The European Commission proposed daily financial penalties for both countries. The European renewable energy directive calls on members to ensure they get 20 percent of their energy from renewable resources by 2020.
"Enforcement of the renewable energy legislation in all the member states is vital," EU Energy Commissioner Gunther Oettinger said in a statement. "Renewables are a solution to global climate change, European economic growth, and security of supply issues."
The European Commission said it raised the issues with both countries in 2011 and again in 2012.
The Lisbon Treaty, which went into force in 2009, gives the commission authority to seek financial sanctions for members that fail to incorporate EU legislation into national law.
Cyprus sparked panic last weekend when it agreed that a $7.5 billion bailout should come from a tax on bank deposits. Parliament rejected the proposal amid widespread opposition.
Cypriot banks have been closed for the week to allow time for a bailout deal to be reached.