EU Approves Hungary’s RE Support Scheme

• Hungary's support scheme for renewable electricity has been approved by the European Commission
• Small installations below 500 kW and demonstration projects will get feed-in-tariff
• Capacities above 500 kW will receive premium on top of the market price of electricity
• Installations above 1 MW and wind installations will get premium based on the results of competitive bidding process
• Hungary needs to partially open up the renewables support scheme to foreign producers in 2017

The European Commission (EC) has approved Hungary's support scheme for renewable power generation. It will support small installations with capacities below 500 kW with feed-in-tariffs, along with demonstration projects.

Installations above 500 kW will receive a 'premium on top of the market price of electricity, exposing them to market signals'. The premium will be determined and beneficiaries will be selected via a competitive bidding process for all installations above 1 MW along with wind installations.

"Hungary has demonstrated that the aid is limited to what is necessary for the projects to move forward, in line with the Guidelines. This will minimize potential distortions of competition created by the public funding and help keep electricity costs at bay for consumers," noted the EC. 

This particular scheme has been allotted an annual budget of up to 45 billion HUF ($167.7 million). It will be financed through the renewables support levy which is currently in place. The country will partially open up the renewables support scheme to foreign producers as of 2017 so as to avoid any discrimination against foreign renewable energy producers.

According to the European Commission, the Hungarian scheme is in line with the former's 2014 Guidelines on State Aid for Environmental Protection and Energy. These guidelines allow member states to generate clean energy but subject to certain conditions.

"We want to make progress towards clean energy for the sake of our environment but also for European economic growth. The Hungarian support scheme will increase the share of green energy in Hungary's energy mix, whilst preserving competition in the electricity market," said Margrethe Vestager, EU commissioner responsible for competition policy.

The Hungarian government had notified the scheme in April 2017. Earlier in May 2017, EU approved French Government's support schemes for wind, solar and sewage gas (see EU Approves French RE Schemes).

With several countries in the European Union having a long way to go to meet their 2020 renewables targets, there is quite some activity in this field taking place now. The low cost for solar makes it an increasingly attractive solution in these EU member states to meet their targets. Hungary installed around 100 MW PV in 2016, according to European solar lobby association Solar Power Europe, which estimates a market of 200 MW in 2017 in their business-as-usual scenario and 284 MW in their High Scenario of their Global Market Outlook.