PHAETHON Analyses August 2026 Electricity Market: Prices Reach New Highs Despite Lower Demand
The Cyprus competitive electricity market recorded another increase in prices in August 2026, with the average Day-Ahead Market (DAM) Market Clearing Price (MCP) reaching €241.62/MWh, the highest monthly average since the market’s launch. This represented an 8.4% increase compared with July, despite slightly lower electricity demand and broadly unchanged volumes of conventional energy cleared in the DAM.
The latest PHAETHON Electricity Market Report examines the eleventh full month of competitive market operation, providing an overview of developments in the Day-Ahead and Forward Markets, price formation, and the forecasting methodology used to assess market conditions.
August was characterised by persistently high electricity prices, with no zero-price or very low-price periods recorded during the month. At the same time, the standard deviation of the MCP fell to its lowest level since the launch of the competitive market, indicating that prices remained comparatively stable, albeit consistently high.
Although photovoltaic generation continued to exert downward pressure on prices during daylight hours, this effect was not sufficient to offset the prevailing price levels. The increase in the average MCP, despite slightly lower demand and broadly stable conventional energy volumes, also draws attention to the role of supply-side conditions in shaping market outcomes.
As noted by Dr Andreas Kyprianou, Associate Professor at the University of Cyprus, Member of PHAETHON CoE, and co-author of the report:
“August saw a further increase in electricity prices in Cyprus, with the average Day-Ahead Market price reaching a new high since the launch of the competitive market. Interestingly, this increase occurred despite slightly lower demand and broadly stable conventional energy volumes, pointing to the important role of supply-side conditions in price formation. While photovoltaic generation continued to exert downward pressure on prices during daylight hours, this was not sufficient to offset the persistently high price levels. The findings highlight the importance of considering demand, renewable energy availability and conventional generation costs together when assessing electricity market outcomes.”
📊 Key findings from August 2026
- Average Day-Ahead Market (DAM) MCP: €241.62/MWh — the highest monthly average recorded since the launch of the competitive electricity market, representing a further increase of approximately 8.4% compared with July and 39.4% compared with June.
- Volume-Weighted Average Price (VWAP): €243.06/MWh — reaching a new monthly high, exceeding the previous record of €225.85/MWh recorded in July.
- Zero-price events: no zero- or very low-price periods were recorded throughout August, with MCPs remaining between approximately €175/MWh and €284/MWh.
- Price variability: the standard deviation of the MCP fell to €19.71/MWh, the lowest monthly level recorded since the launch of the competitive market, indicating comparatively stable but persistently high prices.
- Forward Market (FM) activity: average traded volumes stood at approximately 128.87 MWh, remaining close to the record monthly average of 129.02 MWh recorded in July.
- DAM-cleared energy volumes: average cleared conventional sell offers in the DAM stood at 187.00 MWh, broadly unchanged from July’s 187.43 MWh. Average cleared RES sell offers reached 29.58 MWh, below July’s record of 31.84 MWh but above June’s 27.23 MWh.
- Electricity demand: average demand per half-hour trading period stood at approximately 451 MWh, slightly below July’s average of approximately 455 MWh, but remaining at a high level.
- Maximum Market Clearing Price (MCP): reached €284/MWh during August, the highest price recorded in the month.
🔎 New insights from the August report
The August report provides further insight into the interaction between electricity demand, renewable generation and conventional supply in Cyprus’s competitive market:
- Persistently high prices with limited variability: The average DAM MCP reached a new high, while its standard deviation fell to the lowest level observed since market launch. No zero-price or very low-price periods were recorded.
- Supply-side conditions and price formation: The further increase in the average MCP occurred despite slightly lower demand and broadly unchanged conventional energy volumes, underlining the importance of supply-side factors in determining market prices.
- Renewable generation and residual demand: Photovoltaic generation continued to reduce prices during daylight hours, with midday average MCP levels falling to approximately €209/MWh. Nevertheless, conventional generation remained necessary to meet demand.
- Sustained Forward Market activity: Average FM trading volume remained close to the record level observed in July, indicating continued high trading activity.
- Broader European comparison: The report extends its comparative analysis to cover Cyprus and 16 other European electricity markets, providing further context for the country’s price levels.
Market insights
The European comparison places Cyprus at the top of the 17 markets examined, with an average DAM price of €241.62/MWh in August 2026. This was €64.73/MWh higher than the second-highest market, North Italy.
The sustained price differential reflects the structural characteristics of Cyprus’s electricity system, including its reliance on imported liquid fuels, limited interconnection with other markets, relatively low renewable energy penetration and constraints associated with the size and flexibility of the system. Exposure to international fuel-price fluctuations further contributes to the challenges facing the electricity market.
These findings reinforce the importance of accelerating the integration of renewable energy sources, while strengthening storage capacity and system flexibility to support a more resilient and cost-effective electricity system.
Further Information
For further information about the report and PHAETHON CoE’s electricity market analysis, please contact:
- Professor George E. Georghiou – [email protected]
- Dr Andreas Kyprianou – [email protected]
- Dr Stylianos Loizidis – [email protected]
Download Report
You can download the full PHAETHON Electricity Market Report – August 2026 here:
