Hungary Plans Massive Investment in Solar Generation

Kester Eddy

Long seen as something of a laggard in terms of “green energy” developments, Hungary has announced plans to meet European Union climate change targets with a two-phase plan which envisages a spend of EUR 55 billion in investments by 2030, and up to EUR 152 bln by 2050, with solar energy one of the principal areas of expansion.

Hungary’s latest combined energy and climate change plan targets a reduction in greenhouse gas (GHG) emissions of 40% compared to 1990 levels, and a minimum 21% share of renewable energy sources in gross energy consumption by 2030, Minister of State for Energy Affairs and Climate Policy Péter Kaderják, told a press briefing in late January.

To achieve these ambitious goals will require an estimated HUF 18 trillion (EUR 55 bln) investment in energy-efficient hardware ranging from smart metering and electric vehicles and from more efficient utilities to improved building insulation.

One major plank of the program involves the installation of some 6,000 MW of photovoltaic capacity, almost six times the current installed solar capacity in the country.

The HUF 18 tln gross investment figure includes HUF 4 tln for the new Paks 2 nuclear facility, for which preparations are already underway.

The second phase of the plan, designed to meet European Union energy neutrality targets set for 2020, is expected to involve HUF 50 tln in investment – amounting to 2- 2.5% of GDP per annum. However, details are thin on the ground, and still being formulated.

Along with meeting climate change targets, Hungary aims to achieve a complex variety of goals, not least the question of the country’s energy independence.

Import-dependent

“Hungary is a highly import-dependent country, especially in hydrocarbons, that is natural gas and oil. Our import dependence is [currently] between 80-90%. Also, in electricity, the current net import ratio is well beyond 30%, it was 32% in the last few years, which is a little bit too high. It’s a concern,” Kaderják said.

With the full and timely implementation of the plan, “we hope our import dependence might be reduced from the present more than 80% down to 70% by 2030,” he added.

Naturally, the government is also determined to keep the costs to consumers to a minimum, nor over-tax the economy. Indeed, the plan is expected to stimulate both innovation and the economy.

“We have tried to create a strategy that [facilitates] traditional strategy objectives like secure energy services, along with climate de-carbonization, but in such a way that we do not undermine economic development; rather, we are trying to use this whole change to foster economic development,” Kaderják argued.

However, he added that the effort to restrict utility bills also implies an increased legal requirement on utilities to cut costs.

“We really looked for the lowest, but still economically viable prices for consumers. In this regard, I’d like to emphasize that energy efficiency improvements are one of the best means to do this, and for this reason the government has agreed to introduce a so-called energy efficiency obligation scheme, which will put the energy-saving obligations on the major energy suppliers in the country.”

Limited Wind

But while Hungary envisages a massive increase in solar energy capacity, in sharp contrast to regional trends, it ignores any further expansion of its wind generating capacity, which is currently limited, according to Greenpeace, at a mere 330 MW [see box].

According to Kaderják, the answer is that Hungary is best suited for solar generation, so it is better to focus resources on photovoltaic plants, a somewhat incongruous response considering the plan also declares the diversification of supply to be a primary aim.

He is also keen to stress that Hungary has already achieved much in terms of environmental reform, particularly in reducing greenhouse gas emissions, which were cut by 32% between 1990 and 2017.

This compares to an average of just 23% by the EU-28 countries in the same period, he notes.

“Within the community we have member states that could not reduce even a tonne, not a percentage, but even a tonne of GHG emissions in the last 30 years,” he said, pointing to Austria, Spain, Portugal and Ireland as examples.

“Compared to those countries, and to many others, we think that [Hungary’s] performance is not bad. We have the ninth best performance, together with Denmark, in reducing levels compared to 1990,” he said.

Lack of Wind Power Costing Hungarians, Greenpeace Argues

Anyone driving along the M1 towards Austria could be impressed by the many wind turbines quietly whirling away in the adjacent fields.

Yet, Hungary has invested little in wind, and the last time the authorities issued a license for new capacity was 2006, with the last turbine installed in 2010. From that time, capacity in Hungary has been frozen at 330 MW.

“Since then, a wind tender launched by the last Socialist government was withdrawn [after Fidesz took power] in 2010,” András Perger, climate and energy campaigner for Greenpeace Hungary, told the Budapest Business Journal, adding: “Despite promises, it has never been re-launched.”

This is all the more puzzling since the renewable energy plan in 2012 estimated that some 750 MW of wind capacity could be connected to the grid without any stability problems, the environmentalist said.

Stranger still, amendments to legislation in 2016 introduced a “de facto ban” on new wind capacity, and no logical reason has ever been given for this.

“As a matter of a fact, there is a potential for wind in Hungary, much beyond the 750 MW given by the action plan,” Perger insists. “REKK [the Regional Energy Research Center] examined this in 2016, and concluded that Hungary is losing money with the ban on wind.”

And, if the economic argument was not so strong at the time, “what can be stated for sure is that prices must have gone down since,” he said.