The Hungarian Energy Policy 2007-2020 The Hungarian Energy Policy 2007-2020

and the Renewable Energy Situationand the Renewable Energy Situation Dr. Poós Miklós

director

Ministry of Economy and Transport, Energy Department

Institute of Italian Culture, Budapest

29 November 2007

The Hungarian Energy Policy 2007-2020The Hungarian Energy Policy 2007-2020

Sustainable Transportation

Strategy

MoET Strategy(2007-2010)

Climate Change Strategy

The energy policy connections with other strategiesThe energy policy connections with other strategies

Sustainable Development

Strategy

Energy policy

Renewable Strategy

Energy Efficiency Strategy

And Action Plan

BiofuelsStrategy

OthersLike

liberalisation

Hungarian Energy Policy

2007-2020

The main pillars of the energy policyThe main pillars of the energy policy

Competitiveness SustainabilitySecurity of Supply

Energy policy as a framework strategyEnergy policy as a framework strategy• „The Hungarian Energy Policy 2007-2020” document

yesterday was approved by the Government! Next step: Parliamentary discussion and approval. • The document is a framework strategy. The detailed policies

and measures in other sub-strategic like the follows:

Hungarian Renewable Energy Strategy 2007-2020

National Strategy on Energy Efficiency

and Energy Efficiency Action Plan

Security of SupplySecurity of Supply

To maintain and improve the continuity and security of energy supply.

Energy mix Energy import

diversification Strategic energy stocks Infrastructure developments Supply for the people,

social responsibility

Objective Sections

CompetitivenessCompetitiveness

Contribution of the energy sector to increase the economic competitiveness of Hungary.

Liberalized energy markets, integration to the EU internal energy market

Energy prices Technological development

and R+D

Objective Sections

SustainabilitySustainability

To enforce the principles of sustainable development.

Energy efficiency, energy saving Renewable energy sources Climate change: connections

between energy and climate policies

Connections between energy- and transport policies

Objective Sections

Renewable Energy Situation in Renewable Energy Situation in HungaryHungary

Renewable energy situationRenewable energy situationShare of RES in TPES

in Hungary and in the EU

4.4

6.3

4.7

6.05.75.85.6

5.1

3.7

4.3

2.6

3.4 3.3 3.3 3.4 3.5

1

2

3

4

5

6

7

1990 1995 2000 2001 2002 2003 2004 2005 2006

%

EU 25

Hungary

The EU-25 average is about 50 % higher

than in Hungary.

Green electricity developments in HungaryGreen electricity developments in Hungary

Electricity Consumption and Share of RES Based Electricity Production in Hungary

4.5

0.7 0.60.8

2.3

3.7

32000

34000

36000

38000

40000

42000

44000

2001 2002 2003 2004 2005 2006

GWh

0

1

2

3

4

5

6

%• In relevant EU

Directive the Hungarian indicative target is 3,6% by 2010.

• A We have reached already (in 2005) this target, mainly with fuel change from coal to biomasse in some power stations.

The renewable source structure in green electricityThe renewable source structure in green electricity

•Biomass (crop)

•Biogas

•Hydro

•Wind

•Biomass (from forest)

Turn out newenergy plantation„energy crops”

Shares of different renewable sourcesShares of different renewable sources

• The dominant fuel is biomass, accounting to almost 90% of total RES contribution

• Biomass is followed by geothermal energy and communal waste.

• It is expected that wind

energy will increase in importance in the future when 330 MW of wind farms licensed in March 2006 are commissioned .

Geothermal6.6%

Community waste3.6%

Solar0.2%

Wind0.3%

Biogas0.8%

Biofuel1.7%

Hydro1.2%

Biomass38.3%

Firewood47.4%

Data in 2005

Significance of various RES I.Significance of various RES I. Biomass • Hungary has a significant potential for sustainable

production of biomass, with 5 M hectares of productive farmland and 3 M hectares of forest.

• Since 2000 rapid utilisation of solid biomass in electricity generation: round-wood is co-fired in old coal-fired power stations, but with very low efficiency.

• Solid biomass is almost fully utilised, demand for wood used in electricity generation increased prices in market for wood.

• Further increase in supply is only possible by increased use of waste wood, or the introduction of ‘energy crops’.

Biomass for Transport • Share is still low, but increasing (by 2020 10%)• Reflecting the structure of agriculture, focus is on bio-ethanol

from cereal plant, and on bio-diesel from sunflower seeds and rapeseed.

• Hungary has surplus production of about 3 M tonnes of cereal (in a normal year), which can not be exported due to WTO and EU CAP Reform restrictions. Government expects that decreasing contributions of agriculture to food supply and exports will be compensated for by switching agricultural production to energy crops, by saving farmers’ jobs and preserving social and economic structures in rural areas.

• A number of new investments in bio-ethanol production are under way, the sector has a strong appeal to foreign investors. A large part of biofuel production is expected to be exported.

Significance of various RES II.Significance of various RES II.

Significance of various RES III.Significance of various RES III. Geothermal energy• Hungary has abundant resources of geothermal low-temperature

energy in the form of warm/hot water. Due to high salt content of water the brine must be reinjected to avoid environmental damage. This limits its potential.

Wind• So far a minor contributor to RES based production, but the support

regime has generated a strong investment interest in the last few years.

• Due to grid safety concern the regulator limited capacity and access for new wind installations to a total of 330 MW in the next few years.

• New licences will be permitted as the integration of weather–dependent RES into the grid is secured.

Hydro• Hungary is a flat country, with low available hydro resources.

Support of RES based electricity generation Support of RES based electricity generation

• A generous feed-in tariff has been in place since the Electricity Act 2001, with priority access to the grid. Feed-in tariffs are valid until 2010.

• A licence from the HEO is required to receive the feed-in tariff. • The volume of supported electricity and the duration of the feed-in

tariff in the licence is limited by the HEO, to avoid subsidy after the investment has been fully recovered.

• The feed-in tariff was set by Parliament at 8,21 euro cent, subject to be indexed yearly by CPI. Today it is 9,5 cent/kWh which is 80% higher than the average electricity wholesale price.

Support of biofuel for transport through Support of biofuel for transport through taxation taxation

• From 1 July 2007 a tax reduction to 0% excise tax applied for biofuels blended up to 4.4% of the volume of gasoline.

• From 1 January 2008 same tax exemption will apply to 4,4% of biodiesel blended into diesel.

• Fuel distribution companies not complying with the 4,4% requirement pay extra tax of HUF 8 per litre at the wholesale level.

Investment support for RESInvestment support for RES

• Direct investment support for RES is available through EEOP, financed from EU Structural Funds. Between 2007-2013 250Meuro is available for supporting RES projects.

• Under the II. National Development Plan sustainable solid biomass production forms will be supported, such as pellets and wood chips.

Renewable energy: target numbersRenewable energy: target numbers

In Total Primary Energy Supply by 2020:

14-16%

Biofuels:

2010: 5,75%

2013: 8%

2020: 10%

Thank you very much for your attentionThank you very much for your attentionLa ringrazio molto per la vostra attenzioneLa ringrazio molto per la vostra attenzione

www.gkm.gov.hupoos.miklos@gkm.gov.hu