Auction time - Third METÁR auction to take place in July

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After two successful METÁR tenders1, on April 30, 2021 the Hungarian Energy and Public Utility Regulatory Authority launched the third METÁR tender to support renewable electricity producers under the green premium scheme.

The upcoming auction will take place between July 1, 2021 and July 30, 2021, with a yearly maximum support budget of HUF 450 million and a maximum subsidized volume of 300 GWh/year.

As in the previous tenders, the renewable premium support is earmarked for new investment projects and existing plant units that undergo major refitting or development at a cost exceeding 50% of the initial investment cost.

As before, applicants can be companies with a registered office in the EU, the EEA or the Energy Community, Hungarian branch offices of foreign companies and Hungarian business entities or municipalities. However, the METÁR tender is only available to projects located in Hungary. For various considerations, bidders have been generally Hungarian entities.

In the upcoming METÁR tender there will be two tender categories based on the nominal capacity of bidding projects:

  • power plants with a nominal capacity of 0.3 to 1 MW (“Small Category”), where the maximum subsidy budget to be auctioned is HUF 200 million/year and the subsidized electricity volume to be auctioned is 50 GWh/year;
  • power plants with a nominal capacity of 1 to 20 MW (“Big Category”), where the maximum subsidy budget to be auctioned is HUF 250 million/year and the subsidized electricity volume to be auctioned is 250 GWh/year.

The tender rules set separate limitations with respect to bidders belonging to the same ultimate beneficial owner(s) (“UBO(s)”):

  • Small Category: the maximum volume of subsidized electricity that may be awarded to bidders belonging to the same UBO or UBOs is 15 GWh/year;
  • Big Category: the maximum volume of subsidized electricity that may be awarded to bidders belonging to the same UBO or UBOs is 80 GWh/year.

Applicants will need to make a proposal for the initial subsidized price that may not be higher than HUF 27.32/kWh. Winning projects must start commercial operations within 3 years and the maximum term of the subsidy is 15 years again (may be reduced by other support).

Tender participation is conditional upon providing tender security, while winning bidders must provide and maintain performance security for implementation of the project. The amount of the tender security is 1.5%, while the amount of the performance security is 5% of the benchmark investment value2 defined in the tender invitation.

As anticipated, the upper threshold of the Big Category has been lowered from 49.99 MW to 20 MW, hence, it will be interesting to see how decreasing the capacity will influence the bidding prices of the upcoming tender. Some tender rules, such as the 1 km rule, the statements on the identification of UBO(s) and the development site requirements have been slightly changed, so we recommend that you analyze the tender invitation carefully before you submit your tender proposal.

 

  1. At the first tender held between November 4, 2019 and December 2, 2019, there were more than two and a half times more bid volumes than tendered support volumes. From the 168 proposals submitted, 72 successful tenderers (almost all solar projects, with a total capacity of approx. 132 MW) were awarded HUF 52.4 million (approx. €145.560) annual subsidy in total to be distributed over 15 years. At the second tender held between September 15, 2020 and October 15, 2020, there were more than five times more bid volumes than tendered support volumes. From the 272 proposals submitted, 36 successful tenderers (almost all solar projects, with a total capacity of approx. 210 MW) were awarded HUF 75 million (approx. €208.330) annual subsidy in total to be distributed over 15 years.
  2. The benchmark investment value for fixed solar units is HUF 300 million/MWe, whereas for solar tracking units it is HUF 350 million/MWe.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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