Hungarian government backs down from solar energy regime changes

Hungary will keep a balance-based settlement for households that already have solar panels hooked up to the grid, Energy Affairs Minister Csaba Lantos said in a video message on September 8.

Balanced-based settlement would apply to households that already have solar panels and to registered projects that are completed by the end of 2025 for a period of 10 years from installation, according to the statement.

The news comes as a huge relief for more than 200,000 households with solar panels. Under the balance-based settlement, consumers can take out energy from the grid in the winter to the tune of what they fed into during the summer period.

The energy ministry’s proposal entailed that state-owned utility company MVM would buy excess capacity in the summer for pennies literally, HUF5 per kWh (€0.013), while they could buy electricity in the off-season for HUF36 up to 2,523 KhW of annual consumption and HUF70 over the mark.

Government officials pointed the finger at the EU, even as applying the European Union-mandated gross settlement (monthly balance) would only come into force for new installments from January 1, 2024. The EU has repeatedly warned that retroactive changes to "support schemes should be avoided, as they undermine investor confidence and prevent future investment".

The government has faced an unusually stern criticism from the Fidesz faction for retroactively altering financial conditions for homes bound by existing contracts. Caucus leader Mate Kocsis called on the energy minister to review its plans to change the monthly settlement to an annual one that would have meant a significant increase in expenditures for households.

Industry lobby groups and far right party Our Homeland have planned to launch a class lawsuit against the government if it implements the change in the balance settlement, local media write. More than 1,000 people have signalled their intention to join the initiatives separately. This could explain the swift reversal on the plan, analysts noted, adding that the ruling party feared that the unpopular measure would further erode its support.

According to a fresh poll, Fidesz has lost 20-25% of its voters since April 2022, but remains firmly ahead at 42% amongst decided voters, while the runner-up Democratic Coalition has 15% support. The liberal Momentum party polled at  7-9% around the same level as the joke party Two-Tailed Dog Party and Our Homeland.

The government has also promised to lift the ban on solar energy feed-in to the grid from the end of 2023. The ban came into force in October 2022 as the government said Hungary's grid was overburdened by taking in renewables, namely solar energy.