Energy storage is set to play a central role in Cyprus’ electricity system, helping the country manage renewable energy more efficiently, reduce curtailment from solar and other clean sources, and strengthen grid stability.

Speaking after the signing of an agreement between the Cyprus Transmission System Operator and CYTA for the supply and installation of the country’s first large-scale energy storage systems, Energy, Commerce and Industry Minister Michalis Damianos described the project as a major step in modernising the national power network.

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A Strategic Step In Modernizing The Power System

Damianos said the initiative marks an important milestone in Cyprus’ broader effort to upgrade its energy infrastructure.

“With its implementation, we are entering a new phase in strengthening the resilience and reliability of our island’s electricity grid,” he said. “These storage projects will materially improve the management of renewable energy production, reduce the curtailment of electricity from renewables, and reinforce system stability.”

Energy Transition Requires Time, Coordination And Execution

According to the minister, the energy transition is a complex process that requires careful planning, technical coordination and sustained cooperation among all stakeholders. Against that backdrop, Tuesday’s agreement represents a significant step in implementing Cyprus’ national energy storage strategy and advancing the country’s broader green transition.

Damianos also praised the Transmission System Operator for its planning and execution, while commending CYTA for taking responsibility for the project. “Collaboration among public organizations is a cornerstone for delivering projects that serve the public interest and advance our national energy and climate goals,” he said.

Looking ahead, he reaffirmed the government’s commitment to expanding renewable energy through a more efficient, reliable and lower-emission electricity system.

Three Sites, One Systemic Objective

Stavros Stavrinos, executive director of the Cyprus Transmission System Operator, said the project stems from Regulatory Authority of Energy Cyprus decision 217/2025, issued on June 18, 2025, which instructs the operator to deploy storage systems at three existing transmission substations.

Funding for the systems is expected to come from the EU cohesion policy programme Thalia 2021-2027. For that purpose, the operator is working closely with the Control Directorate of the Ministry of Transport, Communications and Works, which acts as the intermediate body.

Under the project, a 40 MW / 80 MWh storage system will be installed at Athalassa substation in the Nicosia district, while two additional 40 MW systems, with 160 MWh of storage each, will be deployed at the Anatoliko and Free Industrial Zone substations in the Paphos and Larnaca districts, respectively.

Why Location Matters

Stavrinos explained that the three substations were selected to maximise the operational value of the storage systems.

Their direct connection to the transmission network will allow the batteries to provide the required reserves without restrictions, while supporting smoother electricity flows and reducing congestion during periods of high demand.

He added that the project will not affect existing renewable energy developments, whose planning and grid connection work are already included in the transmission system’s ten-year development plan.

Preparing For A Grid Dominated By Renewables

Stavrinos said the role of storage is becoming more urgent as Cyprus’ installed photovoltaic capacity has surpassed 1,040 MW, compared with the average national demand of about 650 MW.

“This level of penetration requires flexible resources,” he said. “Storage gives the operator another tool to ensure the system can respond to demand in a reliable way, which is part of our statutory responsibility.”

He also pointed to the fact that renewable generation already covers more than 60% of demand for several hours on many days, and in some half-hour periods reaches 70% over the course of the year. That is a significant achievement, he said, but it also underscores the need for new balancing mechanisms that can protect system stability as renewable penetration rises further.

Grid-Forming Technology Signals A New Phase

One of the most notable elements of the project is that one of the storage systems will feature grid-forming technology, a capability Stavrinos described as a step toward introducing advanced solutions into Cyprus’ power system.

He noted that this technology was developed to support isolated electricity systems such as Cyprus, where flexibility and resilience are especially valuable. For the operator, he said, it represents another major technical challenge, but also a strategic opportunity.

Private Investment Can Advance Alongside Public Infrastructure

Alongside the state-backed project, privately developed storage facilities are also moving forward. According to Stavrinos, the operator has already issued connection terms for independent storage systems with a combined capacity of 60MW and 190MWh, with several projects now at an advanced stage.

“Our conclusion is clear: all storage projects are welcome and necessary if Cyprus is to meet European and national renewable targets,” he said. “They will significantly reduce renewable curtailment and, by extension, emissions. Ultimately, the consumer should benefit through lower electricity costs and improved system performance.”

Implementation is expected to begin shortly, with an estimated eight-month period before the systems enter the execution phase.

CYTA Sees Public Value And Institutional Confidence

CYTA chair Maria Tsiakka said the company will deliver the project through an open and transparent process designed to benefit citizens, support technological progress and contribute to sustainable development.

She added that the assignment reflects the confidence placed in CYTA to manage complex national infrastructure projects while reinforcing its role in initiatives that create value for the wider economy. “Our participation also reflects CYTA’s active role in initiatives that create real value for the economy,” she said.

Tsiakka said CYTA will work closely with all stakeholders to ensure the project is delivered on schedule and meets the country’s future energy needs.