Solar deployment is accelerating in EU member states, but grid capacity shortfalls and unpredictable changes in government policy must be addressed if the country is to realize its full solar and European energy security potential.
The country, which had just 26 MW of solar power in 2016, added more than a gigawatt last year, and the 2030 National Energy Strategy target of 6 GW of solar power can be reached in five years.
These numbers show significant demand for clean and affordable solar power, but the rapid expansion of solar power has outstripped the ability of the underdeveloped national grid to keep up, affecting regulation, slowing energy investment and even lowering the value of solar power. forints.
In January, German energy company E.ON’s Hungarian operation announced plans to invest 190 million euros ($201 million) in the grid, partly financed by the EU, to unlock 700 MW of grid capacity by 2026. State-owned peer-to-peer network MVM Group and Swiss gas company Opus Titász have announced HUF 96.6 billion ($258 million) network investment plans.
Despite this development, contradictory policy and regulation cloud the outlook for solar energy in Hungary.
In April 2021, the lack of grid capacity led to a license ban for solar power plants over 50 kW. Grid-connected household self-consumption systems smaller than this size were permitted, and industrial systems may still be accepted, albeit only for self-consumption and often requiring energy storage.
Ban on solar energy
The national grid operator (TSO) Magyar Villamosenergia-Ipari Atviteli Systemiranyito (Mavir) announced in May that there is no free network capacity to support tenders. This means that new solar plants can only be permitted through a “unique procedure”, where the transmission system operator sets specific eligibility conditions, which usually require developers to finance the necessary grid infrastructure. Even then, eligible projects must meet “derogation conditions”, which are not transparent.
In October, the Hungarian government introduced a regulation on small, household-sized solar power plants, which fundamentally changed the Hungarian solar market. As of October 31, the above-mentioned household systems connected to the grid of less than 50 kW could no longer have a grid connection and could only be used for own consumption.
This means in practice that such systems only have value if they are combined with energy storage. The inevitable impact on the market prompted the Department of Energy to state in early February that it plans to review the “miniature solar panel shutdown measure.”
Of course, Hungary is not the only country suffering from grid capacity shortages due to the rapid development of renewable energy production – similar problems have occurred in Germany and Romania – and the unpredictable, sometimes ad hoc nature of Hungarian energy regulation shows that the market is under intense scrutiny in Budapest.
The EU could play a major role in preparing Hungary’s electricity grid for more renewable energy by resolving its dispute with Viktor Orbán’s government and freeing the country from the bloc’s Covid recovery fund.
The devastating effects of climate change on the environment and the economic and geopolitical events of recent years have shown that green energy is clearly the way to a sustainable future. More precisely, they have shown that in the long term, only a diverse energy mix can provide national energy security.
The government has begun to address this with subsidies promoting solar energy and energy efficiency. In September, the second phase of the EU-financed HUF 201 billion solar energy and heat modernization fund was launched. According to the program, families with incomes below the national average can apply for a maximum of HUF 2.9 million repayable subsidy for installing solar energy and a maximum of HUF 11.3 million for adding a heat pump, energy storage, and replacing windows and doors. The fund was intended to cover all such costs, but high inflation has meant that the grant does not reach 100% of costs, although it remains popular.
A separate home renovation grant offers families with children or families expecting a child up to HUF 3 million to cover half of the costs of the works, and may include solar costs, provided they are up to HUF 450,000 per kilowatt of installed generation capacity.
In addition, members of the Hungarian government have announced that they are ready to support solar power plants of up to 800 MW.
In order to recharge Hungary’s solar energy, in addition to grid investments and clearer regulation, the nation needs local production. My company, Astrasun Solar, has signed a contract with the Hungarian conglomerate Műszertechnika-Holding and its vehicle chassis manufacturer IK Metál to manufacture solar mounting structures.
Although the European Union’s REPowerEU initiative, announced in May, aims to wean off Russian gas through a solar energy strategy, the plan fails to address the market’s dependence on solar energy imports from China.
In accordance with the strategy, the EU primarily aims to increase its annual solar panel module assembly capacity of 35 GW. Not enough attention has been paid to the fact that Europe has only one gigawatt of solar ingot and wafer production lines – the basis of solar panel manufacturing. The China Photovoltaic Industry Association has estimated that the country would account for more than 98 percent of global ingot and wafer production in 2021.
The EU’s strategy should aim for at least a 20–40 percent increase in European silicon production and Valantee’s manufacturing capacity. These extremely energy-intensive activities would require long-term, low-cost fixed government support for manufacturers’ electricity supplies. These details should have been worked out a long time ago.
The solar energy strategy has room for development both in Hungary and in Europe, and progress could be made through social and professional dialogue to resolve conflicts and strengthen market vulnerabilities.
A more stable, predictable solar policy could pave the way for Hungary’s perfectly positioned solar market and its companies to play a leading role in Europe.
About the author: Dr. Attila Keresztes is the founder and CEO of Astrasun Solar Plc, a Hungarian solar power engineering, construction, operation and maintenance, investment and development company. Attila has more than 10 years of experience in solar energy.