Hungary to launch EUR1.5bn worth of solar panel investments

Hungary may be about to launch HUF500bn (EUR1.5bn) worth of solar panel investments after potential investors applied for licenses for a combined 1,350 megawatts (Mw) of capacity by the end of last year, Ernő Kiss, president of the Hungarian Solar Panel Association, told Hungarian daily Világgazdaság.

Some 2,500 permit inquiries to the Hungarian Energy and Public Utility Regulatory Authority (MEKH) would be a significant boom for the Hungarian market. According to Kiss, 60% of the investments (worth approximately HUF300bn) could strengthen the Hungarian economy. This is the estimated portion of such investments made up of expenditure on tools, spare parts and installation.

Kiss also warned that MEKH might not accept all the applications and it is not sure that all the planned investments will finally be realized. He said that solar panel production in Hungary is in a poor position, as installation works in Europe have peaked and many solar panel plants have already closed their shutters, while the US and China are still enjoying a boom.

Hungarian solar power

Solar power in Hungary is growing rapidly, despite significant lagging behind most of the European states. By the end of 2015 Hungary had installed more than 110 megawatt (MW) of photovoltaic. The country’s capacity robustly grew in 2016, reaching 225 MWs. The International Energy Agency (IEA) in June praised Hungary’s efforts and highlighted the need for more competition in the solar sector. The country’s National Energy Strategy to 2030 aims to ensure a sustainable and secure energy sector while supporting the competitiveness of the economy. The IEA says it was successful in developing wholesale markets for gas and electricity, which allowed for undistorted energy prices to increase efficiency and strengthen security.

The report also welcomed Hungary’s large investments in oil, electricity and natural gas infrastructure – the nation’s energy-related carbon dioxide emissions remain well below 2008 levels despite healthy industrial output. In its report, the IEA also encouraged the government to also emphasize other renewable energy sources such as solar and geothermal power in addition to bioenergy. “We applaud Hungary’s achievements in reducing the carbon intensity of its economy, building energy infrastructure and strengthening energy security, most notably via gas storage,” Fatih Birol, the IEA’s Executive Director, said. “Hungary has made progress in diversifying its energy supplies and increasing competition in the energy sector but there is still more to do on both fronts.”

Hungary’s solar market is estimated to see its largest growth ever in 2017 after sustained growth in the past three years. According to estimates by László Szabo, a senior researcher at the Regional Centre for Energy Policy Research (REKK, Hungary), the country installed approximately 100 MW of new PV capacity in 2016.

According to official statistics, Hungary had 168.7 MW of grid connected PV capacity at the end of December 2015. Most of this capacity comes in the form of PV systems up to 50 kW installed under the country’s net-metering scheme. If the numbers for 2016 are confirmed, Hungary will have reached approximately 270 MW of installed PV as of the end of last year.

Szabo said that further strong growth is expected over the next two years, due to approximately 2 GW of projects approved under the FIT scheme, which could see the light by the end of 2017.

Szabo said that cost of installation in Hungary is higher compared to more mature markets, and a tariff of HUF31 might not be enough to encourage investors, especially for small projects, where specific costs are higher.

Hungary still relies primarily on nuclear energy and power imports in order to satisfy its electricity demand. In 2014, only 35% of the country’s power demand was met by domestic power generation facilities. The Paks Nuclear Power Plant still accounts for over 50% of the total domestic production.

Hungary’s National Renewable Action Plan is aiming to cover 14.65% of the electricity demand with renewables by 2020.

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