Nicosia, Cyprus. Cyprus curtailed an estimated 306 gigawatt-hours of solar energy in 2025, as nearly half of distributed solar generation could not be absorbed by the island’s electricity grid. The country also spent an estimated €250–350 million on EU carbon allowances tied to ongoing fossil-fuel generation.
Rising curtailment on an isolated grid
Four years ago, solar curtailment in Cyprus was essentially zero, before reaching an estimated 29% in 2024 and approaching 46% in 2025, according to industry estimates. The increase has been attributed to the lack of storage for midday solar surplus and the absence of interconnections to export excess electricity.
The curtailed 306 GWh was described as more energy than the city of Paphos consumes in a year, and it was generated without fuel costs before being discarded. Cyprus operates the only fully isolated electricity grid in the European Union, with no electrical link to any other country, leaving no outlet when solar output exceeds demand at midday.
Battery storage and price spreads
Battery energy storage systems, including containerised installations co-located with solar parks, are designed to capture surplus electricity during midday peaks and discharge it later, including during evening demand peaks.
Data from the Cyprus Transmission System Operator’s Day-Ahead Market covering 134 consecutive days from October 2025 to February 2026 showed average midday wholesale prices of €101 per megawatt-hour and average evening peak prices of €183. The spread was positive on all 134 days, with no day in which storing solar energy and releasing it later would have lost money.
For a typical 5 MW solar park adding a 20 MWh battery system, the annual revenue from recovering curtailed energy alone was estimated at approximately €294,000. The payback period was estimated at six to nine years, followed by continued revenue for a further decade.
Regulatory changes and remaining limits
Since January 2026, Cyprus has allowed solar park operators to install battery storage systems alongside existing plants, enabling operators to begin recovering curtailed energy. Several operators have placed orders for battery equipment, and the first installations are expected later in 2026.
CERA and the DSO were credited for establishing the Category B framework that enables these installations. However, the framework does not allow battery storage to participate as a buyer in the electricity market, meaning operators cannot purchase surplus power from the day-ahead market and sell it during peak hours, as is possible in Germany, Spain, Italy, Greece, Portugal and the Netherlands.
Category B systems cannot charge from the grid and may only charge from co-located solar panels. Software-based power limiting, described as a standard practice encouraged across Europe, is not permitted.
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