European Electricity Transition: A Bold New Horizon

A recent report, European Electricity Review 2026, published by Think Tank Ember, highlights a stark disparity between the energy strategies of the European Union and Cyprus. While the EU is rapidly advancing its renewable energy agenda, underpinned by an aggressive shift away from fossil fuels, Cyprus remains reliant on an increasingly costly and pollutant electricity system dominated by conventional fossil fuel sources.

European Union Electricity Mix 2025

The EU’s electricity landscape continues to shift toward renewables at a notable pace. Wind and solar energy now play a central role in the bloc’s power generation, gradually overtaking fossil fuels.

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According to projections for 2025, wind contributes 16.9% of electricity production and solar 13.2%, bringing their combined share to 30.1%, slightly ahead of fossil fuels at 29%. Hydropower remains significant at 17.6%, although drought conditions have constrained its output in several regions. In total, renewable sources account for 47.7% of the EU electricity mix, marking a historic milestone in the region’s green transition. Nuclear energy remains stable at around 23%, continuing to provide a consistent base load.

Cyprus’ Energy Conundrum In 2025

Cyprus presents a very different picture. Approximately 74% of its electricity generation still comes from oil and heavy fuel oil through traditional thermal units. Although the country has achieved strong photovoltaic growth, reaching 21% solar penetration, this progress is limited by insufficient grid modernization and the lack of large-scale storage capacity.

Despite being among EU leaders in solar installations for each person, Cyprus faces curtailment issues where excess renewable energy cannot be absorbed by the grid. Estimates suggest that up to 22% of renewable generation is occasionally curtailed, representing roughly 6–7% of annual electricity demand.

Consequences For Electricity Pricing

The inefficiencies in managing renewable integration and the persisting reliance on fossil fuels have had a direct impact on electricity prices in Cyprus. Although temporary measures, such as a 10% VAT reduction through 2027, have been implemented, the cost per kilowatt-hour for 2025 is forecast at 31 cents —significantly above the EU average of 24.6 cents. This pricing imbalance erodes consumer purchasing power and undermines the competitiveness of the local economy.

Strategic Recommendations For Reform

A decisive recalibration of Cyprus’ electricity sector is essential to bridge the gap with its European counterparts. Key strategic recommendations include:

1. Establishment Of An Independent Coordination Authority: Create an autonomous body dedicated to aligning the efforts of relevant agencies to reduce electricity costs and secure a reliable energy supply.
2. Development Of A Long-Term Electric Generation Strategy: Formulate a strategic plan that balances the rational expansion of renewable energy with conventional sources, incorporating integrated energy storage solutions and robust system management protocols.
3. Prioritization Of Centralized Energy Storage And Grid Adaptation: Emphasize the need for centralized energy storage facilities and the reinforcement of distribution networks to stabilize the supply and effectively absorb surplus renewable generation.

Conclusion

Cyprus stands at a critical crossroads. To achieve affordable electricity and remain competitive, decisive reform and strategic investment in renewable infrastructure are imperative. Failure to act could exacerbate both economic and social challenges, further distancing Cyprus from the progressive energy blueprint exemplified by the European Union.