PHAETHON Analyses June 2026 Competitive Electricity Market: High Prices & Record RES Participation

June 2026 marked the ninth full month of operation of Cyprus’ competitive electricity market, with market conditions continuing to reflect the complex interplay between renewable energy generation, electricity demand, conventional generation and forward market activity. Against this backdrop, the PHAETHON Centre of Excellence (CoE) has published its June Electricity Market Report, providing a detailed analysis of developments in the Forward Market (FM) and Day-Ahead Market (DAM), price formation, generation patterns, renewable energy participation and market forecasting.

June recorded the second-highest average DAM Market Clearing Price (MCP) since the launch of the competitive market, while renewable energy participation in the DAM reached its highest monthly average to date. At the same time, the frequency of zero-price periods declined compared with the previous two months, highlighting the continued importance of demand levels and conventional generation requirements alongside the increasing contribution of photovoltaics (PV).

As noted by Dr Andreas Kyprianou, Associate Professor at the University of Cyprus, Member of PHAETHON CoE, and co-author of the report:

“June provides a particularly useful illustration of how renewable energy generation interacts with demand and conventional generation in shaping electricity market prices. While increased PV generation continued to exert strong downward pressure on prices during daylight hours, higher demand and the need for conventional generation contributed to elevated prices during the morning and evening periods. The findings also show that high renewable energy availability alone does not necessarily result in zero prices, as market conditions and Forward Market commitments remain important factors in determining the final market outcome.”

 Key findings from June 2026:

• Average DAM MCP reached €173.31/MWh, making June the second-highest-priced month since the launch of the competitive market, behind March 2026.
• The Volume-Weighted Average Price (VWAP) stood at €194.03/MWh, continuing the downward trend from the previous two months despite the higher average MCP.
• Average Forward Market trading volume remained at a very high level, reaching 126.61 MWh and remaining comparable to the record levels observed in May.
• Renewable energy participation reached its highest monthly average since market launch, with 27.23 MWh of RES energy cleared in the DAM.
• Solar irradiation also reached its highest average level in the study period, at 193.53 W/m², contributing to increased PV generation and lower prices during daylight hours.
• Zero-price periods became less frequent than in April and May, with zero prices recorded on 1 and 7 June, while higher demand later in the month reduced the frequency of such events.
• The maximum MCP reached €249/MWh, recorded during the evening period on 4 June, reflecting the return of conventional generation as PV output declined.
• Price formation continued to follow a clear intraday pattern, with conventional generation dominating the morning and evening periods, while increased PV generation contributed to a pronounced reduction in prices during daylight hours.
• Cyprus continued to record substantially higher DAM prices than major European markets, reflecting the structural characteristics of the island’s isolated electricity system, including its dependence on liquid fuels, limited interconnection and flexibility, and high operating reserve requirements.

 New insights from the June report

The June analysis provides further insight into the relationship between renewable energy generation, demand and market outcomes. In particular, the report shows that high renewable energy availability does not automatically translate into zero or very low prices. During periods of higher demand, conventional generation may still be required even when PV output is strong, limiting the downward pressure on MCP.

The report also examines the interaction between the Forward Market and Day-Ahead Market, showing how forward commitments — particularly those associated with thermal generation — can influence the volumes subsequently cleared in the DAM. This helps explain why renewable energy participation can vary even under broadly favourable weather conditions.

A further focus is placed on low- and normal-price market conditions, with the analysis demonstrating that the relationship between RES generation and MCP is particularly pronounced when renewable generation is sufficient to cover a large share of demand. Under more typical conditions, however, residual demand and conventional generation requirements remain important determinants of price formation.

Finally, the report continues to apply the PHAETHON forecasting methodology to the Cypriot electricity market, assessing its ability to capture the main intraday price trends under both low- and normal-price conditions.

Market insights

The June findings reinforce the increasingly important role of PV generation in Cyprus’ electricity market. Higher renewable generation can significantly reduce DAM prices during daylight hours, while prices tend to increase again in the evening as solar output declines and conventional generation becomes more prominent.

At the same time, the report demonstrates that renewable generation should not be considered in isolation when interpreting market prices. Electricity demand, conventional generation requirements and Forward Market positions all contribute to determining the final market outcome. This is particularly relevant as Cyprus continues to increase its renewable energy penetration and considers the flexibility, storage and market mechanisms needed to accommodate higher shares of variable renewable generation.

The continued price gap between Cyprus and other European electricity markets also highlights the structural challenges associated with operating an isolated electricity system. Limited interconnection, reliance on liquid fuels and restricted system flexibility remain important factors behind the comparatively high cost of electricity, reinforcing the need for measures that can enhance flexibility, market efficiency and renewable energy integration.

Further Information

For further information, 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 – June 2026 here: