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Illegal Employment on the Rise in Cyprus as Undeclared Work Declines

by THEFUTURE.TEAM

September 16, 2024

A recent report on the labour market in Cyprus has revealed a worrying increase in illegal employment, even as the rate of undeclared work shows signs of decline. The findings, which were discussed during a parliamentary session, have raised concerns among lawmakers and authorities alike about the ongoing challenges in combating labour exploitation and maintaining fair employment practices.

According to data presented by the Ministry of Labour, the issue of illegal employment—workers being hired without proper work permits or contracts—has escalated in recent months. This rise comes at a time when efforts to reduce undeclared work, where employees are not registered or insured, have seen moderate success. Despite progress in regulating the labour market, illegal employment remains a significant issue, especially in industries such as construction, agriculture, and hospitality.

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Understanding the Distinction Between Illegal and Undeclared Employment

Illegal employment refers to the hiring of individuals who are not legally permitted to work, often due to their immigration status or lack of proper documentation. These workers are typically vulnerable to exploitation, receiving lower wages and lacking access to basic protections such as healthcare and social security benefits. In contrast, undeclared work involves the employment of individuals who may be legally allowed to work but are not officially registered, depriving them of insurance coverage and other legal protections.

While authorities have made strides in reducing undeclared work, particularly through stricter inspections and penalties, the rise in illegal employment presents a new challenge. Lawmakers pointed out that illegal employment poses even greater risks, as it not only harms the workers involved but also undermines the integrity of the labour market and contributes to unfair competition among businesses.

Factors Driving Illegal Employment

Several factors contribute to the increase in illegal employment, according to the Ministry of Labour. One key driver is the influx of migrant workers, many of whom lack the necessary documentation to work legally in Cyprus. Without proper channels for legal employment, these individuals often turn to unregulated jobs where they are vulnerable to exploitation.

The growing demand for cheap labour, particularly in sectors like construction and agriculture, also plays a significant role. Employers seeking to cut costs may resort to hiring illegal workers, bypassing the legal requirements for contracts, wages, and benefits. This practice not only puts workers at risk but also creates an uneven playing field, where businesses that comply with legal standards struggle to compete with those exploiting illegal labour.

Efforts to Combat Illegal Employment

In response to these findings, the government has pledged to intensify its efforts to combat illegal employment. This includes increasing inspections, imposing harsher penalties on employers found guilty of hiring illegal workers, and strengthening collaboration with immigration authorities. Additionally, there is a push to create more pathways for legal employment for migrant workers, ensuring they can enter the labour market with proper documentation and protections.

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Cyprus Home Solar Enters A New Era: What Net Billing, Curtailments And Storage Mean For Households

by THEFUTURE.TEAM

June 30, 2026

Residential photovoltaic systems in Cyprus are entering a new phase. The transition from net metering to net billing, growing curtailments of renewable generation, the increasing role of battery storage, changes to subsidy schemes and the launch of the competitive electricity market are reshaping the economics of rooftop solar for thousands of households.

Those changes have direct implications for both existing and prospective solar owners. They affect the financial performance of residential systems while raising practical questions about self-consumption, electricity exports and whether investing in battery storage now makes economic sense.

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Drawing on publicly available information and updates from the relevant energy authorities, the following overview outlines the most important developments and answers some of the questions most frequently raised by residential consumers.

From Net Metering To Net Billing

For years, net metering has been the standard model for residential photovoltaic systems in Cyprus. Publicly available data indicate that around 100,000 households currently operate under the scheme, with a combined installed capacity of approximately 450 MW, representing about 43% of the country’s total solar capacity.

From 1 January 2026, however, new residential solar installations will no longer qualify for net metering and will instead be connected under the net billing framework. The change fundamentally alters how electricity is valued, making it increasingly important for prospective investors to reassess the economics of a new installation.

Why The Difference Matters

The key difference between the two systems lies in how imported and exported electricity is settled.

Under net metering, electricity imported from and exported to the grid is offset on a bi-monthly basis using energy quantities. Any surplus generation is carried forward to the next settlement period, while electricity shortfalls are billed at the applicable retail tariff. Depending on the contract, accumulated surpluses are generally reset without compensation after three years.

Net billing works differently. Settlement is based on the monetary value of electricity rather than the amount of energy generated. Power exported to the grid is compensated at the wholesale price, while electricity imported from the grid is charged at the retail tariff. In practice, households sell electricity at a lower price than they pay to buy it back, making self-consumption significantly more valuable than under the previous system.

Why Storage Is Becoming More Important

Battery storage increases self-consumption by storing surplus solar energy for use later in the day, when photovoltaic panels are no longer generating electricity. That makes storage considerably more valuable under net billing, where maximising on-site consumption has a greater impact on overall savings.

Even so, installing batteries remains an investment decision that depends on installation costs, system size and future technology prices. For many households, however, battery storage is evolving from an optional upgrade into an increasingly important tool for protecting long-term returns.

What Happens To Existing Net Metering Contracts

Existing net metering agreements remain valid until they expire, typically after 15 years, and are not affected by the rules governing new installations.

Once those agreements come to an end, homeowners will be able to move to net billing or consider other options available under the competitive electricity market.

What Happens To Accumulated Surpluses

Most net metering agreements provide for accumulated energy surpluses to be reset after one or three years, depending on the terms of the contract. Some older agreements still provide compensation for unused surpluses, although such arrangements have become increasingly uncommon.

At the beginning of 2026, EPC Supply decided, under the framework of the 2024 renewable energy grant scheme, that accumulated surpluses would be reset without compensation. The company also decided that the reset would recur every three years for all affected contracts.

The decision prompted strong reactions from residential solar owners, leading to parliamentary debate and a presidential referral. The matter is now awaiting a final decision by the Council of Ministers.

Are New Support Schemes Available

The policy shift is also reflected in changes to government support programmes. The popular Fotovoltaika Gia Olous scheme ended on 31 December 2025, and no replacement grant programme is currently available.

A new scheme, Anavathmizo – Exoikonomo, is expected to launch in September 2026 with a budget of €20 million. It will focus on residential energy upgrades and is expected to support the installation of photovoltaic systems combined with battery storage. The approach is consistent with the European Union’s “energy efficiency first” principle, which prioritises reducing energy consumption before expanding generation capacity.

Residential Solar And The Competitive Electricity Market

Another significant change is the opportunity for residential solar owners to participate in the competitive electricity market. Under the current regulatory framework, households that are not participating in subsidy schemes may monetise surplus electricity through agreements with licensed electricity suppliers or aggregation entities operating in the market.

That creates new commercial opportunities, but it also places greater emphasis on understanding technical limitations, contractual arrangements and market pricing. As the market evolves, informed decision-making is becoming increasingly important.

Why Curtailments Happen

Curtailments remain one of the most frequently discussed issues among residential solar owners. Every electricity system must continuously balance generation with demand to maintain grid stability.

When solar production is high but electricity demand is low, the grid can experience oversupply conditions that threaten the security of supply. In those circumstances, the Cyprus Transmission System Operator may instruct the Distribution System Operator (EAC) to temporarily reduce photovoltaic generation.

Curtailments follow a specific order of priority. Large-scale solar parks are limited first, followed, where necessary, by newer residential installations. Older household systems, which account for roughly half of all residential photovoltaic installations, were connected without ripple-control equipment and are therefore not subject to curtailment.

Can Curtailments Be Avoided

One option is to operate a photovoltaic system in zero-export mode, either temporarily or permanently.

Under this configuration, the electricity generated is consumed within the property rather than exported to the grid, unless temporary exports are permitted. Whether this improves the financial outcome depends on several factors, including household consumption patterns, system size and the presence of battery storage.

Operating completely off-grid is possible only with approval from the relevant authorities and is generally limited to remote locations where a grid connection is impractical. Such systems require a technical study by a qualified electrical engineer and typically combine photovoltaic panels with battery storage. A backup diesel generator is usually required to ensure a reliable power supply.

Homeowners planning to expand or modify an existing photovoltaic installation must also obtain the necessary approvals from EAC Supply. Depending on the scope of the changes, a revised agreement or the installation of ripple-control equipment may be required.

A Market Reset For Homeowners

Residential solar in Cyprus is entering a new operating environment. Net billing, curtailments, battery storage, changes to surplus treatment and the gradual liberalisation of the electricity market are reshaping the economics of rooftop photovoltaic systems.

For households considering a new installation, understanding self-consumption, battery economics and future electricity pricing will become increasingly important. Existing system owners, meanwhile, will need to assess how evolving market rules may affect their current agreements and long-term returns.