The liberalisation of the electricity market in Cyprus represents one of the most significant regulatory transformations in recent decades. After years of operating under a monopolistic framework dominated by the Electricity Authority of Cyprus (EAC), the market is finally moving towards a competitive structure aligned with European Union (EU) energy directives. This change promises to create opportunities for investment, innovation, and consumer choice, but it also introduces legal and regulatory complexities that stakeholders must address carefully.
Key Legal Milestones Shaping the Market
The journey towards liberalisation has unfolded gradually. For decades, the EAC functioned as a vertically integrated utility, controlling generation, transmission, distribution, and supply. Early reforms such as the introduction of Feed-in Tariffs and net-metering in 2013 encouraged renewable energy adoption, while regulatory decisions in 2014 mandated the unbundling of the EAC’s activities, laying the foundation for Independent Power Producers (IPPs) to enter the market.
Progress, however, was slower than anticipated. In 2017, transitional market arrangements were introduced to align with EU requirements, yet the EAC retained its dominant role in generation and supply. The decisive shift has come with the launch of the Competitive Electricity Market (CEM), following CERA Decision No. 185/2025. This framework will introduce bilateral forward contracts, a centralized Day-Ahead Market, and a Real-Time Balancing Market, marking the full liberalisation of electricity trading in Cyprus.
Infrastructure and Integration Challenges
For liberalisation to succeed, structural and technological challenges must be addressed. Grid congestion and renewable curtailments have already reached record highs in 2025, highlighting the urgent need for energy storage. Both the government and the private sector are now investing heavily in grid-scale and distributed Battery Energy Storage Systems (BESS). Regional integration is another key component of the transition. The Great Sea Interconnector, scheduled for completion by 2030, will link Cyprus with Israel and Greece, strengthen energy security, and facilitate cross-border electricity trading. At the same time, the rollout of smart meters and digital grid management systems will be crucial to achieving transparency, demand-side flexibility, and greater renewable penetration.
Legal and Regulatory Considerations
While liberalisation creates space for innovation and competition, it also generates new regulatory and contractual demands. Market participants must secure the necessary licences from CERA, structure bilateral agreements and Power Purchase Agreements in a way that balances risk and reward, and comply with evolving tariff and consumer protection requirements. There are also broader issues to consider, including competition law, state aid rules, and the stability of long-term investment frameworks. The complexity of these obligations means that legal foresight is essential to mitigate risks, ensure compliance, and safeguard commercial interests.
What’s Next – Positioning for Success
The Cypriot electricity market is entering a decisive era. The launch of the CEM in September 2025 with the first trading day on October 1,2025, is expected to transform the way electricity is produced, traded, and consumed. For businesses, the coming years will be critical in determining whether they can adapt effectively to the new landscape. Opportunities exist for suppliers, aggregators, and renewable developers alike, but success will depend on strategic positioning, sound contractual frameworks, and proactive engagement with regulators.
How We Support Market Participants
As legal advisors specialising in energy law, regulatory compliance, and cross-border investment, we assist clients in navigating this evolving market with confidence. Our expertise spans in licensing procedures with CERA, the drafting and negotiation of bilateral contracts and PPAs.
With the liberalisation milestone fast approaching, early preparation is the key to turning regulatory change into commercial advantage. Businesses that act now will be best placed to capture the opportunities of a liberalised, competitive, and resilient electricity market in Cyprus.
📩 For tailored legal advice on how your business can prepare for the new electricity market framework, we are here to help. To arrange a consultation www.pyrgouvakis.com
