Feed-in tariff

Updated: 24.02.2017

Author: Flora Borek

In Hungary, electricity generated from renewable energy sources and waste is promoted through feed-in tariffs if the plant’s capacity is between 50 kW and 0.5 MW or in case of a demonstration project. The eligibility period and the maxi-mum amount of eligible electricity are determined for each eligible electricity producer by the Hungarian Energy and Pub-lic Utility Regulatory Authority (HEA).

The regulations for the feed-in tariff set out in Decree No. 389/2007 apply to renewable energy installations already ap-proved eligible for the feed-in tariff before 31 December 2016 (§1 (6)): Within this decree, there are benchmark feed-in periods for biomass (<20 MW), biogas (<5 MW), landfill gas and PV installations <2 MW which can be shortened if other investment schemes are used for the individual project. The feed-in tariffs are fixed and adjusted every year with the con-sumer price index or inflation minus one percentage point, depending on the application date (Annex No. 5 to Decree No. 389/2007). Tariffs are differentiated by plant size, time of licensing, time zones (three per day) and partly by technology. 

For installations having applied for the feed-in tariff after 31 December 2016, the new Decree No. 165/2016. (VI. 23.) ap-plies. This decree sets out different regulations for renewable energy installations between 50 kW – 0.5 MW and for plants between 0.5-1 MW. Installations up to 0.5 MW are either eligible for the feed-in tariff or the green premium (market pre-mium). The green premium is obligatory for plants with a capacity of 0.5-1MW. 

Eligible technologies

Plants approved after 01/01/2017:
All renewable energy generation technologies except wind power are eligible for the feed-in tariff, unless their capacity exceeds 0.5 MW, the authority has proven the eligibility and if it is a new installa-tion and adheres to further requirements laid out in §20 (1) (§10 a-d) Decree No. 165/2016): 
  • The applicant must not be indebted  to the state, to the local government of the selected site and the headquarters of his company and to the Recipient (=Transmission System Opera-tor).
  • In case of having already benefitted from financial aid during the last three years before the current application (EU or national funds and pre-accession instruments), the applicant must prove that he has fulfilled the requirements linked to the granted support. 
  • Absence of a grant repayment decision from the European Commission against the applicant.
  • Absence of violation of competition law for the last three years before applying.
  • Absence of fraud during the eligibility assessment process and the absence of criminal offence committed by the ap-plicant for the last three years before the initiation of the current application. 
  • In case the installation is fuelled with renewable biomass or is a combined heat and power installation, the applicant has to provide for the certificate of origin. Specifications are laid out in the respective decree.
Also refurbished installations are eligible if the investment costs are at least equal to 50% of the initial costs. Plants are only eligible in case the installation/refurbishment process has not started yet (§ 13 (4) Decree 165/2016). Furthermore, installations have to fulfil cer-tain technical requirements (technology-specific) set out in Decree 55/2016.
All approvals 
Only electricity with a valid qualification related to the guarantee of origin according to Government Decree No. 309/2013 for electricity from renewable energy sources and CHP may benefit from feed-in tariffs (§9/A. j Decree No. 389/2007 and §20 h Decree No. 165/2016). Installations with an installed capacity of ≤ 50 kW are not eligible for feed-in tariffs. Net metering applies in their case (see HMKE-regulations).

Solar energy

Eligible.

Geothermal energy

Eligible.

Biogas

Eligible.

Hydro-power

Eligible.

Biomass

Eligible.

Amount

  • There are three different tariff rates depending on the time of day (peak, valley and deep-valley period except for solar power with a single tariff).
  • These time periods are defined by decree, depend on the area the electricity is generated in and vary for weekdays and weekends/holidays as well as for summer and winter-time.
  • There are three tariff areas according to the areas of opera-tion of the six distribution grid operators (Annex 2 Decree No. 165/2016). 
  • The tariff level also depends on a plant's installed capacity and partly the generation technology employed. 
  • There is only a tariff differentiation between solar power and other technologies. The tariffs for RES-E plants for which an application was submitted after 31 December 2016 will annually increase or decrease by the consumer price index of the previous year minus 1%
  • However, for applications after 31 December 2016, only new installations up to 0.5 MW are eligible (§10 Decree 165/2016).
The tariffs for 2017 are listed below. 

Wind energy

Following the new regulation on support for renewable electricity (see Decree 165/2016), wind energy is not eligible for the feed-in tariff but for the premium tariff through tendering procedures (§13 (4) Decree 165/2016). However, in general, wind power plants are not eligible and cannot be connected to the grid without having ap-plied for the feed-in tariff within tendering procedures released through a Government Decree. Furthermore, the supported capacity and the support period are also set through the respective Govern-ment Decree (see § 1 (5) Decree No. 389/2007 and §7/B of Law LXXXVI )

Solar energy

Plants of up to 0.5 MW or less: HUF 31.77 per kWh (approx. € 0.1031); No difference between peak, valley and deep-valley period.

Geothermal energy

Plants of up to 0.5 MW or less:

  • peak period: HUF 35.50 per kWh (approx. € 0.1152)
  • valley period: HUF 31.77 per kWh (approx. € 0.1031)
  • deep-valley period: HUF 12.96 per kWh (approx. € 0.042)

Biogas

Plants of up to 0.5 MW or less:

  • peak period: HUF 35.50 per kWh (approx. € 0.1152)
  • valley period: HUF 31.77 per kWh (approx. € 0.1031)
  • deep-valley period: HUF 12.96 per kWh (approx. € 0.042)

Hydro-power

Plants of up to 0.5 MW or less:

  • peak period: HUF 35.50 per kWh (approx. € 0.1152)
  • valley period: HUF 31.77 per kWh (approx. € 0.1031)
  • deep-valley period: HUF 12.96 per kWh (approx. € 0.042)

Biomass

Plants of up to 0.5 MW or less:

  • peak period: HUF 35.50 per kWh (approx. € 0.1152)
  • valley period: HUF 31.77 per kWh (approx. € 0.1031)
  • deep-valley period: HUF 12.96 per kWh (approx. € 0.042)

Addressees

Entitled party: The persons entitled for the feed-in tariff are the plant operators maintaining installations with a capacity of 50 kW-0.5 MW (except wind power plants). They can also decide to join the premium tariff system (§10 Decree 165 (2016).

Obligated Party: The Recipient (who is defined as the Transmission Grid Operator) is obliged to take off the electricity gen-erated to the extent defined in Decree 17/2016 (see section on cap and eligibility period). Furthermore, the Recipient is obliged to demand for compensation of costs from the obliged balance group (§11 Decree 165/2016). The proceedings of cost compensation are laid down in Decree 63/2016.

Procedure

Process flow

Plant operators are entitled by law to payment for their electricity (§ 13 (1) Act No. LXXXVI of 2007). § 6 Decree No. 17/2016 prescribes the following application process:

 

  • To enforce a claim for a feed-in tariff, a plant operator shall submit an application to the Hungarian Energy and Public Utility Regulatory Authority (§ 7 (1) Decree No. 17/2016).
  • Application deadlines, and the documents to be submitted together with an application are defined by decree (§ 11 Decree No. 17/2016). Checklist and clarification is available on HEA’s website (for example here: mekh.hu/megujulo-tamogatasi-rendszer-metar-szerinti-tamogatassal-kapcsolatos-kerelem)
  • The Hungarian Energy and Public Utility Regulatory Authority sets the eligibility period for the feed-in tariff and the maximum amount of electricity for which the tariff may be received in line with the supported amount of electricity defined (Annex 1 17/2016). 
  • Where a plant operator receives other subsidies or grants for his plant, the Hungarian Energy and Public Utility Regulatory Authority will take into account the total amount of grants received when calculating the eligibility period for the feed-in tariff (§ 3 (3-4) Decree No. 17/2016).

 

 

 

Competent authority

The Hungarian Energy and Public Utility Regulatory Authority may act as a supervising body and inflict penalties in cases of violations of the law (§ 19 Decree No. 165/2016).

Degression

The amount of the feed-in tariff and the feed-in premium should be determined by the weighted average of: 

  • The amount granted in the previous year
  • The development of the consumer price index, provided by the Central Statistical Office, whereby an efficiency im-provement factor of 1% is additionally deducted (Annex 3 Decree 165/2016). Therefore, a digression is possible.

Cap

As of 1 January 2017, technology-specific caps have been introduced (Annex 1 Decree 17/2016). The following figures are valid for plants which are eligible for the feed-in tariff (not premium tariff or tender):

  • Biogas: 6,750 kWh/p.a. for maximum 25 years. The plant has to be put into operation 5 years after confirmation of eligibility at the latest.
  • Biomass: 6,900 kWh/p.a. for maximum 25 years. The plant has to be put into operation 5 years after confirmation of eligibility at the latest.
  • Photovoltaic (fixed): 1,100 kWh/p.a. for maximum 13 years and one month. The plant has to be put into operation 2 years after confirmation of eligibility at the latest.
  • Photovoltaic (sun-tracking): 1,500 kWh/p.a. for maximum 13 years and one month. The plant has to be put into operation 2 years after confirmation of eligibility at the latest. 
  • Landfill gas: 7,500 kWh/p.a. for maximum 5 years and three months. The plant has to be put into operation 2 years after confirmation of eligibility at the latest.
  • Caps for other categories/plant types are calculated on an individual basis by the HEA (§4 Decree 17/2016).

Furthermore, plant’s are exempt from support if the annual planned budget of 20 billion HUF (approx. 64.97 million EUR) is exceeded (Annex 1 Decree 62/2016).

Eligibility period

As of 1 January 2017, technology-specific caps have been introduced (Annex 1 Decree 17/2016). The following figures are valid for plants which are eligible for the feed-in tariff with a maximum capacity of 0.5 MW (not premium tariff or tender):

  • Biogas: for maximum 25 years. The plant has to be put into operation 5 years after confirmation of eligibility at the latest.
  • Biomass: for maximum 25 years. The plant has to be put into operation 5 years after confirmation of eligibility at the latest.
  • Photovoltaic (fixed): for maximum 13 years and one month. The plant has to be put into operation 2 years after confirmation of eligibility at the latest.
  • Photovoltaic (sun-tracking): for maximum 13 years and one month. The plant has to be put into operation 2 years after confirmation of eligibility at the latest.
  • Eligibility periods for other categories/plant types are calculated on an individual basis by the HEA (§4 Decree 17/2016).

Distribution of costs

Consumers

In the end, the consumers not eligible for universal service (“egyetemes szolgáltatás”) bear the costs of the feed-in tariff scheme (obliged balance group operators pass their costs on to businesses).  The “universal service system” guarantees regulated electricity prices for households and small consumers (§§ 13 Act No. LXXXVI of 2007).

Grid operator

The transmission system operator (MAVIR Ltd.) pays the feed-in tariff to the plant operators. Further, the TSO has to ensure the maintenance of the obliged balance groups and the distribution of electricity and its allocation on the market. From April 2016, the obliged balance group operators have to contribute to the financing of the FiT payments (‘KÁT-pénzeszköz’) in accordance with Decree 63/2016. By the end of March 2016, part of the renewable electricity was sold on the organised market (HUPX). From April 2016, all electricity generated from RES is sold on the organised electricity market (Law No. CXCVI of 2015 as an amendment to the Electricity Law LXXXVI of 2007).

Plant operator

From April 2016, the plant operator has to declare an electricity production schedule for each day of the month (§2 (3) Decree No. 63/2016). Prior to that, reporting was obligatory on a monthly basis. If the requirements are not followed properly, the plant operator has to grant financial compensation (“regulation fee”) to the transmission system operator, whereby the amount of the (technology-specific) penalty payment varies between 5-7 HUF/KWh (Approx € 1.6 ct- 2.27 ct). (§12 Decree 165/2016).

Distribution mechanism

Plant operator – transmission system operator/ obliged balance group operators: The TSO buys the electricity from renewable sources from the plant operators and pays them the feed-in tariff. By the end of March 2016, the TSO partly sold this electricity on the organised market (HUPX) and partly to the obliged bal-ance group operators. From April 2016, the renewable elec-tricity will not be distributed to the balance group operators anymore; all renewable electricity will be sold on the organ-ised market (HUPX). The obliged balance group operators will only contribute to the financing of the FiT (§7 (4) Decree 17/2016 in conjunction with § 13 (1) Law LXXXVI)

Obliged balance group operators – final consumer: Obliged balance group operators have to pass through the extra costs to their consumers via bilateral agreements so in the end consumers not eligible for universal service bear the costs through the electricity price. All costs of the new FiT financial means have to be declared on the bill of end consumers who are not eligible for universal service (§9 (3) Decree 63/2016 in conjunction with §13 (3) Law No. CXXXVI).