Hungary: METAR premium based-system’s tender completed

, SEE Energy News

RES producers have to sell their electricity on the market, but they can apply for a so-called “green” premium. The green premium is granted through a tendering process except for those producers with installed capacity between 0.5 MW and 1 MW, which can apply for the green premium at a state-approved fixed price of 0.07 euros/kWh as of 2020. In Hungary, state subsidies for electricity production from renewable sources are available through the METAR premium-based system. As opposed to the former KAT system, which was based on feed-in tariffs and was open for applications until the end of 2017, “green” electricity producers are not entitled to the mandatory purchase of their electricity, except producers with installed capacity of less than 0.5 MW.

The pilot METAR tender was launched in September 2019. The green premium was available in two categories: for producers between 0.3 MW and 1 MW which could apply with a maximum of 33 GWh electricity or for a maximum of 0.91 million euros per year, and for producers between 1 MW and 20 MW which could apply with a maximum of 166 GWh electricity or for a maximum of 1.83 million euros per year. In both categories, premiums are valid for a period of 15 years. The green premium was awarded to those who offered the lowest purchase price for their electricity. For them, the state guaranteed to pay the difference between the subsidized price and the reference price on HUPX.

During the first METAR tender, only 630,000 euros was allocated between the bidders under the 2.75 million euros cap, while 193 GWh from the available 199 GWh overall yearly capacity was distributed, showing the actual bid purchase prices were below the anticipated tender prices. The average bid purchase prices were 0.06 euros/kWh and 0.068 euros/kWh, for each category respectively. This is a 24-33 % drop in the price of electricity as compared to the fixed 0.088 euros/kWh price under the KAT system.

The second METAR tender, which ran from 15 September to 15 October, showed some improvements: the maximum figures have been raised from 33 GWh to 40 GWh and from 166 GWh to 350 GWh, while the project’s maximum installed capacity was increased to 49.99 MW. However, administrative parts of tendering procedure have caused serious problems since the first tender: almost 30 % of applications were declared invalid.