Cyprus targets LNG and renewables to cut energy costs

Cyprus is entering a phase of full energy transition, with the government prioritising independence from imported fossil fuels as the “only realistic option” for economic stability, Energy Minister Michalis Damianos said on Wednesday.

In his address at the 16th Nicosia Economic Congress, Damianos identified energy security as a top priority for the Republic in response to dramatic geopolitical developments in the Middle East, which he said have caused the largest disruption in the history of the oil market.

He underlined that the conflict in Iran and disruptions in the Strait of Hormuz, through which around 20 per cent of global oil and LNG trade passes, highlight the system’s vulnerability and are placing pressure on citizens’ purchasing power.

“Energy security cannot rely on uncertain international conditions,” he said, describing the strengthening of energy independence as “an imperative national necessity“.

According to the minister, the government’s strategy focuses on reducing costs through three central pillars, aimed at reshaping the country’s energy framework.

He explained that the completion of LNG import infrastructure is expected to reduce emissions by 25-30 per cent, lowering the cost of emissions allowances that burden consumer bills.

He added that systems for energy storage under the Transmission System Operator are being promoted to ensure grid stability and enable greater penetration of renewable energy sources.

Referring to projects such as the Great Sea Interconnector (GS)), Damianos said the government’s stance remains “responsible and rational,” guided by the need to safeguard economic and technical parameters.

The minister announced that a scheme for the energy upgrading of homes will be relaunched in 2026, while a new grant scheme for energy storage in businesses will be introduced for the first time.

He also referred to the creation of a smart grid system, including the installation of smart meters, as part of efforts to modernise the electricity network.

Moreover, Damianos said that the state will be required to reduce energy consumption by 1.9 per cent annually from 2027.

For the immediate relief of citizens, he recalled recent decisions to reduce the excise duty on motor fuels by 8.33 cents and cut VAT on electricity from 9 per cent to 5 per cent.

“The cost of inaction is many times greater,” he said, calling on the business community to take advantage of new investment tools and the upgraded One-Stop-Shop framework.