Hungary has a huge potential for solar energy. In order to achieve the European climate targets, the country would do well to invest in Photovoltaics (PV). This development is gradually getting off the ground, and foreign investors are more than welcome. In the land of Orbán, however, vigilance is of the essence.
The proportion of renewable energy resources in the EU must reach 30% by 2030. This has been stipulated in the European climate legislation adopted last year which is in line with the agreements of the Paris Climate Conference in 2015.
In Hungary, however, as in the other Central European countries, this percentage is still very low. The expected results for 2030 leave much to be desired. This is evident in a report from the University of Cambridge – ‘The energy transition in Central and Eastern Europe: The business case for higher ambition.’
Renewable energy sources
In contrast to countries such as the Czech Republic and Slovenia, hydroelectric power stations in Hungary are not a realistic option. This is due to its lack of sufficient topographical relief. Wind energy is not exactly a viable option either. Especially since the Orbán government has banned the construction of wind turbines within a 12 km radius of populated areas.
Hungary currently mainly relies on nuclear energy along with fossil fuels such as coal. Apart from the moral dilemmas associated with nuclear energy, however, there are also a number of other tricky issues. For example, the nuclear power plant in Paks is located on a geological fault line. This was revealed in documentation that the investigative news site Átlátszó found out about in 2017. Which is at odds with the prevailing international directives in force. Furthermore, the tanks where nuclear waste is stored do not meet current safety requirements. A range of environmental impacts are feared as a result of the construction of the new Paks 2 power station. Such as the warming up of the nearby Danube river as a result of the discharge of coolant water. Finally, the construction of the new power station will be financed by the Russian state-owned company Rosatom. Which in turn will make the country economically dependent on Putin’s Russia.
Market growth for photovoltaics
Solar energy is a serious, and above all, genuinely sustainable option for Hungary. With an average of 1250 kWh/m2 of sunlight per year, comparable to central France, Hungary has a considerable potential for solar energy. That’s what the CISL report has revealed. Even though the development of solar energy is still very much in its infancy. Nonetheless, this now seems to be evolving. Hungary plans to invest in the construction of solar energy parks over the next ten years. Although future prospects for growth are not entirely clear. The Hungarian National Energy and Climate Plan foresees an increase from 700 MW to 6645 MW by 2030.
‘Hungary is going to expand its solar energy capacity by ten times between now and 2030!’ Hungarian President János Áder jubilantly announced at the UN climate summit in Chile on 23 September. Although he remained rather vague about the implementation of these plans. Earlier this year in May, in an interview with the pro-government newspaper Magyar Idök, the same Áder even spoke of a twenty-fold increase in capacity compared to 2014, i.e. 80 MW. Yet this would bring Hungary up to a modest capacity of 1,600 MW. Reason for a celebration? Not really.
According to renewable energy expert László Magyar from the NGO Energiaklub, these figures should be taken with the requisite grain of salt. If you assume a capacity of 1000 MW, as Magyar explains, which is actually the case at the moment, and if you then increase than by a factor of 10, you would end up with 10,000 MW in 10 years’ time. Not necessarily infeasible, Magyar contends. However, this would require major investments. Including the expansion of the current network capacity.
Foreign investors sought
Solar energy in Hungary is in the process of becoming a booming business, at least that much is clear. In recent years, incentives have been provided so as to promote the construction of solar energy parks. Since January 2017, for instance, a subsidy scheme (METÁR) similar to the Dutch SDE+ has been in force in support of renewable energy. Which offers to pay a return on investment depending on the size of the installations.
The Hungarian authorities will also hold a large-scale bidding round at the end of this year in order to attract investors. Prior to this, the international events agency Solarplaza, based in the Netherlands, is organizing a conference in Budapest on November the 14th this year. This is in cooperation with Photon Energy. During this conference, interested parties from outside Hungary will be able to obtain information on the legal, technical and financial conditions and possibilities with regard to investments in Hungarian solar parks. According to Photon Energy, it is relatively easy for experienced foreign investors to obtain a loan. As they would have the confidence of Hungarian banks. More so than that of home-grown investors who have no relevant experience. Aside from that, the legal conditions for investing in solar parks in Hungary are ‘transparent’, in the view of Photon Energy.
What does raise some questions, however, is that Hungary is currently facing an Article 7 procedure, not least because of its misappropriation o EU subsidies. One of the cases being investigated is a business deal between István Tiborcz, Orbán’s own son-in-law. His former business partners are currently in the process of constructing a mega solar park made up of 422200 solar panels, capable of generating 10.1 MW. This is located near Herend in the foothills north of Lake Balaton. Not to mention the Turkish businessman and Erdogan supporter Adnan Polat, a loyal business friend of Orbán. He was spotted with the Hungarian Prime Minister in China last year. Where he was in connection with a business deal concerning the financing of an arsenal of solar energy parks.
A genuinely sustainable alternative
In any event, it is likely that a lot of solar parks will be built in Hungary in the coming years. This will provide Hungarians with a sustainable alternative. Not only as a substitute for environmentally polluting fossil fuels such as coal, but also for the severely outdated nuclear power plant at Paks. Its expansion is also being financed by Russian millions. Hopefully, the local population will also benefit from all of this. As in terms of creating long-term jobs, as stipulated in the EU directives for national energy and climate plans.
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