Thursday, September 24, 2020
Home Climate Hungary’s first tender for renewable energy subsidies brings expansion of solar capacity

Hungary’s first tender for renewable energy subsidies brings expansion of solar capacity

The Hungarian Energy and Public Utility Regulatory Authority (MEKH) announced the results of the first pilot tender of Hungary’s new subsidy scheme called METÁR, which provides incentives for cost-effective electricity generation from renewable energy sources (RES). The capacity of solar-powered electricity generation is expected to take off in the upcoming year due to the rise of new investments.

The first call received 168 bids, out of which 72 projects were selected to receive support. The winners will be awarded an annual grant of 229 million Hungarian forints (640,000 euros) for fifteen years. Tender winners will have three years from the time the subsidies are granted to complete investments. Participants could apply for subsidies in two categories: power plants between 0.3 megawatts (MW) and 1 MW capacity and in this category they announced a total of 61 winning projects; and power plants between 1 MW and 20 MW capacity, with 11 projects granted subsidies.

Interestingly the bid prices of the winning projects were significantly lower than the 26.08 forints per kilowatt-hour (kWh) subsidy limit specified in the tender notice. The competition for state subsidies resulted in an average price reduction of 24 per cent in the smaller category and a 33 per cent average price reduction in the larger category with the lowest winning bid of 20.2 Hungarian forints per kWh. In the framework of the green premium tender initiated by the MEKH, RES generators bid for the lowest subsidised price of electricity. The green premium is the difference between the subsidised price of electricity and the market reference price. Therefore, bidders are incentivised to propose competitive subsidised electricity prices.

The METÁR tender is expected to facilitate the development of PV projects, one of the priority area of the Hungarian government’s Climate and Environmental Protection Action Plan. Péter Kaderják, Hungarian minister of state for energy and climate policy emphasised that electricity generated by solar power will increase by 10 per cent due to the subsidised projects compared to last year. Majority of the 72 winning projects will be implemented by small and medium-sized enterprises, who will cover the total electricity demand of 93 thousand households from renewable sources.

“Domestic carbon dioxide emissions will be cut by 75 thousand tonnes per year,” Minister of State Kadrják added. “Thus the subsidies will contribute significantly to the greening of the national energy sector and Hungary’s commitment to becoming climate-neutral by 2050.”

Most Popular

Poland’s District Court judge demands to accelerate the Bełchatów power plant’s closure

A District Court judge in Poland demanded that the operators of the Bełchatów power plant start negotiating with environmental law charity Client Earth to accelerate the plant’s closure and find a solution within three months.

The importance to have cleaner energy in the retail business – interview with Shell Retail’s Executive VP István Kapitány

István Kapitány, Global Executive Vice President for Shell's Retail business, speaks about the company’s journey through the energy transition and how, especially in the retail area, it is important to have cleaner energy.

The finest and the poorest National Energy and Climate Plans from CEE

The European Commission has assessed all the Member States’ National Energy and Climate Plans for 2021-2030. And countries from Central and Eastern Europe are often mentioned as good examples to follow.

Romania is one step closer to link Black Sea fields to shore

Romania took an important step to start the exploitation of its first gas deposit offshore as BSOG launched the installation phase for a 121 km subsea gas pipeline within the offshore Midia Natural Gas Development Project.