January 2024 – As of 1 January 2024, material amendments to several Hungarian energy laws have come into effect, including, among others, the Hungarian Electricity Act (Act LXXXVI of 2007), which has been significantly changed. These changes materially affect decentralised (local) power generation, which has been a focus of the real estate industry in recent times. Below we provide an overview of the main changes in Hungary that may facilitate local power generation, storage, and procurement from electricity sources other than power traders.
The long-awaited change to the concept of a private power distribution line (in Hungarian: magánvezeték), based on the EU’s definition of a “closed distribution system,” ensures the appropriate categorisation of the tenants and other users of areas and premises in any industrial or commercial real estate.
The term “electricity sharing” has been supplemented to allow electricity to be shared with end-users through a private line, which makes it clear that a landlord’s supply of renewable energy sources to tenants is allowed. In line with this change, the definition of a “prosumer” (active customer) has also been amended, such that a prosumer is now entitled to forward or share the electricity generated or stored by itself through a private line. It is also clearly stated that, in this case, a contracting obligation applies to the parties, and that sharing electricity does not qualify as electricity trading or electricity resale.
A new license category has also been introduced, the “self-supply generation licence,” which is to be requested by the operator of a self-supply generating unit, defined as a generating unit i) with a connection capacity exceeding 5 MW, ii) connected to the public network at a user's connection point without any feed-in capacity, and iii) sharing electricity produced by its generating installation with a user connected at the same connection point, or another user in the same group of companies as the user, or the end-user.
The changes also make it possible for an end-user (e.g., a tenant in a logistics park) to install a power plant or power-storage unit and supply the user having ultimate control over the network connection point. We note that in this case, the supply is limited such that other end-users (e.g., other tenants) connecting to the same private line cannot procure electricity directly from another end-user.
Furthermore, the new provisions also clarify the necessary administrative procedure to be followed by a prosumer vis-à-vis the network operator, with special focus on the difference between feeding in to the public grid and sole self-supply.
Based on the above examples of the new legislative changes, it is our view that the process of installing decentralised power-generation units in Hungary will become easier and that significantly less questions of interpretations will arise.
For more information on the amendments, including specific, project-related legal advice, please contact Péter Gullai. Our team will be happy to provide further details on the new laws.