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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.”

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