Hungary: fifth METÁR auction dominated by biomass. Bid cap of 38.15 Ft/kWh

The Hungarian regulator MEKH decided the fifth auction under the METÁR system on 20 December 2021. Eight bids were received, six of which concerned biomass plants. The auction, open only to older plants, had a budget of HUF 17 billion a year and 870 GWh of energy a year, and the maximum bid price was 38.15 Ft/kWh. This is clearly more than in the previous auctions, in which the cap reached 26.70 and 27.32 Ft/kWh.

What METÁR is

METÁR is the Hungarian renewable energy support system, in operation since 1 January 2017. Under the system, premiums are awarded in tenders for installations above 1 MW, while other mechanisms apply to smaller ones. For biomass and biogas plants the design also provided for a so-called brown premium for amortised installations, to avoid their being shut down or switching to fossil fuels.

What was different in the fifth auction

MEKH announced the fourth auction on 15 October 2021 but withdrew it on 19 November. The fifth, announced on 22 November 2021, had several distinguishing features:

• existing plants only — only facilities commissioned at least 20 years before the announcement and operating for at least 14 of the last 20 years could take part;
• scale — HUF 17 billion of support a year and 870 GWh of supported energy a year, 20 to 36 times more than in earlier auctions;
• price cap — 38.15 Ft/kWh instead of 26.70 and 27.32 Ft/kWh;
• timing — bidding lasted one day, whereas previously it usually lasted a month.

Results

Eight bids were received: one solar, one from a hydropower plant and six from biomass. The biomass plants mostly belonged to the Veolia group with French capital. Winners included Hernádvíz Kft. (a hydropower plant), and among the winners were also CHP-INVEST Kft., Újpalotai Energia Kft. and Bakonyi Energetika Kft.

The access conditions (age of at least 20 years) indicate that the auction served to keep existing, amortised units running.

Conversion

The bid cap of 38.15 Ft/kWh is 38,150 Ft/MWh. At a rate of about 360 Ft per euro (indicative, end of 2021), this gives about EUR 106 per MWh, or about PLN 490/MWh at a rate of about PLN 4.6 per euro.

Significance

For biomass this auction meant that support went to existing sources burning biomass rather than to new investment. The whole budget of HUF 17 billion a year at 870 GWh gives an average of about 19.5 Ft of support for each supported kWh (the quotient of the two figures).