Utility scale solar goes merchant in Hungary

Photon Energy has deployed its first merchant PV project in Hungary. The company said the €1 million plant may be the first in a series selling power to the spot market. In an interview with pv magazine, Hungarian renewable energy specialist, Ferenc Kis, stated that these projects may become more frequent in the future, due to new coordinated grid connection capacity allocation.

December 10, 2021

Photon Energy Solutions HU Kft., the Hungarian unit of Netherlands-based solar project developer Photon Energy, has switched on a 1.3 MW solar power plant in Tolna, in central Hungary.

“The new power plant represents the first Hungarian utility-scale PV power plant in Photon Energy Group’s IPP portfolio that the Company will operate without a support scheme. The total annual production of the power plant is expected to be around 2.1 GWh, which corresponds to expected annual revenues of  €420,000 based on current forward prices for electricity baseload in Hungary in 2022,” the company said in a statement.

Given the current power price trend and the fact that in the first half of 2021, electricity prices were much lower than in the past months, Photon Energy said expected revenue for next year could be even higher. “Recent market developments and the outlook for European energy prices vindicates our market approach,” Photon Energy CEO, Georg Hotar, said. “The economics of our first European merchant power plant highlights the value embedded in our dynamically growing project development pipeline across the Central and Eastern Europe region.”

According to Hungarian renewable energy specialist, Ferenc Kis, changes occurred in the Hungarian grid connection process earlier this summer with direct financial implications imposed by obligatory bid bonds. “This coordinated grid connection capacity allocation on the country level will result in new network connection possibilities reserved previously by developers but also gives an emergency break option for the system operator if the PV capacity grows faster than the flexibility of the system,” he told pv magazine.

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“The increased upfront costs of the capacity booking declarations, the reduced maximum capacities (20MW) of large power plants on the METAR auctions, and the withdrawal and re-announcement of the most recent renewable tender are all reasons why more projects are planned on a pure merchant basis, like the one in settlement inaugurated recently.”

According to Kis, the last three auctions have shown significant competition as the procurement exercises were up to five times oversubscribed, while the average bid prices fell by 28% to an average of €50.3/MWh.

The latest statistics from the International Renewable Energy Agency (IRENA) reveal that Hungary had installed 1.95 GW of solar by the end of 2020. New capacity additions hit 553 MW last year.

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This post appeared first on PV Magazine.

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