Cyprus government announces electricity VAT reduction and addresses photovoltaic policies

The Electricity Authority of Cyprus (EAC), through spokesperson Christina Papadopoulou, clarified that the organization follows Ministry of Energy policies regarding photovoltaic systems. The EAC stated that consumers sign contracts explicitly stating that energy surpluses cleared from the grid will not be compensated by the EAC, and any potential state-funded compensation would not be handled by the utility. Additionally, the government announced a reduction in VAT on electricity from 9% to 5%, effective from May 1, 2024. This measure aims to mitigate rising costs caused by global fuel price hikes linked to geopolitical conflicts. The reduced rate will remain in effect until March 31, 2027, before returning to the standard 19%. The policy impacts approximately 500,000 residential accounts across Cyprus. Currently, electricity costs are approximately 26 cents per kilowatt-hour, and the EAC maintains flexibility in fuel procurement to manage these costs.