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IEA: Hungary must focus on investment in clean energy technologies

Hungary’s transition to clean energy can enable it to achieve greater energy security and independence as it navigates the supply challenges that Russia’s invasion of Ukraine has created for countries across Europe, said a new in-depth policy review by the International Energy Agency (IEA).

Hungary has a strong starting point for its energy transition thanks to the rapid growth of solar PV and a solid base of nuclear power. Very recently, Hungary’s government decided to speed up the second round of the residential solar PV tender, which will be available from November instead of the planned spring starting date, with a budget of more than 500 million euros.

But, according to the IEA, it still has considerable work ahead to achieve its objectives for emissions reductions and energy sovereignty.

It is true that, since the IEA’s last in-depth energy policy review in 2017, Hungary has increased its climate ambitions. In 2020, it became one of the first countries in Central Europe to put a carbon neutrality goal for 2050 into law and presented a long-term National Clean Development Strategy the following year. Overall, the country is aiming for 90 per cent of its electricity generation to come from low-carbon sources by 2030.

However, Russia’s invasion of Ukraine has created a new set of energy security challenges in Europe. Hungary declared a state of energy emergency in July 2022 that allowed the government to increase domestic gas and coal production, secure additional gas imports from Russia and increase the output of the Mátra coal power plant.

Just at the beginning of September Hungary’s Minister of Technology and Industry, László Palkovics announced a revamp of the Mátra power plant, which last year alone produced about one-tenth of Hungary’s electricity production. The government wants to increase this with further investments in the following years and ramp up lignite mining until 2025, the planned closure of the power plant. According to the Minister, the revitalisation of lignite production won’t impact the country’s climate goals and commitments.

The government is also considering extending the lifetime of the four reactors at the country’s Paks nuclear power plant, which guarantees almost 50 per cent of Hungary’s electricity supply. Following the review of the design documentation, at the end of August, the Hungarian Atomic Energy Authority (OAH) issued the licence for the construction of two power units with Generation III+VVER-1200 reactors.

“Prioritising energy efficiency and renewables is a pragmatic approach that aligns with Hungary’s energy and climate goals in the short term and the long term. It can avoid increases in both fossil fuel imports and emissions,” said IEA Executive Director Fatih Birol.

“Hungary has a strong commitment to renewables. As the next step, the government’s priority is to upgrade the national grid to be capable of integrating the rapidly growing electric capacity generated by weather-dependent energy sources,” commented Attila Steiner, Hungary’s State Secretary for Energy and Climate Policy. “However, to guarantee supply security and reach our ambitions climate goals, it is imperative to maintain or even increase our reliable and emission-free nuclear capacity as well.”

The IEA review is calling on Hungary to reduce fossil fuel consumption and diversify its energy sources towards a broader portfolio of renewables by drawing on the considerable potential of its wind and geothermal energy resources as well as extending the lifetime of existing reactors, where safety permits.

At the same time, Hungary should make the best use possible of its energy market interconnections, which it has significantly increased in recent years, to get energy supplies from diverse routes, sources and suppliers. The IEA report highlighted that Hungary has a critical role to play in the major task of improving Central and Eastern European countries’ links to regional gas storage sites and new LNG terminals elsewhere in the European Union.

“A stronger focus on investment in clean energy technologies is critical,” Dr Birol said. “Hungary has a huge opportunity to develop hydrogen for industrial sectors. Continued investment in developing its solar PV, geothermal and wind resources will allow Hungary to reduce its reliance on natural gas and coal in both heating and power generation. Hungary possesses the technologies it needs to advance its transition toward a clean and more secure energy system, which in turn will improve regional energy security.”

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