Land requirements for new energy investments in Cyprus

As a key member of the Belt and Road Initiative, Cyprus has seen increasing co-operation with China, attracting a growing number of Chinese investors. As a Mediterranean island nation guarding the maritime routes between Europe, Africa and Asia, Cyprus is gradually developing into a regional power interconnection hub. It has signed co-operation memorandums with neighbouring countries in the electricity sector, and is gradually constructing energy bridges that link power transmission between Israel and Greece, and Greece and Egypt, contributing to the energy transformation of those countries. In recent years, Cyprus has introduced a series of incentives, such as the Universal Photovoltaic Program, to vigorously develop the new energy industry, providing multiple opportunities for Chinese investors.

Obtaining project land is a crucial prerequisite for investing in such new energy projects as photovoltaics (PV) and wind power. Based on the author’s legal experience in Cyprus’ new energy investment field, this article shares the country’s basic land regulations and requirements for PV and wind power projects.

Land acquisition

Land ownership in Cyprus is freehold, and landowners may lease rights to use the land. Lease agreements for immovable property on a term of more than 15 years may be registered with the Department of Lands and Surveys, and the registered lease agreements may stipulate that the lessee has the right to transfer, mortgage or sell the right of use by public auction, or pass on the right of use to his/her heirs.

According to chapter 109 of the Immovable Property Acquisition (Aliens) Law, the acquisition of land by non-EU nationals or companies controlled by them in Cyprus requires the approval of the nation’s Council of Ministers. It should be noted that the above-mentioned foreign entities wishing to acquire immovable property by indirect acquisition and indirect control, etc., are also required to obtain prior approval from Cyprus’ Council of Ministers.

Expropriation and requisition In the event of compulsory land expropriation by the state or other public legal persons, the landowner should be compensated at the market value of the land on the date of acquisition notification, with additional interest. The interest calculation period extends from the date of acquisition notification to the date of actual payment.

In the event of compulsory land requisition by the state, a notice of requisition must be published in the Official Gazette, and compensation should be paid based on the rental value of the requisitioned land, nuisance, cost of unutilised resources, etc. The period of requisition may not exceed three years, and the same land cannot be repeatedly requisitioned.

Site requirements

New energy power plants can acquire land use rights through purchase or leasing. Investors should note that the construction of a new energy power plant requires a prior planning permit, except for the following exemptions:

1. Existing buildings with a planned installed capacity of less than 150 kilowatts on the plot of land that are completed and fully permitted;
2. No buildings within the plot, and the plot is not located in an industrial zone or natural resource protection area, with a planned output is less than 150 kilowatts; or
3. No buildings within the plot, and the plot is located in an industrial zone.

For new energy power plants that require a prior planning permit, the Cyprus Town Planning and Housing Department also imposes strict restrictions on site selection based on project type, capacity, and the planning area of the proposed site.

The following areas are prohibited from constructing individual wind turbines and wind farms:

1. Restricted development zones;
2. Areas occupied by public or forest roads, paths, land levelling planning areas, trails or easements. However, wind turbine propellers may be permitted to extend over such areas where an easement exists;
3. Within archaeological sites or on ancient monuments;
4. National forests (excluding the areas referred to in item 5 below)
5. In designated coastal and nature reserves, landscapes, protected landscapes, “Natura 2000” protected areas and any other designated nature reserves;
6. Within 500 metres of migratory bird corridors and passages in specially protected areas for wild birds and habitats designated according to Cyprus Law No. 152 (I)/2003; and
7. Within airports, runways and military installations, projects or areas.

The construction of individual wind turbines and wind farms may be permitted in the following areas, but are subject to special restrictions: individual wind turbines and wind farms may be permitted in terrain prone to severe instability, landslides and falling rocks. However, after obtaining planning permission, specialised geological and structural studies should be carried out for the construction in accordance with the Streets and Buildings Regulation Law.

The construction of individual wind turbines and wind farms may be permitted in areas with abundant reserves of important mineral resources. However, it is essential to consult with the geological survey and mining authorities, and ensure that wind power generation and the development of resources do not affect each other.

At present, bilateral economic and trade relations, and investment co-operation between Cyprus and China have been developing steadily. From January to November 2023, the bilateral trade volume between China and Cyprus reached USD910 million. Chinese investors interested in investing in new energy projects in Cyprus should focus on changes in local land policies to ensure compliance with business operations. Due to space constraints, this article only provides a general introduction to the land requirements for PV/wind power projects. The Cyprus Renewable Energy Resources Law, Promotion and Encouragement of Renewable Sources of Energy Use and Saving of Energy Law, Acquisition of Immovable Property (Aliens) Law, Town and Country Planning Law, Compulsory Acquisition of Property Law and Requisition of Property Law are all relevant, and Chinese investors are advised to gain in-depth understanding with the help of professional lawyers.

Wang Jihong is a senior counsel and Xu Yibai is a non-equity partner at Zhong Lun Law Firm