Market Status: Hungary - Capacity jumps despite delay in call for proposals

HUNGARY: After a summer decision by the government to shelve a tender call that would have added 410MW of wind, industry hopes are now for the launch a new tender as early as this spring.

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Hungary's national renewable energy action plan, submitted to the European Commission only in December, indicated that 740MW of commercial wind plants may be operating in 2020.

Hungary's government is planning to revise the feed-in tariff scheme, but the implications are unclear. The 2011 feed-in tariff for wind farms licensed before 2008 is HUF 30.1/kWh (EUR0.112/kWh). Since the last wind farm licenses were issued in the country in 2006, that incentive scheme should apply to all wind farms. The time period for which the purchase price is received depends on a producer's agreement with the Hungarian Energy Office. The government is wary of increasing spending on renewables, but one informed insider says it is premature to assume the revision will necessarily entail a simple cut in the tariff rate.

Installed wind capacity in Hungary jumped 95MW to 295MW in 2010, with Spanish firms Iberdrola and Renovalia bringing the vast majority of the new generation online. By February, that figure rose to about 330MW, or the level at which licenses were capped in a 2006 tender process. But how Hungary will move past that mark is difficult to gauge.

"Everybody is waiting," says Andrea Kircsi, president of the Hungarian Wind Energy Association (HWEA). "If there is a new tender this year, work on those projects will begin in 2012. This delay is not so good for the market," he adds.

Hungary's total wind power capacity

The Hungarian transmission system operator, Mavir, has placed at 740MW the level of wind that could be integrated without grid modifications, according to Peter Simon, a partner with the Budapest office of law firm CMS Cameron McKenna.

"One issue is whether they would like to invite bids for this entire 410MW in one round or whether they will split it into various rounds," says Simon. He says it is "virtually impossible" that any new capacity licensed later in 2011 will be brought online by the end of the year.

Among existing projects, Iberdrola is expected this year to complete two projects already under construction - its 8MW Csoma II wind farm and the 26MW Amundsen facility. With their completion, Iberdrola's total installed capacity in the country will rise to 158MW.

As market players await the issue of new licences, Kircsi believes that one recent development which could help Hungary's ability to absorb larger amounts of wind energy was the launch last summer of HUPX, the Hungarian electricity market exchange.

New Hungarian Capacity in 2010
Owner Project Capacity (MW)
Iberdrola Csoma II 38
Iberdrola Scott 36
Renovalia Babolna 15
Other projects 5.8
Total 94.8
Source: Hungarian Wind Energy Association

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