Christakis Hadjilaou, electrical engineer with many years of experience in the operation of the power system
The operation of residential photovoltaic (PV) systems in Cyprus is entering a new phase, marked by major changes in how households produce, consume and sell electricity.
A shift from net metering to net billing, rising renewable energy curtailments, the growing role of storage systems, changes in subsidy schemes and the introduction of a competitive electricity market are reshaping the landscape for thousands of households.
Officials and sector data show that these developments are already affecting the financial viability of both existing and new solar investments, while also raising new questions over how self-produced electricity should be used and valued.
From net metering to net billing
For years, net metering has been the dominant framework for residential solar systems in Cyprus.
According to publicly available data, around 100,000 households currently operate under net metering, with total installed capacity reaching approximately 450 MW — around 43% of Cyprus’ total solar capacity.
From 1 January 2026, new residential PV installations will no longer fall under net metering and will instead operate under net billing.
The change significantly alters how energy exports to and imports from the grid are accounted for and forces prospective investors to reassess project economics.
Key differences explained
Under net metering, electricity is offset on an energy basis every two months. Surplus electricity exported to the grid is deducted from imported electricity. Any excess is carried forward, while deficits are billed at retail rates. Accumulated surpluses are typically reset every three years without compensation, depending on contract terms.
Under net billing, the settlement is financial rather than volumetric. Exported electricity is sold at wholesale prices, while imported electricity is purchased at retail rates.
In practice, this means households “sell low and buy high”, making self-consumption during production hours significantly more important.
Role of storage systems
Battery storage is becoming increasingly important under the new system.
Storage allows households to retain excess solar generation for later use, increasing self-consumption and reducing reliance on the grid. This becomes particularly relevant under net billing, where exported electricity receives lower compensation.
However, investment decisions depend heavily on installation costs and ongoing technological developments in storage solutions.
What happens to existing contracts
Existing net metering contracts will remain valid until their expiration, typically lasting around 15 years, and will not be immediately affected by the new regime.
After expiry, households may transition to net billing or other options available under the competitive electricity market framework.
Treatment of surplus energy
Most net metering contracts provide for the periodic reset of accumulated surplus energy, typically every one to three years.
Some older contracts include compensation provisions, but recent regulatory decisions have moved away from this approach.
At the start of 2026, the Electricity Authority of Cyprus Supply decided, under the 2024 renewable energy subsidy scheme, to reset accumulated surpluses without compensation. This decision has triggered reactions from households and was referred to Parliament before being sent back to the Council of Ministers for a final decision.
New support schemes
The popular “Photovoltaics for All” subsidy scheme ended on 31 December 2025, and no active grant programme is currently in place.
However, a new €20m scheme titled “Upgrade–Save” is expected in September 2026, focusing on household energy efficiency upgrades.
The programme may also subsidise solar systems combined with storage, in line with the EU “energy efficiency first” principle.
Participation in the electricity market
Households with PV systems may also participate in Cyprus’ competitive electricity market under the current regulatory framework.
Under a 2024 decision by the Cyprus Energy Regulatory Authority, households not receiving subsidies can sell surplus electricity through agreements with suppliers or aggregators operating in the market.
Why is renewable energy being curtailed
Curtailments occur to maintain balance in the electricity system.
When solar production is high and demand is low, excess generation can threaten grid stability. In such cases, system operators may instruct reductions in solar output.
Large solar parks are curtailed first, followed by newer residential systems if necessary. Older household systems without remote control mechanisms are generally not affected.
Can curtailments be avoided?
One option is a zero-export operation, where systems are configured to prevent electricity from being fed into the grid.
In such cases, all production is consumed on-site unless temporary export is allowed.
Full off-grid operation is also possible in limited cases, subject to approval, particularly in isolated areas. These systems typically require solar panels, batteries and backup diesel generators.
Any modifications to existing systems require approval from the Electricity Authority of Cyprus Supply, and in some cases, installation of curtailment control equipment.