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BY YOSEF ABRAMOWITZ
As we in Israel look west to the Mediterranean, it is with much pride that we continue to welcome the increased bi-lateral relations between our two countries; treaties, agreements and memorandums of understanding that have recently been signed in many areas – religious, defence, renewable energy, natural gas, electrical transmission and others. It is in this spirit that we wish to share our experiences in solar power in order that the Government of Cyprus can quickly reach its goal of 198 MW of solar projects in Cyprus.
By 2020, about 10% of Israel's installed capacity will be produced by Solar Power. The Arava Power Company, Israel's pioneering PV company and one of the five largest has a pipeline of over 400 MW. This national goal is being achieved through a licensing process on a first come first serve basis as in many European Union countries. The bottom line is that more megawatts can be built faster and more competitively through a licensing process than through tendering processes, at least that is what many European countries have learned.
The recent financial downgrading spreading around the EU and in Cyprus in particular will have an affect on solar project financing. This is the right time for the Government of Cyprus to take a leadership role and set policies to incentivize large scale solar projects throughout Cyprus, especially as the underwater electrical cable is being planned to connect our country to yours and through to Europe. Large scale projects are the only kind that will achieve economies of scale and bring solar projects to grid parity in Cyrpus. Policies such as creating tax benefits on solar power production so that producers can finance lower and lower tariffs; Policies such as loan guarantees for developers who use EU expertise, equipment and technologies in order to create the industry in Cyprus for large scale solar field development. Policies such as green energy procurement for the government’s energy needs could boost the solar industry to new heights especially during the upcoming EU Presidency.
The role of Government is to set the policies that will create markets and then the markets regulate themselves through competitive pricing. The current tendering path will not achieve the economies of scale that are needed to bring solar projects to grid parity and will place great pressure on the Renewable Energy Fund of Cyprus to keep funding above grid parity projects in Cyprus. The Cyprus market is at grid parity today if solar projects could sell directly to customers during peak hours when the sun is shining and the air conditioners are blazing. Some energy storage would be needed to address the winter evening peak hours.
When Solar projects will become an IPP, Cyprus will truly be fulfilling its EU obligations of opening up the market and allowing price competition and market competition in renewable energy.
A discussion on energy in Cyprus would not be complete without discussing the Natural Gas fever that has spread from Israel to Cyprus. Natural gas is expected to decrease the cost of electricity in Cyprus sometime between 2015 and 2020, but only time will truly tell if this will occur with all the increased costs to date and going forward since the emergency situation began in Cyprus last year. We hope that the recent natural gas discoveries come to both Israel’s shores and Cyprus’ shores in the near future. This along with a strong PV policy will go a long way in reducing the fines that Cyprus is paying for not meeting its renewable energy targets as an EU country. Yes, renewables and PV in particular can quickly be built to reach these targets.
We look forward to continued cooperation in these and other areas with the Government and People of Cyprus.
Yosef Abramowitz is president of the international board of the Arava Power Company.
