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Financial innovation, ‘smart grids’ and one-stop shops

Aradippou’s ambitious journey towards net carbon-neutrality

Aradippou is driving an ambitious local energy transition by engaging local actors as well as national and European partners. The municipality aspires to establish one-stop shops that provide comprehensive solutions for homeowners, encouraging them to engage in upscaling renewable energy projects and increasing energy efficiency. The municipal projects also aim to unleash financial and technological capacity to establish a ‘smart grid’. Involvement in various European projects is allowing the city to access European funds and partnerships which will equip it to reach net carbon-neutrality by 2030.

Affected population 20,000
By Dr Panayiotis Michael, municipality of Aradippou, Cyprus


Aradippou is the second largest municipality in Cyprus in terms of area, with 20,000 inhabitants living in an area of some 174 km2. Situated near Larnaca’s international airport, it has industrial and free trade zones which account for a significant amount of its energy consumption and CO2 emissions.

The municipality has been a member of Energy Cities, the European Association of local authorities in energy transition, since 2015.[i] The city’s plan for a locally powered energy transition is in line with EU goals: it aims to become net-zero carbon-neutral within the next ten years, by encouraging its citizens to install photovoltaics and increase their homes’ energy efficiency.

A ‘Smart City’ project and solar energy for Aradippou

By cooperating with the Electricity Authority of Cyprus, Aradippou aims to establish a ‘smart grid’, connecting the main industrial zones and the airport with residential areas, in order to monitor overall energy use and balance demand.

A commitment to increasing renewable energy generation by fostering photovoltaic development lies at the heart of the municipal strategy. The plans for the smart grid feature new technological approaches enabling the construction of photovoltaic parks with energy storage, and the city plans to support the installation of solar panels in 2,000 homes.[ii] Aradippou is experienced in implementing photovoltaic plants and is currently developing two solar parks which are expected to be producing 3MW each within a few years.

Soft loans as innovative financial tools

As in other European regions, one of the biggest obstacles that citizens face is the large upfront investment required to switch to renewable energy sources. High-interest loans make investment a financial risk for many. After complicated negotiations on interest rates, the municipality had designed an innovative financial mechanism specifically intended to encourage solar energy production. A soft loan scheme, which was established in cooperation with the Cyprus Cooperative Bank and the Larnaca Chamber of Commerce and Industry,[iii] has secured a pilot budget of €1 million. Ensuring efficiency, fairness and accountability, each new ‘soft loan’ is set up in consultation with municipal employees and can be adjusted based on citizens’ feedback.

In order to fund these solar energy and energy efficiency improvements, the municipality also developed a plan which was submitted to and successfully selected by the Ministry of Finance of Cyprus, to be supported by the European Fund for Strategic Investments (EFSI).[iv] This, in turn, enables the municipality to secure further funds issued by European finance consortia supporting clean energy infrastructure as part of the overarching EU Smart City strategy. In general, the programme is designed to reduce citizens’ energy bills, fostering a demand-oriented economic process that is expected to boost the local economy by creating jobs in renewable energy, smart technology and the construction sector.[v]

INNOVATE: A one-stop shop encouraging citizens to invest in photovoltaics and energy efficiency

Residents and homeowners are generally open to the idea of retrofitting their homes, but the volatile energy market, high interest rates, numerous regulations and a lack of time and technical knowledge often curtail their ambitions.

In order to overcome these difficulties and accelerate the retrofitting of residential units, Aradippou joined 11 European pilot cities as a learning partner in the INNOVATE project. The main objective of INNOVATE, which is coordinated by Energy Cities, is to empower municipalities to use their local knowledge about the population, existing building structures and available energy sources. INNOVATE supports cities to deliver tailored energy advice packages adapted to the needs of local consumers and homeowners, bridging the gap between people’s motivation and practical feasibility. It facilitates the establishment of ‘one-stop shops’ in cities like Aradippou, where trained employees provide comprehensive solutions helping to minimise individual residents’ efforts and risks.[vi]

One central pillar of these packages is coordinating homeowners’ efforts throughout the energy efficiency investment period, using municipal resources to monitor the process and ensure high quality service. By offering innovative financial solutions to homeowners, the energy packages Aradippou develops are expected to attract further investment.[vii]

Energy efficiency in low-income households

Aradippou participated in the EU-funded project ELIH-Med, which was completed in 2014. Partners from seven countries in the Mediterranean region jointly improved energy efficiency and promoted energy savings in low-income households. Across Cyprus, 25 houses were renovated, to include smart electricity meters, photovoltaic installations, double-glazing, energy-efficient fireplaces, and waterproof and energy efficient insulation. As a result, participating households were able to save 40% of their energy consumption, reducing their bills and environmental impact at the same time.[viii]

Education in Smart City technologies in Aradippou for a climate-neutral future

In order to realise the ‘Smart City’ project more effectively, Aradippou cooperates with national educational authorities, such as the Cyprus Pedagogical Institute, which undertakes educational actions relating to energy and environmental protection to raise awareness among the population – a key aspect of Aradippou’s approach.[ix] The municipality has also established an Erasmus programme to give students the opportunity to exchange knowledge in the field of ‘Smart City’ development.


Aradippou is comprehensively integrating energy transition policies into its wider ‘Smart City’ project. Its approach encompasses measures to increase energy efficiency and the share of renewables. It is also developing innovative and accessible financial mechanisms to encourage citizens to invest in solar energy. With the support of EU projects, the city is able to offer comprehensive packages to citizens, featuring soft loans and well-coordinated energy projects.

About the author

Dr Panayiotis Michael holds an MBA (including Environmental Management) and a PhD in Computer Science from the University of California. Dr Michael has extensive experience in Foreign Direct Investment Facilitation and his work has been commended by the World Bank. Currently, Dr Michael supports Aradippou Municipality in its progress towards becoming a Smart City, including attracting investment in environmental sustainability and strategic actions to promote ‘smart’ specialisation. Dr Michael is Aradippou’s Project Manager for the INNOVATE Horizon 2020 project.

This blog article was co-created by Lukas Toedte and is part of the mPOWER blog series in which cities and towns share how they are building better energy futures. Read the original article on https://municipalpower.org/articles/financial-innovation-smart-grids-and-one-stop-shops-aradippous-ambitious-journey-towards-net-carbon-neutrality/. This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement number 785171.

[i] https://energy-cities.eu/members/city-of-aradippou/

[ii] http://www.aradippou.org.cy/index.php/en/euro-programs/aradippou-eu-smart-city

[iii] http://www.larnakachamber.com.cy

[iv] https://www.eib.org/en/efsi/index.htm

[v] https://energy-cities.eu/best-practice/soft-loan-scheme-for-photovoltaics/

[vi] https://energy-cities.eu/project/innovate-2/

[vii] http://www.financingbuildingrenovation.eu/wp-content/uploads/2017/09/6_D2.1_MGA_Aradippou_final.pdf

[viii] http://www.aradippou.org.cy/index.php/en/euro-programs/current-programs/433-eu-elih

[ix] http://www.pi.ac.cy/pi/index.php?lang=en

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