Market Status: Cyprus - Wind springs to life as construction starts

CYPRUS: Cyprus is getting ready to join the wind club as construction of the country's first wind farm proceeds.

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The groundbreaking ceremony for the 82MW Orites wind farm, developed by local firm DK Windsupply, was held in September 2009 and company chairman Akis Ellinas expects the project, which uses 2MW Vestas turbines, to be commissioned by August.

Signs of progress on the island nation come after the European Commission gave the green light to a revised support scheme for wind energy last July. Under the new incentive plan, wind producers are awarded EUR0.166/kWh for the first 1,750 hours of operation each year at full load. Above that volume, the payment reverts back to the electricity authority's standard purchase price, about EUR0.10/kWh. The tariff is good for 20 years and is not adjusted for inflation. It applies to the island's first 165MW of wind capacity.

Simon Page, investment manager at Platina Partners, which is providing financial backing for the Orites project, says the revised support mechanism was necessary, given the island's relatively modest wind resources. "The revised scheme enabled this project to go ahead and should enable other projects to go ahead," he says.

Indeed, other projects are already moving forward, including the 32MW Alexigros wind project promoted by Cyprus Wincono, a joint venture between local developer Ketonis and Germany's Wincono. "We are working very closely on financing now and hope to begin construction work this spring," says Sylvia Trabert, head of project management at Wincono Cyprus. She forecasts the Alexigros project could be operational in 2011.

Rokas Renewables, a subsidiary of Spain's Iberdrola, has two advanced wind projects in the island's Larnaca district, at 20MW and 44MW respectively. Tsantilas Thanasis, general director of Rokas Renewables, says all licences have been granted for the 20MW project. All that is needed now is formal approval from the Cyprus ministry of commerce, industry and tourism for the project's integration into the new tariff scheme. Thanasis expects the building licence and tariff agreement for the 44MW project to be obtained shortly, with construction scheduled for 2011.

DK Windsupply's Orites wind farm is due to be expanded to about 140MW in the next few years. "We are working on the second phase and we believe that, by the end of this year, we will be in a position to complete the documentation and start building in 2011," says Ellinas.

One looming problem is that Cyprus looks set to bump up against the 165MW to which the new tariff scheme applies in the not-too-distant future. "I don't know if it will be worked out this year but, in the relatively near term, everyone is waiting to see what the feed-in tariff will be above the 165 MW limit," says Wincono's Trabert.

"We have told the government that 165MW is not sufficient and we would like to increase this limit to 250MW," says Ellinas, who is also president of the Cyprus wind energy association. "We already have licences up to 250MW and that would be a fair arrangement." Cyprus is targeting wind capacity of 165MW in 2013 and is aiming for around 300MW in 2020.

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