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Hungary

Hungary

Market cap dampens hopes in Hungary -- Grid stability worries

With just under 20 MW of new plant added in 2006 -- the largest being a 10 MW project of five Vestas 2 MW machines (table) -- around 37 MW of wind capacity was operating in Hungary by the end of the year. That rate of progress is likely to be short lived, however. While licence applications have been made for a combined capacity of 1500 MW, prompted by a favourable renewable energy support system, the Hungary Energy Office has the capped the wind market at 330 MW, expressing concerns about the electricity transmission network's stability. As a result, many project plans have come to a standstill.

German developer Epuron (formerly Voltwerk), for one, is now merely investigating the viability of several wind projects in southern Hungary. It was touted to have around 25, 10 MW projects planned for commissioning in 2008, and other projects in the pipeline, all now on hold. Similarly, Windpower Vep Energy, a non profit company, is facing a delay in getting permission for its planned second phase extension to its wind project, currently comprising a single Enercon 600 kW unit installed in May 2005, but planned to increase to 37.4 MW. Phase two envisages two 2 MW units and an 800 kW machine, while phase three would see 16 more 2 MW machines installed, all units to be supplied by Enercon.

This year construction has started on one of Hungary's biggest wind plant so far, 12 Vestas 2 MW machines near Mosonszolnok near the Hungarian-Austrian border. It is being developed by a Spanish-Hungarian consortium, Energy Corp Hungary, comprising LG Energia, Spain's Acciona Eolica, CEASA and GEHC Energies Renova.

The Hungarian wind market is driven by a government mandated purchase price fixed at HUF 23.00/kWh (EUR 0.09/kWh), adjusted each year in line with the consumer price index. Power companies are obliged to buy electricity generated from renewable sources on the basis of long term contracts. Alongside Denmark and Germany, Hungary is one of the best EU member states in meeting its 2010 target for renewables' contribution to electricity supply. Its 5.8% target for 2010 was met in 2005 and it is expected to hit 7.9% by 2010, largely thanks to co-firing of solid biomass in power stations.

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