: EC and EEA)   

On accounted emissions and removals from land use, land use change and forestry there are 
currently no available data for Cyprus. 

CO2 emissions in transport and alternative fuelled vehicles 

CO2  emissions  from  road  transport  are  56%  higher  than  in  1990  in  Cyprus.  They  have  only  slightly 
decreased since 2005. Average CO2 emissions from new cars registered in Cyprus have decreased by 
around  29%  since  2005.  In  2016,  average  CO2  emissions  from  new  cars  were  123,5  g  CO2/km  (EU 
fleet-wide target is 130 g CO2/km since 2015 and will become 95 CO2/km from 2021 on). 

9 

 
 
 
 
 
 
                              Energy Union – Cyprus 

 (source: European Environment Agency) 

According to the 2016 data available, Cyprus has 36 publicly accessible electric charging points.

(European Environment Agency)  

       (European Alternative Fuels Observatory) 

National Policy Frameworks under Directive 2014/94/EU on alternative fuels infrastructure have to 
establish targets, objective and measures for the development of the market of alternative fuels in 
the  transport  sector  and  the  deployment  of  the  relevant  infrastructure.  Cyprus  has  submitted  its 
National Policy Framework as requested under article 3 of the Directive 2014/94/EU.  

A detailed assessment of the Cypriot National Policy Framework in terms of its compliance with the 
requirements  of  Directive  2014/94/EU  on  alternative  fuels  infrastructure,  its  contribution  to 
achievement  of  long-term  energy and  climate objectives  of  the  Union  and  coherence of  its  targets 
and objectives in terms of cross-border continuity has been published as part of the Communication 
on  Alternative  Fuels  Action  Plans  (COM(2017)652)  and   the  related  staff  working  document 
SWD(2017)365.  

Cyprus is also planning to contribute to lower CO2 emissions from marine transport by developing a 
liquefied natural gas (LNG) bunkering facility, which may be built in Limassol. 

10 

 
 
 
 
 
 
 
                              Energy Union – Cyprus 

5.2. Adaptation to climate change 

Cyprus  adopted its  National  Adaptation  Strategy  in  2017.  The  National  Adaptation  Action  Plan  had 
already  been  published  in  2014  and  was  incorporated  into  the  NAS,  so  the  NAS  and  NAP  are 
presented  as  one  document.  Vulnerable  sectors  that  have  been  identified  comprise  water, 
agriculture,  soil  resources,  fisheries  and  aquaculture,  forestry,  biodiversity,  public  health,  tourism, 
coastal zones, energy and infrastructure. A Monitoring Strategy has been developed to complement 
the NAS, in which a Monitoring Team  was suggested. Monitoring reports are scheduled every year 
from 2017 to 2019 but nothing has been published so far. 

5.3. Taxes on energy and transport and fossil fuel subsidies 

Cyprus does not have a carbon tax in place, but both the car registration tax and car ownership tax 
depend on CO2 emissions performance. This is significant since Cyprus has a relatively large and old 
car park. 

The overall tax burden on energy and transport in relation to GDP in Cyprus was 3.1% in 2014, which 
was  about  0.7  p.p.  higher  than  the  EU  average.  It  represent  a  very  slight  decrease  compared  to 
2007.The tax burden on transport in Cyprus has shifted from taxes on vehicles to taxes on transport 
fuels, resulting in about halving the tax burden of the former, while leaving the overall tax burden on 
transport nearly unchanged. The burden of fuel taxation now exceeds the EU-average in line with the 
strong  reliance  on  imported  petroleum  products.  In  contrast,  the  taxation  of  heat  and  electricity, 
which was close to the EU average in 2007, has not followed the rise of the EU-average and is now 
lower. 

 (source: Eurostat) 

No data is available for Cyprus of the potential use of fossil fuel subsidies in the country. 

5.4. Renewable energy  

With a renewable energy share of 9.4 % in 2015, Cyprus appears on track to reach the target (13 % of 
gross  final  energy  consumption)  for  2020.  It  has  met  the  third  interim  target  of  7.45  %.  However, 
since  the  trajectory  is  not  linear,  the  final  target  will  need  to  be  achieved  by  means  of  a  stronger 
annual growth of the renewable energy share, in line with Cyprus' high potential in this area.  

 Since 2013 Cyprus has abolished feed-in tariff support schemes for the production of electricity from 
renewable sources and a net metering and self-consumption scheme has been put in place. Access of 

11 

 
 
 
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electricity from renewable energy sources to the grid shall be granted according to the principle of 
non-discrimination. With regard to the use of the grid renewable energy shall be given priority. Grid 
development is a matter of central planning (Transmission Grid Development Plan 2007-2016 by the 
Cypriot TSO). In addition, renewable heating and cooling (RES H&C) is promoted by support schemes 
offering  subsidies  to  enterprises  and  households  respectively.  Currently,  in  operation  is  a  support 
scheme for the installation or replacement of solar hot water production systems for households.  

There  is  number  of  policies  aiming  at  promoting  the  development,  installation  and  use  of  RES 
installations as well as specific RES H&C obligations. However the speed of new installations seems to 
have slowed down in the last few years. 

Two concentrated solar power (CSP) supported by NER300 funds are currently under development. 
Helios  Power  (50  MW)  reached  final  investment  decision  on  28  December  2016  but  financing  is 
currently on hold waiting for the negotiation of a power purchase agreement; entry into operation is 
planned  for  31  December  2018.    EOS  Green  Energy  (50  MW)  reached  in  principle  final  investment 
decision,  but not a financial close as it is having difficulties securing all necessary loans. Entry into 
operation is planned for 30 June 2020. 

With  2.5  %  share  in  2015,  Cyprus  is  lagging  behind  in  the  use  of  renewable  energy  sources  in 
transport and could have difficulty to reach the binding 10 % target by 2020; at the moment, there is 
no support scheme, or no public incentive, for the promotion of renewable energy in the transport 
sector in Cyprus.   

 (source: Eurostat-SHARES) 

(source: Eurostat-SHARES) 

12 

 
 
 
 
                              Energy Union – Cyprus 

Fossil fuels avoidance and GHG avoided emissions due to penetration of renewable energy sources 
remains substantially below EU average4.  

 (source: EEA) 

5.5. 

Contribution of the Energy Union to better air quality 

Air  quality  in  Cyprus  is  reported  to  be  generally  good,  with  exceptions.  Nevertheless,  for  the  year 
2013,  the  European  Environment  Agency  estimated  that  about  450  premature  deaths  were 
attributable to fine particulate matter (PM2.5) concentrations in Cyprus5.  

In  2015,  Cyprus  reported  no  exceedances  of  the  binding  EU  air  quality  standards  in  the  only  air 
quality zone6; see below7. 

(source: EEA) 

4 Avoided GHG emissions mentioned here have a theoretical character as these contributions do not necessarily 
represent 'net GHG savings per se' nor are they based on life-cycle assessment or full carbon accounting. 
5  European  Environment  Agency,  2016,  Air  Quality  in  Europe  –  2016  Report,  table  10.2.  The  report  also 
includes details as regards the underpinning methodology for calculating premature deaths.    
6 Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality 
and cleaner air for Europe, OJ L 152, 11.6.2008, p.1-44 
7  Compliance  data  as  reported  by  the  Member  States  as  part  of  their  official  annual  air  quality  report  for  the 
calender year 2015 (available on the European Environment Agency's (EEA) Eionet/Central Data Repository), 
http://cdr.eionet.europa.eu/cy/eu/aqd  

13 

 
 
 
 
                                                            
                              Energy Union – Cyprus 

The health-related external costs from air pollution in Cyprus have been estimated to be more than 
EUR 549 million/year (income adjusted, 2010), which includes the intrinsic value of living a healthy life 
without premature death as well as the direct costs to the economy such as healthcare costs and lost 
working days due to sickness caused by air pollution8. 

The  Energy  Union  can  substantially  contribute  to  further  improve  air  quality  in  Cyprus  through 
measures reducing emissions of both GHG and air pollutants such as PM and nitrogen oxides (NOx) 
from major contributing sectors such as (road) transport, energy production, industry and residential 
heating (e.g. stoves and boilers) as shown below9. 

This issue is particularly important in a country where tourism represents a significant share of GDP. 

(Source: EEA. This table reflects only sources of primary PM2,5 emissions.)  

6.  Research, innovation and competitiveness  

6.1. 

Research and innovation policy 

Research  policy  is  mainly  implemented  through  the  Research  Promotion  Foundation  (RPF), 
established in 1996,   which is the main research funding agency in Cyprus. Energy research in Cyprus 
focuses  on  wind,  solar,  geothermal,  marine  and  biomass,  as  well  as  on  the  development  of  new 
renewable energy technologies related to energy production, transfer and storage. Other priorities 
include  the  improvement  of  energy  technologies,  and  energy  efficiency  in  industry,  transport  and 
buildings. 

Energy  research  can  be  funded  under  the  RESTART  2016-2020  Programmes  of  the  RPF,  a  multi-
annual  development  framework  of  Programmes  for  the  support  of  Research,  Technological 
Development and Innovation in Cyprus. Energy was identified as one of the dominant Priority Sectors 
of  Pillar  I  of  the  RESTART  2016-2020  Programmes  and  is  expected  to  play  a  major  role  in  the  next 
years. In contrast to Pillar I which deals with the implementation of specific targeted Programmes in 

8  See  also  the  EU  Environmental  Implementation  Review  Country  Report  for  Cyprus,  SWD(2017)36  final  of 
3.2.2017 
9 National emission data as reported by the Member States to the EEA (available on the EEA's Eionet/Central 
Data Repository), http://cdr.eionet.europa.eu/cy/eu/nec_revised 

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                              Energy Union – Cyprus 

the  Priority  Sectors,  Programmes  of  Pillar  II  aim  at  addressing  the  needs  of  the  RTDI  System  and 
enhancing  its  prospects.  The  Programmes  focus  around  “excellence”,  following  a  bottom-up 
approach meaning that participants may implement projects in the scientific or technological field of 
their choice including the Energy field. 

Cyprus  is  active  in  the  ongoing  work  of  the  Strategic  Energy  Technology  (SET)  Plan,  taking  part  in 
twelve out of fourteen temporary working groups for the implementation of the integrated SET Plan.  

Regarding  the  Horizon  2020  programme,  Cyprus  has  received  so  far  0.2%  of  the  EU  contribution 
devoted to the 'secure, clean and efficient energy' part of the programme.  As of September 2017,  
28  participations  from  Cypriot  organisations  have  been  awarded  EUR    4.2  million  in  Horizon  2020 
energy  projects.  This  includes  two  grants  totalling  EUR  0.5  million  to  Cypriot  beneficiaries 
participating in project ZERO-PLUS (net zero energy settlements), and a grant of over EUR 0.4 million 
to the University of Cyprus for its participation in project GOFLEX (smart grids). 

6.2. 

Investments and patents in the Energy Union R&I priorities  

The European Commission does not have any data regarding the public (national) investments in the 
Energy Union R&I priorities.  

Private investment in the Energy Union R&I priorities in 2013 was estimated at EUR 5 million (0.03% 
of  the  private  R&I  investment  in  Energy  Union  R&I  priorities  in  the  EU).  The  focus  was  on  the 
Sustainable  Transport  and  Efficient  Systems  priorities,  which  received  51%  and  49%  of  the  private 
R&I investments respectively. 

In 2013, the most recent year for which complete patent10 statistics are available, 2 companies and 
research organisations based in Cyprus filed 2 patents in low-carbon energy technologies (0.03% of 
the EU total) in the Efficient Systems and Sustainable Transport priorities. 

In  2013,  private  investments  and  patents  in  Energy  Union  R&I  priorities  were  lower  than  the  EU 
average  when  normalised  by  GDP  and  by  population  respectively.  In  the  period  2007-2013,  both 
private  R&I  investments  and  the  number  of  patents  in  Energy  Union  R&I  priorities  decreased  on 
average by 14% and 1% per year, contrary to the indicators at EU level that increased by 6% and 15% 
on average respectively. 

10   In  the  context  of  this  document,  the  term  'patent'  refers  to  patent  families,  rather  than  applications,  as  a 
measure  of  innovative  activity.  Patent  families  include  all documents  relevant  to  a  distinct  invention (e.g. 
applications to multiple authorities), thus preventing multiple counting. A fraction of the family is allocated 
to each applicant and relevant technology. 

15 

 
 
 
                                                            
                              Energy Union – Cyprus 

 (Data  sources:  Patent  data  based  on  the  European  Patent  Office  PATSTAT  database11.  Private  investment  as 
estimated by JRC SETIS. Detailed methodology available from the JRC12.) 

6.3. 

Competitiveness 

In 2013 Energy costs shares in total production costs for industry and services were more than twice 
as big as EU 25 despite the lack of energy intensive industries. Lack of natural gas forces all industry 
and  services  to  rely  on  oil  and  oil  products;  Cyprus  economy  is  therefore  vulnerable  to  oil  price 
volatility.  

Electricity prices paid by industrial users were in 2016 above EU average. From 1 September 2017, 
new retail regulated tariffs have been implemented. Charges based on “Maximum Demand” applied 
previously in Commercial and Industrial Retail Tariffs have been abolished, while Seasonal Time-of-
Day (STOD) Tariffs were introduced. 

 (source: ECFIN) 

(source: ESTAT and IEA) 

Regarding  the  competitiveness  in  wind  and  solar  energy  technologies,  Cyprus  seems  to  have 
underutilised its potential to become a major player in the solar energy  sector. As indicated by the 

11 https://www.epo.org/searching-for-patents/business/patstat.html#tab1  
12 https://setis.ec.europa.eu/related-jrc-activities/jrc-setis-reports/monitoring-ri-low-carbon-energy-technologies  

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revealed comparative advantage indicator13 well above 1, the Cypriot economy has a strong revealed 
competitive  advantage  in  solar  PV,  in  both  absolute  terms  and  vis-à-vis  the  EU  as  a  whole.  This 
comparative  advantage  has  been  concentrated  in  the  sub-sector  of  solar  component  production. 
Cyprus' relative export success in this  niche has been fading however with the strong rise of China 
(together  with  Taiwan  and  Malaysia)  as  major  exporters.  The  relatively  late  installation  of  solar 
power generation capacity (despite Cyprus' excellent conditions for solar power generation) does not 
seem  to  have  played  a  major  role  in  view  of  the  relatively  tiny  size  of  its  "home  market"  for  solar 
components. The relative trade balance14 figures show that Cyprus has been a net importer of solar 
PV items; the trade deficit has increased over time with Cyprus' building more solar energy plants. 
The figures show that Cyprus is not specialised in wind energy technologies. It has had a very weak 
competitiveness  performance, in both absolute  terms  and  vis-à-vis  the EU  as  a  whole. The relative 
trade balance confirms that Cyprus is  an importer  of wind components, significantly exceeding the 
EU average. 

 (source: UN comtrade) 

7.  Regional and local cooperation 
Cyprus  promotes  initiatives  for  regional  cooperation  with  EU  and/or  non-EU  countries.  There  are 
already  two  projects  (East  Med  pipeline,  and  the  EuroAsia  Interconnector)  which  have  qualified  as 
Projects of common interest (PCIs) on the basis inter alia of their cross-boundary effect.  

In addition, Cyprus is actively pursuing wider (trilateral and quadrilateral) regional cooperation in the 
energy and hydrocarbons sector. The Memorandum of Understanding between Cyprus-Greece-Israel 

13 The RCA index for product "i" is defined as follows: RCAi =

Xj,i
∑ Xj,i
i
Xw,i
∑ Xw,i
i

 where X is the value of exports, and j is 

the country and w is the reference  group, the World economy. 2005 refers in the text to the indicator average 
over the 2000-2009 period, while 2015 represents the average over the 2010-2016 period. The same applies for 
the RTB indicator - see below. 
14 The RTB indicator for product "i" is defined as follows: RTBi =
exports and Mi imports. 

 where Xi is the value of product's "i" 

Xi−Mi
Xi+Mi

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                              Energy Union – Cyprus 

in August 2013 and the Cyprus-Greece-Israel-Italy Declaration of Tel Aviv for the East pipeline in April 
3rd 2017 are sound examples.  

European  Territorial  Cooperation  – 
'Interreg'  –  under  EU  cohesion  policy  provides  further 
opportunities for cross-border, transnational and interregional cooperation, including in the Energy 
Union areas.  

Cities and urban areas have a key role in the energy and climate challenge. The Urban Agenda for the 
EU,  established  by  the  Pact  of  Amsterdam  in  May  2016,  better  involves  cities  in  the  design  and 
implementation of policies, including those related to the Energy Union. It is implemented through 
Partnerships, in which the Commission, Member States, cities and stakeholders work together on a 
number  of  important  areas,  including  on  Energy  Transition,  Urban  Mobility,  Air  Quality,  Climate 
Adaptation and Housing. Cyprus is participating in the partnership on Urban Mobility, as member. 

By 2016, in the context of the Covenant of Mayors, the sustainable energy action plans delivered by 
24  Cypriot  municipalities  had  been  assessed.  Overall,  these  24  municipalities  cover  about  470 
thousands inhabitants. These municipalities committed to reducing GHG emissions by 27.7% by 2020 
(as compared to 1990 baseline), in line with was committed on average at EU level, but leading to 
higher emissions per capita.  

(source: JRC 2016. Notes: SEAP=sustainable energy action plan, GHG=greenhouse gas emissions) 

In  Cyprus,  by  September  2016,  no  cities  have  yet  committed  to  conduct  vulnerability  and  risk 
assessment  and  develop  and  implement  adaptation  plans  in  the  framework  of  the  Covenant  of 
Mayors for Climate and Energy. 

8.  Cohesion policy and EU clean energy investments  

EU  cohesion  policy  makes  a  key  contribution  to  delivering  the  Energy  Union  objectives  on  the 
ground, including important investment possibilities to implement energy policy objectives in Cyprus 
which are complemented by national public and private co-financing, aiming at optimal leverage. It 
also  ensures  integrated  territorial  solutions  to  energy  and  climate  challenges,  supports  capacity 
building and provides technical assistance. 

Over 2014-2020, cohesion policy is investing some EUR 45 million in energy efficiency improvements 
in public and residential buildings and in SMEs, as well as in high-efficiency cogeneration and district 
heating in Cyprus. Cohesion policy is also investing significantly in R&I and in SME competitiveness in 
Cyprus,  based on the national  strategy  for  smart specialisation.  For  Cyprus,  the strategy includes  a 
focus  on  sustainable  energy.  At  this  stage,  the  allocations  foreseen  for  investments  in  R&I  and 
adoption of low-carbon technologies in Cyprus are not specified, but should become available in line 
with the evolving content of the smart specialisation strategy. A further estimated EUR 82 million is 
invested in supporting the move towards an energy-efficient, decarbonised transport sector. 

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(source: DG REGIO) 

These  investments  are  expected  to  contribute  to  around  3,500  households  with  improved  energy 
consumption  classification  and  a  decrease  of  around  3,000,000  kWh  per  year  of  primary  energy 
consumption  of  public  buildings.  Overall,  the EU Cohesion policy  investments  in Cyprus  over  2014-
2020 are expected to contribute to an estimated annual decrease of GHG emissions of around 4,000 
tonnes of CO2eq. 

In the context of the review of the cohesion policy funding for the period 2017-2020 (the so called 
"technical adjustment"), Cyprus has decided to allocate an additional amount of EUR 13 million for 
supporting the shift towards a low-carbon economy, for the use of financial instruments to support 
energy efficiency in the public sector and households. 

For  example,  during  2007-2013  the  Operational  Programme  "Sustainable  development  and 
Competitiveness"  co-funded  by  Cohesion  Fund  (CF)  and  European  Regional  Development  Fund 
(ERDF) co-financed actions in view to increase the contribution of renewable energy sources to the 
energy  balance,  in  particular  installation  of  photovoltaic  systems  in  public  buildings,  schools  and 
camps,  installation  of  hot  water  systems  or  heating  from  solar  panels  in  public  buildings,  and 
development of electrical and thermal energy generation systems, utilizing solar power through the 
creation of solar thermal plants. The total budget for these actions amounted to some EUR 5 million. 
The average annual electricity output produced by photovoltaic systems installed in public buildings 
amounts  to  2,257,877  kWh.  In  addition,  the  additional  renewable  energy  generation  capacity  is 
1.5MW, compared to 1.4MW which was the target value of the indicator by 2015. 

Through  its  support  to  sustainable  transport  systems,  the  Connecting  Europe  Facility  (CEF)  also 
contributes to the goals of the Energy Union. Following Cypriot participation in the CEF – Transport 
2014-2015 Calls, the Cypriot action portfolio comprises 9 signed grant agreements, allocating EUR 5.1 
million of actual CEF Transport Funding to Cypriot beneficiaries (state-of-play February 2017)15. The 
transport mode which receives the highest share of funding is multimodal transport action (40.1% of 
actual funding). The action aims to facilitate freight operations by building a multimodal logistic and 
freight  platform  in  Larnaca  International  Airport.  The  platform  will  ensure  easy  access  to  the  main 

15   Note  that  European  Economic  Interest  Groups  and  International  Organisations  are  excluded  from  the 

analysis. 

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roads,  the  Larnaca  Port  and  the  existing  passenger  terminal,  in  order  to  encourage  exports  and 
transhipment from the island to the rest of Europe, the Middle East and Africa. 

Since Cyprus is an island, the maritime sector is well represented in its CEF portfolio with 55.6 % of all 
Cypriot  actions.  In  this  context,  Cyprus  focuses  on  reducing  the  environmental  impact  of  maritime 
transportation via the participation in projects that promote the use of LNG as fuel and the use of on 
shore power supply. The most significant Cypriot action in terms of actual funding is a pilot action to 
test  and  enhance  a  sustainable  intermodal  transport  and  logistics  system  for  freight  movement 
between Mediterranean and Northern European destinations by rail and sea.16   

16   Source: INEA 

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