Concentrated Solar Power and Thermal Energy Storage: A Strategic Case for Cyprus

Concentrated Solar Power and Thermal Energy Storage:
A Strategic Case for Cyprus

Nestor Fylaktos, Marios Georgiou, Theodoros Konstantinou, Kypros Milidonis, Constantinos Taliotis, and Theodoros Zachariadis

Policy Brief No. 8, May 2026

KEY POINTS

The isolated Cypriot grid curtailed significant amounts of its renewable generation in 2025. Hybrid solutions using electrochemical batteries with Concentrated Solar Power (CSP) and Thermal Energy Storage (TES) mitigate this spillage and minimise total needs for energy storage.
CSP and TES installations can help stabilise the Cypriot power network without the need of additional investments in equipment like grid-forming inverters.
CSP and TES infrastructure utilise geopolitically secure materials, operate for 30 years essentially without degradation, and can stimulate local economic activity to a larger extent than imported photovoltaic panels and batteries.
Policy frameworks should therefore incentivise hybrid installations of energy storage, combining photovoltaics and batteries with CSP and TES, and explore the possibility to convert existing power generation assets into zero-carbon Carnot batteries.

Background

The electrical power system of the Republic of Cyprus operates under significant technical constraints. The isolated nature of the network, coupled with the continued deployment of non-dispatchable photovoltaic (PV) generation, has led to structural mismatches between energy supply and demand. In 2025, operators curtailed 22% of the national renewable generation potential. To address this inefficiency, grid architecture requires a transition beyond short-duration electro-chemical storage. Concentrated Solar Power (CSP) integrated with Thermal Energy Storage (TES) provides a mechanism for long-duration load shifting whilst inherently supplying grid services like the synchronous inertia required for frequency stability.

The Curtailment and Grid Stability Challenge

Cyprus relies entirely on domestic generation to match instantaneous demand. The integration of inverter-based PV systems has reduced the mechanical rotational inertia traditionally supplied by fossil-fuelled synchronous generators. This reduction leaves the grid susceptible to volatile rate-of-change-of-frequency events and potential load shedding.
When solar irradiance peaks during the spring months, moderate cooling and heating demand leads to overgeneration. System operators must curtail renewable output to maintain minimum load levels on conventional thermal units, which remain online to provide reserve margins and voltage regulation. This curtailment protocol limits the use of zero-marginal-cost renewable energy and necessitates the continued consumption of imported fossil fuels. In 2025, Cyprus experienced elevated curtailment levels; 22% of the country's renewable generation potential was cut (see Figure 1).

climate change adaptation investments in cyprus up to 2050

Figure 1: Total monthly RES curtailments and their fraction of total RES generation in Cyprus, 2025. Source: Cyprus Transmission System Operator.

Simulation Results

Figure 2 shows simulations of the electricity system of Cyprus using a version of the International Renewable Energy Agency’s FlexTool software that has been specifically developed by the Cyprus Institute for the Cypriot electricity system, which uses hourly generation and demand data for all substations connected to the transmission system. Four scenarios were examined:

Baseline Scenario: Unmitigated structural mismatch causes massive seasonal energy spillage, peaking between March and May.
Short-Duration BESS (400kWh): Yields an imperceptible reduction in curtailment. Marginal deployments cannot absorb massive diurnal overgeneration.
Bulk TES (2,000MWh): Two 100MW, 10-hour units absorb the daytime generation surplus for delayed evening dispatch, executing the required bulk energy shift.
Hybrid Architecture (100MWh BESS & 500MWh TES): Achieves curtailment reductions directly comparable to the standalone 2,000MWh TES. Electrochemical batteries manage high-frequency, intra-day ramps, whilst thermal storage handles the continuous, long-duration energy shift. This hybridisation optimises total storage volume and capital allocation.

Figure 2: Simulated curtailment in the electricity system of Cyprus for 2025.

Supply Chain Security and Strategic Resilience

For an isolated island nation reliant on imported energy, the geopolitical vulnerability of the supply chain is a central consideration. Lithium-ion battery scaling is linear and capital-intensive, rendering it economically challenging for continuous baseload power exceeding four to six hours. Furthermore, electro-chemical battery manufacturing relies on critical minerals such as lithium, cobalt, manganese, and nickel. The supply chains for these materials are concentrated in a limited number of jurisdictions, exposing procurement to supply shocks and commodity pricing fluctuations.

Conversely, the supply chain for CSP and TES infrastructure utilises abundant, geopolitically secure materials: steel, flat glass, concrete, and industrial salts. TES scales volumetrically; expanding storage capacity requires larger insulated containment vessels and additional thermal media. This yields a lower marginal cost for long-duration storage, coupled with a 30-year operational lifespan without cycle-degradation. In Europe, up to 80% of the capital expenditure can be retained within the regional economy through the domestic manufacturing of mounting structures, piping, and civil engineering works. This provides macroeconomic benefits—such as job creation and industrial growth—that importing turnkey battery systems cannot fully replicate.

Policy Recommendations

To safeguard grid stability and eliminate the economic penalties of renewable curtailment, the following strategic actions are recommended:

Implement Hybrid Storage Procurement: Design future grid storage tenders to mandate or heavily incentivise hybrid architectures. Procurement frameworks must value both the rapid frequency response of electro-chemical batteries and the bulk energy shifting of long-duration thermal storage.
Initiate Carnot Battery Feasibility Studies: Commission engineering and economic feasibility studies for retrofitting existing power stations into Carnot batteries. Repurposing existing synchronous assets offers a route to stabilising the isolated grid without stranding legacy infrastructure.
Prioritise Geopolitically Secure Infrastructure: Embed supply chain resilience criteria into national energy storage strategies, favouring technologies with high local content potential and low reliance on critical minerals.
Market Integration Mechanisms: Establish mechanisms to effectively integrate CSP and TES in the electricity market, aligning with the European Commission's mandates for accelerating large-scale renewable deployments and deeper internal market integration. Without appropriate price signals and targeted support or remuneration schemes, such technologies may remain under-deployed despite their technical suitability.

Conclusion

Concentrated Solar Power with thermal energy storage offers a specific combination of dispatchability, synchronous inertia, long-duration storage, and supply chain security. The window for deployment before the grid commits entirely to a battery-centric storage strategy is narrowing. Strategic integration of these hybrid technologies will ensure grid resilience and boost local economic activity whilst leveraging geopolitically secure supply chains to deliver dispatchable, low-carbon electricity for the Republic of Cyprus.

Further information is provided in our technical report, available here.