Monday, December 4, 2023

The Cyprus Connection: EU funds EuroAsia electric link

The Green Deal brings €1.037 billion for 5 EU energy infrastructure projects

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Planning to create well-integrated energy infrastructure networks, EU countries have agreed on a European Commission proposal to invest €1.037 billion in 5 cross-border infrastructure projects with the largest amount of funding going to the EuroAsia project (€657 million) to support the first electricity interconnection between Cyprus and the European grid.

“Recent months have reminded us again how crucial a well-integrated EU energy market is for ensuring affordable energy and security of supply, as well as the clean energy transition,” EU Energy Commissioner Kadri Simson said. “While we have made remarkable progress in the last decade with making our market better connected, more can and should be done. I want to particularly highlight the EuroAsia interconnector, that will bring an end to the energy isolation of Cyprus and link it to the rest of Europe,” she added.

This electricity project interconnects the transmission networks of Cyprus and Greece, allowing the transmission of electricity in both directions and ending the energy isolation of Cyprus. The 898-kilometer of undersea cables and maximum sea depth of 3,000 meters will set new world records for a project of this kind, the Commission said, adding that this investment is a continuation of the financial and political support of the EuroAsia project.

The Connecting Europe Facility (CEF) grant comes in addition to the €100 million grant awarded in the Recovery and Resilience Facility instrument.

“The EuroAsia is an established project. It is a very mature project and already construction has started – not on the line but on the land installations in Cyprus, the inverter stations,” Institute of Energy for South-East Europe (IENE) Chairman Costis Stambolis told NE Global in Athens by phone on January 27. “So, the current decision confirms the EU’s commitment to this strategic project which will connect Cyprus with Israel and Greece through Crete, and this is of vital importance because Cyprus, which has until now been literally an energy island, will obtain access to the European interconnected electricity network,” he added.

Stambolis stressed that the project will not just connect Cyprus, Greece and Israel but is part of a European strategy to extend the network to all EU members. He pointed out that until now Cyprus, although a full member of the EU since 2004, is not connected in any way to the European energy networks so it’s starting with electricity.

The IENE Chairman noted that these projects have been on the table for several years. “The EuroAsia Interconnector construction started since middle of last year so now it’s entering a critical phase where they have to go ahead and plan for the underwater cable. Also, the connection with Israel is very important because Israel will become net exporter of electricity to Cyprus,” Stambolis said, adding that Israel has excess of cheap electricity production because of plentiful gas supplies. “So, Cyprus will benefit through this interconnection with electricity supplies from Israel and the connection to the European network,” he said.

Stambolis said the EU’s decision to finance the EuroAsia Interconnector is a strategic decision. “In the first years we don’t expect the cable – at least the stretch between Greece and Cyprus – to be financially viable because it’s very small loads of electricity but it’s important for the interconnection idea so that’s why the EU is funding this because this project is getting the lion’s share quite rightly because it’s a very expensive but necessary investment so that Europe can claim that all its members are somehow interconnected which is the right thing to do – to have a pan-European electricity grid. So, some connections are more profitable than others, but this is not a question of profitability, it’s a question of energy security,” Stambolis said.

Constantinos Filis, director of research at Institute of International Relations, told NE Global by phone on January 27 the decision to finance the EuroAsia interconnector is a strong sign to the market that this project has the backing of the EU. “Getting more than half of the European funds although it is only one of the 4 projects that has been financed is really important,” Filis said.

He pointed out that the allocation of CEF funds therefore supports the implementation of the European Green Deal. The Interconnector is in line with EU’s policy to fund projects that are promoting its objective for zero carbon emissions in 2050, Filis said.

He stressed that the EuroAsia project will boost security of supply in the EU. “The more projects we adopt the better it is for the European Union especially in terms of gaining more leverage vis-à-vis its main supplier – in the case of Russian gas,” Filis said. He noted that the more multiple energy suppliers and sources the better it is for the EU given that for the foreseeable future the bloc will face strong competition especially from Asia, including China. “So, it needs good news and positive developments to better tackle this problem of oligopolistic status that some countries like Russia now enjoy via-a-vis the European market,” Filis said.

The Connecting Europe Facility (CEF) for trans-European energy networks will provide financial support for the construction of 3 projects for electricity transmission and 1 for gas storage, as well as supporting a study on CO2 transport. According to the Commission, well-integrated energy infrastructure networks are necessary for the energy transition, as they facilitate the integration of renewable energy, enhance security of supply and help keep energy prices in check.

In addition of the EuroAsia Interconnector, the agreement reached on January 26 grants financial aid to the Baltic Synchronisation Project Phase II (€170 million). The second phase of the Baltic project includes funding for grid reinforcement in Poland and upgrading the transmission infrastructure in Lithuania, Latvia and Estonia – thus supporting the integration of the Baltic States’ electricity system with other European networks. The Baltic Synchronisation project also received funding under previous CEF calls leading to total CEF support of more than €1.2 billion, underlining the political importance of this project.

CEF funding will also support the Aurora line (€127 million), the development of a third transmission line between Sweden and Finland in order to increase electricity transmission capacity between the two countries and support the integration of onshore and offshore renewable electricity.

Moreover, CEF grants financial aid to the Chiren expansion (€78 million). This project covers the capacity increase of a gas storage facility in Bulgaria, which is necessary for regional security of supply in South-East Europe, as well as reducing gas supply costs. It also supports the phase-out of coal in the region, facilitating the clean energy transition.

Finally, the CEF is financing the Northern Lights Phase II (€4 million) study which looks into the expansion of the CO2 transport and temporary storage capacity in Norway, open to industrial clusters from across the EU, with the aim to accommodate additional demand.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media


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