The entire electricity market (and the renewable energy market in particular) is in a major transition marked by constant regulatory changes and dynamically changing market conditions. In this alert, we provide an overview of the regulatory response to the growing difficulties surrounding the integration of renewable energy production capacities, known as âgradual integrationâ.
As of April 1, 2021, new capacity allocation principles have been introduced for the distribution of available grid connection capacities between production facilities. Detailed rules for the execution of the new capacity allocation procedure are expected to be published in the technical and distribution codes of the Hungarian power system before the end of this year. For more information, we recommend that you regularly consult the website of MAVIR, the Hungarian transmission system operator (draft proposals for the new rules for the allocation of generation capacities are available on the MAVIR website).
MAVIR published on September 2, 2021 the provisional rules applicable to the current grid connection procedures.1 Below is a brief summary of the main provisional arrangements applicable to certain pending network connection procedures. Similar provisional rules should be published by the DSOs in September 2021.
1. Projects affected by the provisional rules
The provisional rules relate to requests from power plants to be connected to the MAVIR transmission network that were in an ongoing grid connection procedure on July 1, 2021 (i.e. the corresponding grid connection agreement had not been concluded on that date) and
- either a grid connection plan or a feasibility study was submitted to MAVIR before August 3, 2021; Where
- or MAVIR has issued its offer for the technical and financial conditions for the development of the connection to the network (“MGTÂ») Before July 31, 2021 and the project concerned participated with this MGT in the METÃR call for tenders launched by the Hungarian Regulatory Authority for Energy and Utilities on April 30, 2021.
Thus, any other request for connection to the network of current and future power plants that does not fall into any of the above categories will be subject to the new capacity allocation procedure, the very first of which must be launched before the end of 2021.
2. Main obligations relating to projects affected by the provisional rules
Projects affected by the provisional rules must comply with the following obligations, among others:
- they must submit to MAVIR a binding capacity reservation declaration (in Hungarian: kapacitÃ¡slekÃ¶tÃ©si nyilatkozat) no later than October 8, 2021;2
- they must provide MAVIR with a network connection request security (in Hungarian: igÃ©nybejelentÃ©si biztosÃtÃ©k) 900,000 HUF / MVA (based on the nominal capacity of the plant included in the capacity reservation declaration) in the form of a cash deposit before 8 October 2021;
- they must provide MAVIR with a guaranteed capacity reservation (in Hungarian: kapacitÃ¡slekÃ¶tÃ©si biztosÃtÃ©k) 3,600,000 HUF / MVA (based on the nominal capacity of the plant included in the capacity reservation declaration) in the form of a cash deposit before January 31, 2022.
Regardless of the status of their login, developers must pay the cash deposits mentioned above, which will be credited to the login fee.
Failure to comply with the above obligations will result in the termination of the current network connection procedure and the loss of the right to the requested network connection capacity. In addition, failure to properly provide capacity reservation security will result in loss of network connection request security.
3. Other rules for the declaration of capacity reservation
Developers of projects falling under the transitional rules must decide whether to issue their respective capacity reservation declaration unconditionally or conditional on their partial or total allocation during a METÃR call for tenders organized before the end of 2022. In the latter case , the developer will only guarantee the connection capacity to the network of the project concerned on the condition and subject to being awarded (in part or in whole) a METÃR premium grant during any METÃR call for tenders organized before the end of 2022.
Developers who had only one MGT issued before July 31, 2021 (but did not submit the connection plan before August 3, 2021) and participated with this MGT in the last METÃR call for tenders, are not allowed to make a declaration of capacity reservation only on condition of being awarded to The METÃR call for tenders was closed on July 31, 2021.
In both cases (i.e. an unconditional or conditional capacity reservation declaration), the developer must respect a firm deadline in order not to lose his right to secure connection capacity and cash deposits of a total amount of HUF 4,500,000.
- Modification of the Technical Code (in Hungarian: zemi SzabÃ¡lyzat) of MAVIR is available here, the relevant provisions can be found in section 5.1.10 of the Technical Code.
- Its model form will be published by MAVIR in the coming days and will be available on its website.