Cyprus’ energy system has traditionally been characterised by a heavy reliance on imported fossil fuels. As an island state, Cyprus has historically operated as an isolated energy system without electricity interconnections.

Consequently, enhancing energy security through the diversification of energy sources and the transition towards renewable energy sources has become a key national priority in recent years.

Pursuant to the Final Updated Integrated National Energy and Climate Plan of Cyprus (“the NECP”) for the period 2021–30, submitted to the European Commission on 19 December 2024, Cyprus has set a revised target of achieving a 33% share of renewable energy in its gross final energy consumption by 2030.

The share of renewable energy in Cyprus’ gross final energy consumption has increased steadily in recent years. In 2020, renewables accounted for 16.88% of gross final energy consumption, while the latest available figures for 2025 indicate that this share has increased to approximately 21.5%. Although these figures suggest that fossil fuels continue to account for a significant proportion of Cyprus’ gross final energy consumption, they also reflect the country’s continued progress towards its 2030 renewable energy target.

The primary renewable energy sources used in Cyprus are the following:

• solar photovoltaic energy;
• wind energy;
• biomass; and
• solar thermal energy.

Of these, solar photovoltaic energy is by far the most dominant renewable energy technology in Cyprus, followed by wind energy, while biomass makes only a very limited contribution to the country’s renewable energy sector. Although solar thermal energy is widely used, this is primarily for domestic water heating rather than electricity generation. In 2024, approximately 93.5% of households used solar thermal systems to heat water.

In 2025, total installed renewable energy capacity in Cyprus amounted to approximately 1,139 MW, of which 957 MW (around 84%) consisted of solar photovoltaic installations. Cyprus is one the leading EU member states in the deployment of residential energy systems for self-consumption, with approximately 52.6% of total installed photovoltaic systems corresponding to self-consumption systems. The total installed capacity for wind energy amounted to approximately 158 MW in 2025.

Compared with 12 months ago, the Cyprus renewable energy market has moved from steady capacity growth into a period increasingly defined by grid and storage constraints, alongside a wave of regulatory reform to address them. Total installed renewable capacity was approximately 1,139 MW by the end of 2025 (957 MW solar, 158 MW wind), and renewables accounted for approximately 27.4% of the electricity mix, up from 24% in 2024. Growth has increasingly outpaced the grid’s ability to absorb it, with curtailment rising sharply through 2025.

The most significant legislative development was Law 188(I)/2025, published on 7 November 2025, which partially transposes Directive (EU) 2023/2413 and Directive (EU) 2024/1711, places the Unified Service Centre on a statutory footing, and introduces binding maximum permitting timeframes for renewable energy projects for the first time. Energy storage has become the dominant commercial focus: a EUR35 million state grant scheme opened in February 2025; Cyta and TSOC agreed a 125 MW battery facility; and, by early 2026, 33 private companies held BESS licences representing over 1,000 MW of further capacity. From January 2026, new photovoltaic installations also moved from net metering to net billing, with a first reset of accumulated household credits in February–March 2026.

Separately, Cyprus’ first foreign direct investment screening regime entered into force on 2 April 2026, adding a filing requirement for non-EU/EEA investors acquiring 25% or more of a renewable energy undertaking valued at EUR2 million or above.

Internationally, the Great Sea Interconnector, which is planned to connect Cyprus, Greece and (eventually) Israel, faced significant delays and questions over its financial viability through late 2025 and early 2026, including a European Public Prosecutor’s Office inquiry into EU grant funding. In early August 2026, French investor Meridiam acquired a majority shareholding in the project from Greece’s IPTO, a development both governments have welcomed, although its final cost and viability remain subject to further assessment.

The energy market in Cyprus is primarily governed by the Law on the Regulation of the Electricity Market of 2021 (Law 130(I)/2021), which transposes Directive (EU) 2019/944 on the common rules for the internal market in electricity.

Law 130(I)/2021:

• regulates the generation, transmission, distribution, storage and supply of electricity;
• establishes a competitive, consumer-centred and low-carbon electricity market;
• introduces a licensing regime for electricity market activities;
• regulates access to transmission and distribution networks and the interconnection of electricity systems;
• establishes the institutional framework for the operation of the electricity market, including the Transmission System Operator of Cyprus (TSOC);
• introduces consumer protection measures, including provisions relating to vulnerable consumers and energy poverty; and
• aims to ensure security of supply, market transparency and compliance with the EU internal electricity market framework.

Renewable energy is governed by a separate legislative framework, and the primary legislation is the Promotion and Encouragement of the Use of Renewable Energy Sources of 2022 (Law 107(I)/2022) which partially transposes Directive (EU) 2018/2001. The aim of Law 107(I)/2022 is to establish a legislative framework which promotes and encourages the use of Renewable Energy Sources in the energy market in Cyprus.

There are several other pieces of legislation that are also used to regulate the energy sector in Cyprus. These include: the Law on the Operation of the Renewable Energy Sources and Energy Saving Fund of 2022 (Law 108(I)/2022), which establishes the financial mechanism supporting renewable energy projects and energy efficiency measures; the Energy Efficiency Law of 2026 (Law 92(I)/2026), which promotes and encourages energy efficiency; and the Law on the Regulation of the Market of Natural Gas of 2004 (Law 183(I)/2004) (as amended), which regulates the natural gas market.

In terms of imminent changes, the Promotion and Encouragement of the Use of Renewable Energy Sources (Amendment) (No 2) Law of 2025 (Law 188(I)/2025), published in the Official Gazette (Part I(I), No 5060) on 7 November 2025, partially transposes Article 1(1) and (7) of Directive (EU) 2023/2413 and Article 1 of Directive (EU) 2024/1711. The amendment places the existing Unified Service Centre (established administratively in 2023) on a statutory footing as the single point of contact for renewable energy licensing, and introduces binding maximum permitting timeframes, including 18 months for renewable energy projects outside designated acceleration areas, up to 3 years for offshore projects, and shorter windows (ranging from one month to 12 months) for smaller-scale installations such as rooftop solar equipment, co-located storage and heat pumps.

The primary regulators for renewable energy activities in Cyprus are the Ministry of Energy, Commerce and Industry through its Energy Services Department and the Cyprus Energy Regulatory Authority (“CERA”).

The Energy Services Department of the Ministry of Energy, Commerce and Industry is responsible for the planning, coordination and implementation of Cyprus’ national energy policy. It implements the NECP and any other legislative frameworks that govern renewable energy and energy efficiency.

CERA is the independent national regulatory authority established under the Law on the Establishment and Operation of the Cyprus Energy Regulator Authority of 2021 (Law 129(I)/2021). It is responsible for the regulation and supervision of the electricity and natural gas markets in Cyprus pursuant to Directives (EU) 2019/944 and (EU) 2009/73/EC.

Pursuant to the Law on the Regulation of the Electricity Market of 2021 (Law 130(I)/2021) CERA must:

• issue, amend, suspend and revoke licences;
• issue binding regulatory decisions;
• conduct investigations, either following a complaint or on its own initiative; and
• impose administrative fines and other sanctions for non-compliance with legislative provisions.

The activities that are regulated in Cyprus are primarily governed by the following legislative frameworks:

• the Law on the Regulation of the Electricity Market of 2021 (Law 130(I)/2021);
• the Promotion and Encouragement of the Use of Renewable Energy Sources Law of 2022 (Law 107(I)/2022);
• the Electricity Market (Licensing) Regulations; and
• Regulatory Decision 02/2021 entitled “the Regulatory Framework for the Granting of the General Licence” (Regulatory Administrative Act No 523/2021).

Pursuant to Article 26 of Law 130(I)/2021, a licence must first be obtained from CERA by any person (natural or legal) wishing to undertake any of the following activities:

• building and operating electricity generation facilities;
• supplying electricity to final and wholesale customers;
• operating transmission and distribution systems;
• installing and operating electricity storage facilities;
• providing electricity market services; and
• the construction of direct electricity lines.

However, Article 27(1) of Law 130(I)/2021 gives CERA the power to grant a “general license” for:

• electricity generation facilities that are not connected to the transmission or distribution network;
• electricity generation facilities with a maximum installed capacity of up to 20 kW;
• self-consumption electricity generation systems with a capacity of up to 30 kW;
• renewable energy generation facilities with an installed capacity of up to 50 kW;
• small-scale, high-efficiency combined heat and power installations; and 
• any other activities designated by the Ministry or CERA.

In addition, Article 27(4) of Law 130(I)/2021 also allows for persons to be exempt from obtaining a licence for:

• self-consumption electricity generation facilities with a capacity exceeding 30 kW and up to 1 MW; and
• renewable energy generation facilities with an installed capacity exceeding 50 kW and up to 8 MW.

Subject to the information given in 2.5 Market Access and Foreign Investment and to any restrictions relating to the acquisition and/or leasing of land by non-EU nationals, a licence granted by CERA may be transferred to another person (natural or legal) by obtaining approval from CERA, subject to the transferee demonstrating the required technical and financial capabilities.

Whilst Cyprus does not impose any renewable energy-specific restrictions on foreign investments, foreign direct investments meeting certain thresholds are now subject to a mandatory screening mechanism under the Establishment of a Framework for the Screening of Foreign Direct Investments Law of 2025 (Law 194(I)/2025), which entered into force on 2 April 2026. The regime generally applies to non-EU investors acquiring 25% or more of the share capital or voting rights (or equivalent decisive influence) in a Cyprus undertaking active in a broadly defined list of strategic sectors, including energy, where the value of the investment is EUR2 million or more. Where the statutory criteria are met, the investment must be notified to the Ministry of Finance, as the competent authority, and cleared before completion, in order to assess whether it may affect the security or public order of Cyprus.

Electricity generation from renewable sources in Cyprus takes place within a market that opened to competition following the launch of the competitive electricity market on 1 October 2025, although transmission and distribution remain regulated monopoly activities. Any person, natural or legal, wishing to construct and operate an electricity generation facility, including a renewable energy facility, must first obtain a licence from CERA under Article 26 of the Electricity Market Regulation Law of 2021 (Law 130(I)/2021), except where a general licence or exemption applies to smaller-scale installations.

The generation asset base is dominated by solar photovoltaic installations, which accounted for approximately 957 MW of the roughly 1,139 MW of total installed renewable capacity in Cyprus by the end of 2025, with wind contributing a further 158 MW. Key parties involved in RES generation include the Electricity Authority of Cyprus (EAC), which remains a significant generator of both conventional and renewable electricity, alongside a growing base of independent producers licensed by CERA, ranging from utility-scale solar and wind developers to smaller self-consumption and net-billing generators.

The production sector for gas from renewable sources in Cyprus remains underdeveloped, with no established market present.

Generally speaking, Cyprus does not have a large market for the production sector for heat from renewable sources such as geothermal energy. However, it uses solar thermal systems for domestic water heating, and approximately 93.5% of Cypriot households are equipped with these.

The Cyprus Union of Solar Thermal Industrialists is the primary representative body for the solar thermal manufacturers. The industry is governed by the Promotion and Encouragement of the Use of Renewable Energy Sources of 2022 (Law 107(I)/2022).

Cyprus does not have an established hydrogen market. However, in 2025, the Energy Services Department of the Ministry of Energy, Commerce and Industry published the “Cyprus National Hydrogen Strategy”, which sets out the Government’s roadmap for developing and promoting the hydrogen sector. Biofuels are still only used on a small scale in Cyprus, although the NECP calls for their use to be increased in the transport sector.

Small-scale renewable electricity generation for own consumption, including domestic rooftop photovoltaic systems, is primarily governed by the Electricity Market Regulation Law of 2021 (Law 130(I)/2021), the Promotion and Encouragement of the Use of Renewable Energy Sources Law of 2022 (Law 107(I)/2022), and CERA regulatory decisions. Pursuant to Article 27 of Law 130(I)/2021, electricity generation installations up to 20 kW, systems generating electricity for own use of up to 30 kW, and renewable electricity generation installations of up to 50 kW fall within CERA’s general licence regime, which is lighter-touch than the standard licensing process described in 2.3 Regulated Activities above. Under Article 36 of Law 107(I)/2022, there is also provision for a registry of installers of small-scale renewable energy systems, including photovoltaic systems, although inclusion in this registry is voluntary rather than mandatory.

The commercial framework for self-generated electricity changed materially from 1 January 2026, when Cyprus replaced its net metering and net billing schemes for new installations with a single, market-based self-consumption framework designed by CERA. Under net metering, which had applied to residential systems, exported electricity was credited at the retail rate on a rolling basis; under the new framework, excess electricity exported to the grid is instead compensated at the wholesale rate, which is intended to encourage self-consumption and the take-up of battery storage rather than grid export. Systems with a net metering or net billing contract signed before the end of 2025 continue under their existing terms until those contracts expire, at which point they will transition to the new framework; existing net metering customers have also had their accumulated surplus credits periodically reset, most recently in February–March 2026 – a change that attracted some public criticism when first implemented.

The storage of electricity from renewable sources is also governed by Law 130(I)/2021, which established a regulatory framework for grid-connected energy storage facilities, including battery energy storage systems. As a general rule, neither the DSO nor TSOC may own, develop, manage or operate energy storage facilities, reflecting the EU’s general unbundling principle for network operators; limited exceptions apply where the facilities constitute fully integrated network components, subject to CERA’s approval.

In practice, storage has become one of the most active areas of the sector: as at early 2026, 33 private companies held CERA battery energy storage system (BESS) licences representing over 1,000 MW of potential capacity. Cyta and TSOC have separately contracted a 125 MW battery storage facility, due to arrive in January 2027 and be operational before summer 2027, and it was confirmed in July 2026 that terms had also been agreed for a further 150 MW of privately owned storage projects expected online during 2027. The Electricity Authority of Cyprus (EAC) is separately developing its own storage facilities totalling 180 MW. The government’s state-backed EUR35 million Grant Scheme for Energy Storage Systems, which opened for applications in February 2025, has further accelerated development of storage assets connected to the grid.

Due to Cyprus’ isolated electricity system, there is an increased possibility of grid congestion issues from RES and this is addressed through a system of forced curtailment. Under the Transmission and Distribution Gride Code, the TSOC and/or the DSO may limit the electricity generated by renewable energy installations whenever necessary to safeguard the stable and secure operation of the transmission or distribution systems. Curtailments are implemented using specific algorithms designed to ensure the fair allocation of curtailment among renewable energy installations connected to the grid. The TSOC has a published Curtailment Procedure for Photovoltaic Generation in the Distribution System and regularly publishes statistical information on curtailments affecting small-scale photovoltaic systems.

The market for the transportation and storage of gas from renewable energy sources is still in the developmental stage in Cyprus. Existing biogas plants mainly use agricultural, livestock and organic wasted to produce biogas which is then used on-site to produce electricity rather than being transported to other facilities.

Currently, there is not a significant production sector for heat from renewable sources in Cyprus.

As noted in 3.4 Hydrogen and Other Biofuels, Cyprus does not have an established hydrogen market or dedicated hydrogen transportation or storage infrastructure; hydrogen policy remains at the strategic planning stage under the National Hydrogen Strategy approved in June 2025, with no hydrogen-specific legislation yet in place.

Following the launch of the competitive electricity market on 1 October 2025, the market for the trade and supply of renewable Electricity has been liberalised, allowing licenced suppliers to procure electricity from the wholesale market and supply end users under electricity supply agreements. The market is regulated by CERA.

Suppliers must hold a supply licence pursuant to Article 34 of the Electricity Market Regulation Law (Law 130(I)/2021 and the Licensing Regulations, the Electricity Market Rules and any other terms that the competent authorities may set out. Some of these terms include pricing transparency, disclosure of the energy mix supplied and performance indicators. The Electricity Authority of Cyprus (EAC) remains the primary retail supplier and acts as a supplier of last resort pursuant to Article 106 of the Electricity Market Regulation.

Due to the fact that most biogas is being used on-site for electricity and heat generation rather than being supplied through a gas network, there are currently no established markets for the trade and supply of gas from renewable energy sources.

Since heat from renewable energy sources is mainly generated and consumed on-site in residential and commercial buildings, Cyprus does not have an established market for the trade and supply of heat from renewable energy sources.

The market for the trade and supply of hydrogen in Cyprus is still at the developmental stage, and no established commercial market exists.

Renewable energy certificates in Cyprus are known as guarantees of origin, issued pursuant to the Renewable Energy Sources Law and Law 174(I)/2006, through an electronic registry for issuing, transferring and cancelling certificates. TSOC is the designated issuer, with CERA supervising the system under CERA Decision No 857/2013.

Corporate PPAs are used in the Cyprus renewable energy market. Since the October 2025 market liberalisation, licensed suppliers may also enter bilateral supply agreements with generators and self-consumers, with terms freely negotiated rather than following a standard form.

Cyprus has a well-established onshore renewable energy market, with solar photovoltaic projects the most prominent RES technology deployed, followed by wind energy projects. Before construction may begin, a developer must obtain a Planning Permit from the Department of Planning and Zoning, a Construction Licence for an Electricity Generation Station from CERA, a Building Permit, and Preliminary and (later) Final Connection Conditions from the competent Network Operator (TSOC or the DSO), and an Environmental Impact Assessment is required as part of the planning permit process for larger-scale projects. A CERA Licence for the Operation of an Electricity Generation Station must be obtained; CERA licences are generally granted for 25 years, renewable. Certain smaller installations may be exempted from parts of this process under CERA’s general licence regime (see 2.3 Regulated Activities). The key authorities involved are the Ministry of Energy, Commerce and Industry, CERA, TSOC, the DSO, and the Department of Town Planning and Housing.

As of June 2024, Decree 1/2024 has imposed heavy environmental related restrictions, limiting to a significant extent the areas on which RES facilities can be built on.

The primary legislative frameworks governing offshore project developments are as follows.

• The Maritime Spatial Planning and Related Matters Law of 20217 (law 144(I)/2017.
• The Electricity Market Regulation Law of 2021 (Law 130(I)/2021.
• The Promotion and Encouragement of the Use of Renewable Energy Sources Law of 2022 107(I)/2022.

The key authorities involved are the Ministry of Energy, Commerce and industry, CERA, TSOC, and the Shipping Deputy Ministry. For the offshore projects to be developed there would be a need to obtain all the necessary licences and approvals from the aforementioned authorities.

Renewable energy projects in Cyprus are typically financed through a combination of sponsor equity (often from foreign developers and investors), EU and national grant funding, and loans from domestic and international banking institutions, with project finance structures becoming more common as project sizes increase. There is no dedicated legislative framework for renewable energy project financing; security packages are structured under the general principles of Cyprus company, contract and immovable property law. Typical lender security includes mortgages over project land, fixed and floating charges over the project company’s assets and receivables, pledges over shares in the project company, and assignments by way of security of receivables under power purchase agreements and other project contracts. Direct agreements between lenders and key project counterparties, such as EPC contractors and O&M operators, are standard in larger transactions and typically include step-in rights.

The main risks that are often evaluated by financiers include permitting challenges, grid access constraints (particularly in over-congested areas), real estate issues, and regulatory risk. PPAs are essential for bankability, particularly in the absence of applicable support schemes.

Cyprus has a range of national subsidy and incentive schemes to support the growth of the renewable energy sector to meet both the NECP targets and EU-wide targets. The Ministry of Energy, Commerce and Industry has set up grants for the installation of renewable energy systems, including photovoltaic systems for self-consumption, solar thermal systems, heat pumps and energy storage. An example of such a grant is the EUR35 million Grant Scheme to support the installation of energy storage systems for renewable energy projects.

Cyprus has also introduced tax deductions following the amendments to the Income Tax Law 118(I)/2002 to encourage green investments. These incentives include:

• up to EUR1,000 for improving the energy efficiency of the primary residence in Cyprus;
• up to EUR1,000 for the installation of technical energy efficiency systems of the primary residence, renewable energy systems and batteries for storage of electricity; and
• up to EUR1,000 for electric vehicles that are registered with the Department of Road Transport.

Cyprus does not have a dedicated legislative framework governing the cessation of activities or decommissioning and disposing of renewable energy installations. Instead, the disposal of renewable energy equipment is regulated under Cyprus’ waste management framework. In particular, photovoltaic panels constitute waste electrical and electronic equipment and the producers are responsible for implementing the EU WEEE Directive for the collection and disposal of the photovoltaic panels. Recently, Cyprus authorised WEEE Cyprus Ltd to be supervise the disposal or photovoltaic panels.

Cyprus’ renewable energy policy is expected to continue focusing on achieving the targets and ambitions set out in the Updated National Energy and Climate Plan (NECP) 2021–2030 and the broader objectives of the European Green Deal. Some of these key policy priorities are to:

• increase renewable energy deployment;
• reduce greenhouse gas emissions;
• improve energy efficient;
• tighten energy security;
• digitise the electricity grid; and
• promote energy storage.