In mid-June 2016, the Parliament of Hungary enacted the Renewable Energy Support System (in Hungarian: “Megújuló energia támogatási rendszer”) (“METÁR”), the new regulatory and support scheme for electricity generation from renewable energy sources (“RES”). Via METÁR, Hungary aims to meet its undertakings in the field of RES generated electricity by 2020.
METÁR support regime in a nutshell
METÁR consists of a mandatory off-take regime and a “premium support” regime, both of which will be differentiated on the basis of the energy resources applied, production methods, nominal capacity of the power plant, efficiency of energy transformation and the date of development of the relevant power plant.
RES electricity producers with less than 0.5 MW capacity will continue enjoying the mandatory off-take regime. RES electricity producers with capacity between 0.5 MW and 1 MW will be subject to the specific support system operated under METÁR. RES electricity producers with capacity over 1 MW must sell the electricity produced by them on the free market, and can only be entitled to support in the form of a “premium” allocated to RES power plants via tenders. Premiums will be paid only over the average market price.
Restrictions on wood as fuel
In order to prevent illegal logging and to protect forests, METÁR contains strong guarantees regarding the usage of wood as fuel in the course of RES electricity generation.
The entry into force and effective date of METÁR is subject to the approval of the European Commission. Based on information published in the media, we understand that (after the appropriate EU approval) METÁR will enter into force as of 1 January 2017.
Co-existence with the current RES support regime
Even after METÁR comes into force, the currently effective mandatory off-take regime for RES electricity (“KÁT”) will remain effective until the last contract made under the KÁT regime expires or 2045 at the latest. Once METÁR becomes effective, however, new market players can only be supported in the framework of METÁR.
Detailed rules to be published separately
The details of METÁR, including the rules of the mandatory off take regime and the tender for submissions, the maximum level of support, the level of minimum efficiency as well as the related calculation method will be set out later in governmental and ministerial decrees as well as the decree issued by the Hungarian Electricity and Public Utilities Authority. These secondary laws are expected to be issued by the end of 2016.