The Cyprus electricity market will transform from a bilateral contract market to a wholesale market with three trading mechanisms, (a) bilateral trade, (b) a daily market, and (c) a balancing energy market in real time. The current organisation and organisation during the transitional phase of the Transitional Adjustment is based on bilateral contracts between producers and suppliers, and from 2021 onwards the operation of the permanent (final) organization is expected. The Transitional Regulation introduces a competition field for the electricity supply activity, allowing bilateral agreements between producers (conventional units or Renewable Energy Source (RES) units) with suppliers to enable them to develop their activity and to represent final consumers by providing financial incentives to their commercial policy.

This scheme can be applied to commercial  systems operating with renewable energy sources. The producers under this scheme are obliged to take part in the competitive market with the operation of the new electricity market model.  The participants will no longer be allowed to sell their generated energy to the EAC at its cost of avoidance.