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Hungary’s second renewables auction concludes with lowest bid of $0.0549/kWh

The auction has been significantly oversubscribed and has seen 36 successful projects among 257 submitted. Around 390 GWh of power was contracted and will be provided exclusively by PV projects.

For the small PVPP category, including installations between 300 kW and 1 MW, final prices varied from HUF21/kWh ($0.071) to HUF 23.03/kWh, while in the large PVPP group, including projects ranging in size from 1 MW to 49.9 MW, final prices ranged from HUF16.18/kWh ($0.0549) to HUF17.97/kWh. The average final price in the first category was HUF22.35 while, in the second one, it was HUF17.22.

For the smallest category, the HEPURA expects to contract 40 GWh and for the largest group, the contracted power should be around 350 GWh. For comparison, in the first, pilot renewable energy auction, held in March, the Hungarian authority had secured 33 GWh and 166 GWh, respectively.

“The results of the second tender clearly show that … the significant increase of the capacity limit, from 20 MW to 50 MW for large scale projects, had a favorable effect on foreign investor[s’] appetite,” Hungarian energy expert, Kinga Máté, told pv magazine. “In this regard, approximately 50% of the projects awarded in the bigger category were submitted by individual foreign investors or in the form of a joint venture in cooperation with one of the key players of the local market.”

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According to another Hungarian renewable energy specialist, Ferenc Kis, the low prices seen in the auction may lay the ground for the birth of a PPA market in Hungary, although the current energy regulation does not contemplate a similar option. “The Hungarian renewable energy market is still hindered by a tax that supports small district-heat producers,” he told pv magazine. “Based on the shorter contract for difference period and close-to-market prices in the present auction, the unsuccessful bidders may wait for [a change in] the unfavorable renewable energy tax and head toward the 50-100 MW scale, to build purely merchant projects in the coming years.”

HEPURA is granting 15-year feed-in premium payments to the successful projects, to top up wholesale electricity prices. The tender is part of the Hungarian government’s METAR-KÁT renewables incentive program, which was launched in 2017. The European Commission approved the scheme in July 2019.

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Source: pv magazine