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02 April 2024
newsletter
hungary

Hungary: Amendments to grid capacity allocation rules may signal last chapter of solar power gold rush

Only a few years ago, the Hungarian National Energy Strategy set the then ambitious target of reaching 6 GW of solar power capacity by 2030. By early 2024, that target had already been achieved, as the gross capacity of PV installations doubled within only two years. The new target for 2030 is now set at 12 GW, and there is little doubt that it will be easily reached.

The joy of the Hungarian energy policymakers is matched by the sorrow of many investors. The government's latest decision in this area (Government Decree 54/2024 (III.6.)) practically eliminated the possibility for any new renewable energy projects (with very limited exceptions) to receive a grid connection with feed-in-capacity. This came short after the launch of the second round of the recently revised grid connection allocation procedure, where the developers submitted capacity applications in the magnitude exceeding 10 GW. Unfortunately for many, as the grid connection rights required to install the 6 GW additional PV capacity to reach the 2030 target were already issued earlier, the decisionmakers opted to annul the procedure and refuse most new applications. According to the Government Decree, a completely new grid connection capacity allocation regime will be prepared by the end of 2024, indicating no realistic way to obtain new feed-in capacity for weather-dependent renewables in the near future. On a separate note, the recent changes do not affect the development of on-site (self-consumption only) power plant projects.

Nevertheless, Government Decree 54/2024 also opened a new window of opportunity for investors looking for Hungarian renewable energy projects. The Hungarian Energy and Public Utility Regulatory Authority ("HEA") is now required to create and publish a database on its website of all weather-dependent power plant projects with a capacity of at least 0.5 MW that have already obtained a grid connection offer or grid connection agreement. This may also include projects under development and operational units. For each project, the new database will include, among others, the name of the developer, the geographical identification data of the connection point, the available feed-in capacity, the type of installation and its primary energy source, the envisaged connection date and the amount of connection fee payable. The HEA will publish the database for the first time by 7 April 2024 and will update it on a quarterly basis.

From the perspective of interested investors, the HEA's database will contain all relevant data regarding the total 6 GW solar capacity under development and intended to be commissioned by 2030. In other words, for the very first time, Hungary will have a true public "marketplace" where potential buyers, investors and finance providers can seek out and contact the developers of the last wave of PV projects to facilitate transactions, joint ventures or other forms of cooperation. We anticipate it becoming a pivotal tool for stakeholders and stimulating the solar generation unit market.

The first publication of the HEA's database will likely signal the last chapter of the solar power gold rush that reshaped Hungary's energy landscape over the previous ten years. After reaching the 12 GW threshold, the demand for new PV generation capacities may become negligible in the already overstretched Hungarian electricity market. Since 2014, when total installed PV capacity was 0.077 GW, favourable and stable subsidy schemes (FiT, CfD), relatively low property prices, a simple capacity allocation regime, and global economic and technological developments have resulted in an unprecedented volume of investments in PV installations and created a whole new industry. Stakeholders will now "finish the job" and install the second half of the targeted gross 12 GW solar capacity by 2030. Given the experience of the first 6 GW, the upcoming years are expected to deliver further lucrative deals for developers, investors, suppliers and finance providers as well. Additionally, the HEA's incoming database is poised to become the starting point for many future success stories.

 

authors: Gergely Horváth, Viktoria Hiesz

Gergely
Horváth

Attorney at Law

hungary