Hungary - Progress on hold as wind awaits new tender

HUNGARY: Hungary is unlikely to see a single new turbine turning this year, as investors wait for the details of a planned incentive system to be revealed and a new tender for additional wind capacity to be launched.

Figures from the Hungarian Wind Energy Association show that cumulative wind capacity rose 34MW to 329MW in 2011, brushing up against the 330MW level at which capacity was capped in a 2006 tender process. "There has been no new tender and no indication of when it will take place," notes Peter Simon, a partner at international law firm CMS Cameron McKenna's Budapest office. Hungary's government in 2010 shelved plans to seek tenders for an additional 410MW in capacity. That would have brought Hungary in line with its 2020 target of 740MW in commercial wind farms.

Before a new tender can happen, Simon says, details of the new incentives scheme, known as METAR, must be released. "The numbers behind this support scheme are set to be discussed in May," he says. A tender can only be called once the new incentive law is promulgated, likely at the end of 2012.

Among investors standing by is Iberdrola, which accounted for all of the new capacity in Hungary last year. The Spanish wind giant brought online its 8MW Csoma II and 26MW Amundsen wind farms, taking its cumulative Hungarian wind capacity to 158MW.

One positive development is that the capacity of the grid to handle additional wind-power projects has increased over the past year and should improve further thanks to a large combined-cycle gas turbine power plant coming online and another one planned by Hungarian energy group MOL and Czech utility CEZ. The two plants will have a combined installed capacity of nearly 1.3GW.