Green Premium (Premium Tariff)
Updated: 07.01.2019
Author: John Szabo
The feed-in premium (so-called green premium) was introduced on 1 January 2017. The final electricity price is based on the market referential price and an administrative premium, which is to be seen as a compensation payment granted for renewable energy plant operators. Plant operators have to sell their electricity directly, i.e. to a third party through a sup-ply agreement or on the stock market, and claim the premium from the grid operator. The grid operator is obliged to physi-cally take the electricity produced.
Plants with a capacity between 0.5-1 MW are eligible for the green premium without tendering. Plant operators maintain-ing installations between 50 kW and 0.5 MW may choose the green premium instead of the feed-in tariff. The plant’s eligi-bility is determined by the Hungarian Energy and Utility Regulatory Authority (HEA).
From April 2016, the plant operator has to declare an electricity production schedule for each day of the month. Since 1 July 2018 HEA requires a forecast identifying output for 15-minute time intervals (§2 (3) Decree No. 63/2016 and (§12 Decree 299/2017). 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.€ 1.56 ct- 2.18 ct).
Eligible technologies
In general, all technologies are eligible if their capacity is between 0.05 and 1 MW except for wind power plants. For plants with a high-er capacity than 1 MW and wind power plants, the premium tariff can be obtained through tendering procedures (§13 (3) Decree 299/2017). However, the construction of the project must not have already started when the application for the green premium is hand-ed in (§ 6(1) Decree 299/2017) and plants have to fulfil the technical requirements (technology-specific) laid down in Decree 55/2016
| Solar energy | Eligible |
|---|
| Geothermal energy | Eligible |
|---|
| Biogas | Eligible |
|---|
| Hydro-power | Eligible |
|---|
| Biomass | Eligible |
|---|
Amount
General information on tariffs:
- There are three different tariff rates depending on the time of day (peak, valley and deep-valley period except for solar power which is subject to a single tariff).
- These time periods are defined by decree (Decree 299/2017), depend on the area the electricity is generated in and vary for weekdays and weekends/holidays as well as for summer and wintertime.
- There are three tariff areas according to the areas of opera-tion of the six distribution grid operators (Annex 3 Decree No. 299/2017).
- The tariff level also depends on a plant's installed capacity and the generation technology employed.
Premium Tariffs for the green premium:
All eligible technologies receive the same basic tariff (Annex 1. De-cree 299/2017)
- peak period (basic tariff): HUF 31.77 per kWh (approx. € 0.0989)
- valley period (basic tariff): HUF 31.77 per kWh (approx. € 0.0989)
- deep-valley period (basic tariff): HUF 31.77 per kWh (ap-prox. € 0.0989)
Addressees
Entitled party: Plant operators maintaining installations with a capacity of 50 kW-1 MW (§10 Decree 299/2017) are entitled for the green premium. The plant/installation has to be new or subject to refurbishment amounting to at least 50% of the initial invest-ment costs (§11 (1) Decree 17/2016). However, plants with a capacity higher than 0.5 MW have to sell their electricity on the electricity stock market HUPX (§ 4 (2) Law LXXXVI. of 2007).
Obligated party: The Recipient (i.e. the transmission grid operator) has to identify and account the amount of the premium tariff and distrib-ute the respective financial means (§6 Act No. LXXXVI of 2007). Obliged balance group operators have to claim the pay-ment from the contributors and pass it on to the TSO. Plant operators have to sign a contract with the Recipient (§ 16 De-cree 299/2017). The financial means has to be made available by the contributors specified in §13 (3) not eligible for ‘uni-versal service’ (Act No. LXXXVI of 2007), where “universal service” (“egyetemes szolgáltatás”) guarantees regulated elec-tricity prices for households and small consumers.
Procedure
Process flow | Plant operators are entitled by law to payment for the electricity they generate (§ 13 (1) Act No. LXXXVI of 2007). § 6 Decree No. 17/2016 prescribes the following application process: - To enforce a claim for a premium tariff, a plant operator shall submit an application to the Hungarian Energy and Pub-lic Utility Regulatory Authority (§ 7 (1) Decree No. 13/2017).
- Application deadlines, and the documents to be submitted together with an application are defined by decree (§ 7 (1-2) Decree No. 13/2017). Checklist and clarification is availa-ble 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 premium tariff and the max-imum amount of electricity for which the tariff may be re-ceived in line with the supported amount of electricity de-fined (Annex 1 13/2017).
- Where a plant operator receives other subsidies or grants for his plant, the Hungarian Energy and Public Utility Regula-tory Authority will take into account the total amount of grants received when calculating the eligibility period for the feed-in tariff (§ 3 (3) Decree No. 13/2017).
|
|---|
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 2 Decree 299/2017). Therefore, a digression is possible.
Cap
As of 2 January 2018, modified technology-specific caps have been introduced (Annex 1 Decree 13/2017). The following figures are valid for plants which are eligible for the premium tariff (except the regular feed-in tariff or tender):
- Biogas: 6,750 kWh/p.a. for maximum 25 years. The plant has to be operational 5 years after confirmation of eligibility at the latest.
- Biomass: 6,900 kWh/p.a. for maximum 25 years. The plant has to be operational 5 years after confirmation of eligibility at the latest.
- Photovoltaic (fixed): 1,100 kWh/p.a. for maximum 17 years and 11 months. The plant has to be operational 2 years after confirmation of eligibility at the latest.
- Photovoltaic (sun-tracking): 1,500 kWh/p.a. for maximum 17 years and 11 months. The plant has to be operational 2 years after confirmation of eligibility at the latest.
- Landfill gas: 7,500 kWh/p.a. for maximum 4 years and 9 months. The plant has to be operational 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 13/2017).
Furthermore, plants are exempt from support if the annual planned budget of 10 billion HUF (approx. 32.48 million EUR) is exceeded (Annex 1 Decree 62/2016).
Eligibility period
As of 2 January 2018, modified technology-specific eligibility periods have been introduced (Annex 1 Decree 13/2017). The following figures are valid for plants which are eligible for the premium tariff (except the regular feed-in tariff or ten-der):
- Biogas: 6,750 kWh/p.a. for maximum 25 years. The plant has to be operational 5 years after confirmation of eligi-bility at the latest.
- Biomass: 6,900 kWh/p.a. for maximum 25 years. The plant has to be operational 5 years after confirmation of eli-gibility at the latest.
- Photovoltaic (fixed): 1,100 kWh/p.a. for maximum 17 years and 11 months. The plant has to be operational 2 years after confirmation of eligibility at the latest.
- Photovoltaic (sun-tracking): 1,500 kWh/p.a. for maximum 17 years and 11 months. The plant has to be operational 2 years after confirmation of eligibility at the latest.
- Landfill gas: 7,500 kWh/p.a. for maximum 4 years and 9 months. The plant has to be operational 2 years after con-firmation of eligibility at the latest.
- Caps for other categories/plant types are calculated on an individual basis by the HEA (§4 Decree 13/2017).
Furthermore, plants are exempt from support if the annual planned budget of 10 billion HUF (approx. € 32.48 million) is exceeded (Annex 1 Decree 62/2016).
Distribution of costs
| Consumers | Consumers not eligible for universal service (“egyetemes szolgál-tatás”) bear the costs of the premium tariff scheme (obliged balance group operators pass their costs on to businesses). The “universal service system” guarantees regulated electricity prices for house-holds and small consumers (§§ 13 Act No. LXXXVI of 2007). |
|---|
| Distribution mechanism | - Transmission system operator – obligated balance group operators – final consumers: The transmission system operator (MAVIR Ltd.) determines and pays the premium tariff to the plant operators which is the referential market price and the administrative premi-um. In general, 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). The obliged balance group operators have to contribute to the financing of the FiT and Premium payments (‘KÁT és Prémi-um -pénzeszköz’) and allocate their costs to final consum-ers. The amount of the administrative premium to be paid by the balance group operators in accordance with § 13 (1) of the Electricity Law is determined by the TSO (§6 Decree 63/2016). In the end, the TSO is not allowed to make profit or loss.
- Plant operator – obliged balance group operators: Plant operators who participate in the premium system have to sell their electricity on the organised market (HUPX) or to the obliged balance group operator of choice (bilateral con-tract). The obliged balance group operators will only con-tribute to the financing of the Premium (§1 (4) Decree 63/2016 in conjunction with § 13 (1) Law LXXXVI). The transmission system operator is responsible for the func-tioning of the mechanism.
- 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 Premium financial means have to be declared on the bill of end con-sumers who are not eligible for universal service (§9 (3) De-cree 63/2016 in conjunction with §13 (3) Law No. CXXXVI).
|
|---|
Hungary
