EBRD supports decarbonisation of Cyprus’ energy sector

Cyprus is to benefit from cleaner air and reduced energy costs following the introduction of natural gas to the country, with a project jointly financed by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the European Union (EU).

The EBRD is providing a €80mn loan to the Natural Gas Infrastructure Company of Cyprus (ETYFA*) for the acquisition of a floating storage and regasification unit (FSRU) and the development of related infrastructure. The FSRU will be permanently anchored about 1.3 km off the coast of Limassol in Vasilikos Bay and will connect directly to the adjacent Vasilikos power station, the largest power plant in Cyprus. 

The EU is extending a €101mn grant for the project under the Connecting Europe Facility. The remaining project costs will be funded by a €150mn loan from the EIB and a €43mn equity contribution from the Electricity Authority of Cyprus (EAC).

The project is a critical component in the energy strategy of Cyprus, with significant energy security, environmental and economic impacts. Close to 90% of the island’s electricity supply relies on petroleum products imports and its energy system is isolated, without interconnections for electricity or gas. The new infrastructure will allow Cyprus to replace expensive and polluting heavy fuel oil with cleaner natural gas, says the EBRD.

The project is expected to reduce the country’s CO₂ emissions by 10% and lead to a substantial reduction in local air emissions (sulphur dioxide, particulate matter and nitrogen oxides). In the longer term, the flexible gas-fired Vasilikos power plant will play a key back-up role as Cyprus moves increasingly to wind and solar power as part of an accelerating green transition in the EU.

*ETYFA is jointly owned by the Natural Gas Public Company (DEFA) of Cyprus and EAC, both state-owned entities.