Greece’s Regulatory Authority for Energy (RAAEY) has made a significant decision regarding the methodology for calculating the regulated revenue of the Greece-Cyprus electricity interconnection project, marking a crucial step toward finalizing the regulatory framework for the Great Sea Interconnector (GSI) project.
According to a briefing from Greek grid manager ADMIE, that is the project’s implementing body, on July 11, the agency’s leadership will present the complete GSI cost-benefit study to Cyprus’ minister of energy, commerce and industry. Key conclusions from this study were initially shared with Cypriot authorities in early June.
The Greek regulatory authority’s decision acknowledges the necessity to commence revenue payments from the project’s construction phase, aligning with a similar decision by Cyprus’ regulatory authority (CERA) in the summer of 2023 regarding the previous implementing body.
In its ruling, RAAEY also specifies a 50-50 allocation for operating costs, endorsing ADMIE’s proposal for a larger share of operational expenses compared to the 37% originally planned for capital expenditures (CapEx).
Additionally, RAAEU’s methodology includes enhanced provisions to cover geopolitical risks associated with the project, explicitly stating that these costs will be fully supported through the regulatory asset base. This mirrors expectations from CERA’s corresponding decision, underscoring the project’s national significance for both countries.
The adoption of RAAEY’s decision is deemed critical, as it averts production halts by submarine cables manufacturer Nexans, which faced uncertainty due to regulatory delays.
ADMIE highlights the next pivotal milestone: obtaining two additional decisions from Greek and Cypriot regulatory authorities by mid-August to finalize the project’s regulatory framework. This aims to eliminate lingering regulatory uncertainties and facilitate Nexans’ full engagement, while also expediting investor decisions pending the finalized regulatory framework.Unmute
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Despite the framework’s incomplete status, ADMIE has secured binding financing terms from a commercial bank and submitted its revenue proposal to both regulators, incorporating these terms alongside the project’s technical complexity.
