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Hungary

Hungary

Hungary cancels 410MW wind energy tender

The Hungarian Energy Office has cancelled a tender for the construction of 410MW in wind farms, casting doubts over the country's growth plans for wind energy.

The tender, which had already drawn preliminary bids to construct 1.1GW in wind farms, had represented the first opening for new projects since the government capped capacity at 330MW in a 2006 tender.

The Hungarian Energy Office reserved the right to re-open the tender process under new conditions. Miklos Brazai, power and utilities manager for consultancy KPMG in Hungary, expects that they will do that. "They will reissue something, but when and how is not clear," says Brazai.

The tender cancellation came shortly after the formation of a new government in Hungary at the end of May. The incoming government's targets for renewable energy sources have not yet been made public, since the deadline for the country to publish its national renewable energy action plan was postponed until the end of September.

Its binding 2020 obligation as an EU member state means the country will need to cover 13% of all energy consumption to renewable sources by 2020, up from 4.3% in 2005. "After we see the national renewable energy action plan, we will see what role green generation will have and then have a better understanding of the government's next step," says Brazai.

Hungary's previous government had forecast that 920MW of wind farms could be operating by 2020, producing 1.7TWh of electricity a year. At the end of July, Hungary's installed wind capacity amounted to 201MW, although that number should rise to 330MW by 2011 as the remaining projects licensed in the 2006 tender process are built.

As it announced the cancellation of the tender in July, the Hungarian Energy Office said that wind generation remained a priority, although visibility on future growth is now low. "Now nobody can know how much wind there will be by 2020 or in the future," says Andrea Kircsi, secretary of the Hungarian Wind Energy Association.

The uncertainty created by the cancellation is itself a problem, notes Jacopo Moccia, regulatory affairs adviser at the European Wind Energy Association. It is difficult to attract foreign investors if there is no regular roll-out of capacity, he says. "No matter how ambitious the government wants to be, if you have nothing for two, three or four years, it is problematic."

Nonetheless, Brazai does not expect investors already involved in the shelved tender to flee the market just yet. Investors are instead taking a wait-and-see approach. "They have already invested too much to simply close down operations," he explains.

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