The public debate on energy has largely focused on transport fuels, but the surge in international oil prices is now being felt directly in electricity bills as well. The price of electricity has risen by 27% since May, with the cost per kilowatt-hour increasing to 33 cents from 26 cents, placing additional pressure on households and businesses already struggling with high fuel costs.
International oil prices remained above $110 per barrel on Monday, driving up the cost of electricity generation in Cyprus and increasing the likelihood of higher power bills in the coming months.
According to Christina Papadopoulou, spokesperson for the Electricity Authority of Cyprus (EAC), the total bill for a residential consumer using 800 kWh every two months now stands at €264, while a household consuming 1,000 kWh pays around €330.
EAC data show that the average electricity tariff currently stands at 33 cents per kWh including VAT, compared with 27 cents in May.
Higher prices driven by fuel costs
Papadopoulou said the indicative electricity bill is 4% higher than the previous month and 11% higher than the previous two-month billing period.
On an annual basis, electricity prices have increased by 15%, while compared with two years ago they are up 12%. By contrast, prices remain 5% lower than three years ago.
“The increase is entirely due to rising liquid-fuel prices resulting from the international energy crisis affecting all of us,” she said.
“The issue of reducing energy costs concerns all EU member states. As EAC, we had pre-purchased fuel and CO₂ emission allowances at lower prices, which were used during the summer months. Those reserves have now been exhausted. We also attempted to secure additional fuel purchases in advance, but unfortunately suppliers did not agree.”
According to EAC figures, the average weighted fuel price rose from €620 per metric tonne in April 2026 to around €920 per metric tonne in October, while diesel prices exceeded €1,000 per metric tonne during certain periods.
“As a result, fuel costs have increased by 48% within six months,” Papadopoulou said.
Despite this increase, electricity prices rose by a lower rate of 27%, partly because some generation comes from EAC-owned photovoltaic parks, where production costs are about 5 cents per kWh, helping to limit further increases.
Need for greater renewable energy use
Papadopoulou noted that Cyprus' energy mix remains heavily dependent on liquid fuels, which still account for around 90% of electricity generation, while renewable energy sources contribute only 10%.
“The integration of more renewable energy into the electricity generation mix is a necessary condition if Cyprus is to reduce its dependence on conventional fuels and achieve a gradual stabilisation and reduction in electricity prices,” she said.
She added that EAC should be allowed to enter into bilateral energy-purchase agreements with private renewable-energy producers so that the benefits can be passed on to consumers through lower electricity tariffs.
Existing support measures
Since 1 May 2025, VAT on electricity for all residential consumers has been reduced to 5%, a measure that remains in force until 30 March 2027.
In addition, government subsidies have been extended until the end of 2026 for vulnerable consumers covered by Tariff 08 and for small commercial customers under Tariff 10.
For beneficiaries of Tariff 08, the subsidy covers the full increase in energy costs.
How electricity prices could fall
According to EAC, the key factors that could reduce electricity costs are:
- Greater penetration of renewable energy sources.
- Large-scale energy storage systems.
- More efficient power-generation units.
- The introduction of natural gas.
“The arrival of natural gas would significantly reduce the cost of purchasing greenhouse-gas emission allowances,” Papadopoulou said.
She noted that EAC has already completed the necessary modifications to its units at Vasiliko and is ready to use natural gas when it becomes available.
However, responsibility for importing natural gas rests with DEFA and not EAC.
At the same time, large-scale energy-storage projects are moving forward.
Existing measures are not enough, economist says
Economist Tasos Yiasemides argued that the continued rise in fuel prices highlights the limitations of current support measures.
“Reduced taxation lowers the overall price level, but it cannot reverse the trend as long as international markets and geopolitical instability continue pushing costs upwards,” he said.
He noted that diesel, which underpins transport, agriculture and fisheries, remains at record-high levels, with the impact filtering through the economy into household expenses.
Iasemides also pointed to what he described as a less-discussed aspect of the issue.
“VAT is calculated as a percentage, so every increase in prices automatically raises government revenue. Part of the support provided therefore returns to public coffers.”
With public finances currently showing a surplus, he said the key question is how available fiscal space should be used.
According to Iasemides, any new support measures should be targeted.
“Broad reductions tend to benefit those who consume more, are expensive to maintain and are difficult to withdraw. Additional tax revenues could instead be directed towards low-income pensioners, vulnerable households and people living in rural areas who have limited transport alternatives.”
He also suggested assistance for professionals whose livelihoods depend heavily on fuel costs, helping to prevent price increases from being passed on to food products.
In addition, he called for stronger market oversight, arguing that large price differences between fuel stations cannot be explained solely by operating costs.
Price pressures likely to continue
Investment analyst and board member of CFA Society Cyprus, Kyriakos Inios, said volatility in international energy markets is expected to persist.
“International oil prices are likely to remain high and volatile over the coming months,” he said.
While tankers continue to pass through the Strait of Hormuz and supply flows are gradually recovering, markets have not yet fully normalised. Low stock levels and high transport costs continue to support elevated prices.
According to Inios, consumers should pay particular attention to refined products such as petrol and diesel, which directly affect retail fuel prices.
Pressure on diesel markets is expected to continue into 2027, according to forecasts by the International Energy Agency (IEA).
Keravnos calls for restraint
Finance Minister Makis Keravnos said on Tuesday that the government's objective is to contain fuel prices rather than achieve major reductions.
He added that Cyprus intends to raise once again at European level the issue of greater flexibility in the application of fiscal rules in order to address the consequences of the energy crisis.
Keravnos said the government is monitoring the implementation of support measures already announced and noted that an initial assessment by the Consumer Protection Service found a 5% reduction in the price of certain essential products.
Asked whether rising oil prices make further support measures necessary, given that many increases appear to be offsetting existing assistance schemes, the Finance Minister replied that the international environment does not allow expectations of significant price reductions.
