NICOSIA – Cyprus has given the green light for construction of a 1.9 billion euro ($2.1 billion) undersea electricity cable linking its grid with Greece's, aiming to sharply reduce electricity bills and end its energy isolation, the country's energy minister said Tuesday.
Minister George Papanastasiou said the significance of the project is underscored by the European Union’s decision to fund it with the sum of 657 million euros ($735 million).
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He said the Cypriot government will contribute 25 million euro ($27.8 million) annually over the five-year period of the 1,000 MW cable’s construction so that Cypriot taxpayers won’t see any hike to their electricity bills as part of their 63% share of building costs.
The total 125 million euro sum will be raised from revenues generated from the EU's emission trading system.
Papanastasiou said the cable, expected to be completed by the end of 2029, is part of a series of projects including the planned introduction of natural gas to the island nation's energy mix, that aims to “further accelerate the country's medium-term economic development and the welfare of its citizens."
Officials said Cypriot consumers stand to gain a drop in their electricity bills of as much as 40% once the approximately 900 kilometer-long (560-mile) cable is completed. The cable's operating costs will be split down the middle by both Cypriot and Greek consumers. An additional 36 euros on Cypriot electricity bills covering the cable's operation costs once it's up and running will be offset by the overall huge savings they'll gain.
Officials also said the project will carry a guaranteed return on investment of 8.3%, considered attractive for potential investors. The U.S. and the United Arab Emirates' TAQA energy and water company have expressed interest in investing in the project, officials said. Cyprus is also mulling whether to become a stakeholder in the parent company that will run the cable once it's complete.
It's envisioned that the cable, with an operating life of around 35 years, will eventually continue from Cyprus to connect with Israel's electricity grid. Israel's Energy Minister Eli Cohen recently posted on the social platform X that he emphasized to his Cypriot counterpart the cable's “great importance” to Israel as a “top priority” that would “strengthen energy security in the region.”
Tuesday's Cabinet decision ends weeks of speculation over the project's future after Cypriot officials negotiated with the cable's Greek operator, the Independent Power Transmission Operator, on how to mitigate the risks involved with its construction as well as its financial viability.
Those risks include interference by any third party that would stall the project at any point in its construction. That's why the Cypriot government is disbursing the 125 million euro contribution in increments.
France's Nexans is building the cable and Germany's Siemens will be contracted to build the onshore transformers. Officials said the cable's undersea course has been mapped out, but additional surveying may be required in areas where difficult subsea terrain may require the digging of trenches to protect the cable.