PHAETHON Analyses Eighth Month of Competitive Electricity Market: Lower Prices & Record Forward Trading in May 2026

The Republic of Cyprus’s competitive electricity market has now completed its eighth full month of operation, providing further evidence of how renewable energy generation, market dynamics, and system characteristics continue to shape electricity prices. The May 2026 results show that the average Day-Ahead Market (DAM) price declined to its second-lowest level since the market’s launch, while widespread zero-price periods continued to occur across almost the entire month due to strong photovoltaic (PV) generation combined with relatively low electricity demand.

Despite this downward trend, Cyprus continued to record substantially higher wholesale electricity prices than most European electricity markets, highlighting the structural characteristics of the island’s isolated power system and its continued dependence on conventional fuel-based generation.

This competitive market framework continues to enhance transparency, strengthen consumer choice, and support Cyprus’s long-term objectives for renewable energy integration, energy security, and alignment with European decarbonisation policies.

At the forefront of monitoring and analysing this transition, the PHAETHON Centre of Excellence (CoE) has published its May Electricity Market Report — the eighth in a monthly series delivering transparent, data-driven analysis of Forward Market activity, Day-Ahead Market price formation, generation mix trends, electricity price forecasting, and the evolving role of renewables 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:

“The May results highlight an increasingly mature market, where growing photovoltaic generation is delivering more frequent low- and zero-price periods and contributing to the second-lowest average market price since launch. At the same time, the analysis confirms that structural characteristics of the Cypriot electricity system continue to keep wholesale electricity prices well above most European markets, while record Forward Market activity points to the growing importance of forward trading in electricity price formation.”

📊 Key findings from May 2026:

• Average Day-Ahead Market (DAM) price: €153.80/MWh — the second-lowest monthly average recorded since the launch of the competitive electricity market.
• Volume-Weighted Average Price (DWAP): €206.96/MWh — remaining considerably higher than the average DAM price despite lower monthly MCPs.
• Zero-price events: observed on all days except 3 May, reflecting sustained midday oversupply from strong PV generation combined with low demand.
• Maximum Market Clearing Price (MCP): €262/MWh — recorded during evening hours when renewable generation declined and conventional generation met peak demand.
• Forward Market (FM) activity: reached a new record high, with average traded volumes increasing to 126.99 MWh, the highest since market launch.
• Generation mix: conventional generation cleared in the DAM fell to its lowest level since market launch, while renewable energy continued to play an increasingly important role during daylight hours.
• Price drivers: strong PV generation continued to suppress prices during midday periods, while limited renewable availability during evening hours remained the principal driver of price increases.
• European market comparison: despite lower prices in May, Cyprus continued to exhibit significantly higher wholesale electricity prices than most European electricity markets due to its isolated system, reliance on liquid fuels, and limited flexibility.

🔎 New in this report

• Detailed analysis of the interaction between Forward Market commitments and Day-Ahead Market price formation, demonstrating how record Forward Market activity is increasingly influencing market outcomes and the volumes cleared in the DAM.
• First detailed comparison with European electricity markets, showing that despite declining prices, Cyprus continues to record substantially higher wholesale electricity prices than most interconnected European markets because of its dependence on liquid fuels, the absence of electrical interconnections, and the structural characteristics of its isolated power system.
• Expanded assessment of low- and high-price market events, confirming that widespread zero-price periods are closely linked to strong photovoltaic generation, while the month’s only extreme price event resulted primarily from reduced renewable availability rather than unusually high electricity demand.
• Further evidence that renewable generation alone does not determine market outcomes, with electricity demand and Forward Market commitments playing a decisive role in determining the volume of renewable energy ultimately cleared in the Day-Ahead Market.

Market insights

The May results reinforce the continuing evolution of Cyprus’s competitive electricity market. High photovoltaic penetration is increasingly driving prolonged zero-price periods during daylight hours, while conventional generation remains essential during evening peak demand and periods of limited renewable generation. At the same time, record Forward Market activity indicates that market participants are making greater use of forward trading as the competitive market matures.

The analysis also demonstrates that electricity price formation continues to depend on the interaction between renewable generation, electricity demand, Forward Market commitments, and system flexibility, rather than renewable output alone.

Overall, the May findings indicate that Cyprus’s competitive electricity market is becoming increasingly responsive to renewable generation, with photovoltaic output now regularly producing prolonged zero-price periods. However, they also demonstrate that structural characteristics—including the island’s isolated operation, dependence on liquid fuels, and limited flexibility—continue to constrain the extent to which these wholesale market improvements translate into price convergence with European electricity markets. Continued investment in storage, system flexibility and market development will therefore be essential to maximise the value of increasing renewable energy penetration.

Further Information

For further information, please contact:

• Professor George E. Georghiou — [email protected] 
• Dr Andreas Kyprianou — [email protected] 
• Mr Stylianos Loizidis — [email protected] 

Download Report

You can download the full PHAETHON Electricity Market Report – May 2026 here: