Former Hungarian Prime Minister Viktor Orbán has little interest in climate change and the energy transition. Hungary is still one of the global solar leaders. Due to careless regulation, your own solar system becomes a must for many households. “Everyone knew that if I bought a solar system, I would de facto be exempt from the system costs,” says Eastern Europe analyst Maike Kirsch from the think tank E3G in the podcast “The Climate Laboratory of ntv”. In 2023, Orbán pulled the emergency brake on subsidies, but the solar boom was complete: Hungary now covers almost a third of its electricity needs with the sun. However, due to a wind power blockade, the opposite pole is missing and the electricity system is not balanced. “The new Prime Minister Péter Magyar is aware of this,” says Kirsch. He wants to work on grid expansion, battery storage and wind turbines. However, these plans collide with Hungary's other major source of electricity: the Paks nuclear power plant provides 45 percent of Hungary's electricity and is to be expanded - together with Russia.
ntv.de: Hungary covered around a quarter of its electricity needs with solar power last year. That is more than Germany or Spain and about three times as much as the global average. Was this achieved thanks to or despite Viktor Orbán?
Maike Kirsch: The correct answer is probably: partly, partly.
How did this come about? Orbán is better known for gas deals with Gazprom that he concluded during Russia's attack on Ukraine. The enormous solar expansion is surprising.
That's correct. In 2015, the solar share of the electricity mix was two percent. After that things went uphill quickly. Now Hungary is at 25 to 30 percent. No other country has made a comparable leap. In 2024, solar energy will also overtake natural gas. At the same time, the share of coal fell to six percent. The cause was a regulation called the net metering policy.
What does that mean?
This is a billing system. The argument was affordability. For years, Hungarian households with solar systems were able to feed electricity into the grid during sunny periods. This was later offset against the electricity that they received from the grid at other times, i.e. in the evening or in winter. There are no costs for electricity transport or storage. No household had to use its own solar power if there was too much. This was a very attractive credit system.
Another form of feed-in tariff, only more lucrative?
All households knew: If I buy a solar system, I will largely be exempt from the system costs. Anyone who feeds in as much electricity as they use over the course of a year had to pay practically no network costs. In Germany, a quarter of the electricity price goes to this. However, this meant that the Hungarian electricity grid could not keep up. The costs for expanding and modernizing the network and for expanding storage facilities were not covered.
Did households build up an electricity credit in the summer and use it in the winter?
Nope. These households were protected against fluctuations in electricity prices and thus indirectly gas prices. However, the billing system gave them no incentive to use the network efficiently, i.e. to use electricity when it was plentiful and cheap and to save when it was scarce and expensive. This problem can still be seen today, for example with the drought and the failure of the Paks nuclear power plant this summer: solar power was able to cover an incredible amount of demand during the day. Electricity prices at midday were around 100 euros per megawatt hour, which is 10 cents per kilowatt hour. In the evening, Hungary had to import electricity primarily based on natural gas. In some cases it cost more than twice as much. Three years ago, the Orbán government introduced a moratorium on the feed-in of solar power and changed this billing regulation. In addition, it was said that the network was too old, not well developed and flexible enough.
That sounds like arguments that we know from Germany.
Yes. Apart from that, the two countries have major differences in their electricity mix, their dependencies on Russia and their network expansion. In Germany, much more thought was given to how to better set up the system holistically. You can't just incentivize solar expansion. You have to think about how demand will change, how you can create incentives for households and industry to use the system efficiently, how much flexibility you need and what other forms of energy you need to supplement it. The Orbán government has not given this any thought. They were more or less forced to do this by the EU: The new electricity market rules stipulate that electricity costs must reflect actual network usage.
Orbán simply wanted to score points with the population with cheap solar power?
Allegedly. Solar energy of course makes economic sense for Hungary; the potential is enormous. The climate perspective had less influence. You can see this in the gas imports. But the gas that doesn't come from Russia has now become extremely expensive. The state pays a lot of money to keep electricity bills artificially low. The new government knows. Dependence on natural gas costs a lot of money.
Hence the solar boom.
The billing system was the first reason. The second was the skyrocketing gas prices during the energy crisis. Hungary also had a very restrictive wind policy. The Orbán government has stipulated that by 2024 a wind turbine must be at least twelve kilometers away from the nearest settlement. This has contributed to the country's embrace of solar energy as a cheap source of electricity.
Twelve kilometers? Even more restrictive than the wind-unfriendly 10H regulation in Bavaria?
Yes. In practice it was not possible to build wind energy. This left only solar energy for the expansion of renewables.
Will this populism endure under the new Prime Minister? Péter Magyar is noticeably turning many areas inside out. Wind turbines would help to use less gas.
The new government has a fundamentally different course - partly due to economic necessity and energy security and partly because it wants to unlock €16.4 billion in EU funds. The plan is to diversify gas imports and be independent from Russia by 2035. In addition to further solar expansion, one focus is the power grid. The government is investing 1.5 billion because it is already overloaded and needs to be expanded. Four gigawatts of wind energy and the expansion of storage facilities are also planned by 2032.
That's not that much by German standards, but Hungary only consumes a good six gigawatts at its peak. Germany has ten times higher consumption.
Yes. Solar is currently at 8.4 gigawatts. The goal is 12 gigawatts by 2030. Wind is to be expanded to a third of this.
How realistic is the implementation of the plan? We know from Germany: It is much more difficult to expand the grid than renewables.
There will definitely be problems. The network is already reaching its limits. Solar systems are regulated. Nevertheless, it makes sense to set ambitious goals. It is not important whether you fulfill them precisely. The government seems very aware that this system needs to be balanced. Solar power needs a counterbalance so that you don't have to import expensive energy when the sun isn't shining. This is often wind. The Magyar government is also aware that a flexible electricity system requires significantly more battery storage and households need smart meters. Without smart meters, consumers do not know when it makes most sense to use electricity and when not.
To optimize the system and reduce costs?
Basically, it doesn't matter when the washing machine runs. This can be controlled intelligently and automatically. In industry, certain processes can also be flexibly ramped up and down without affecting the economic efficiency of the operation. If this flexibility is allowed to be compensated, the industry can even benefit financially. This flexibility was missing when Paks was running at just 10 percent performance in August. The government had to personally ask several large companies whether they could turn off 700 megawatts of electricity.
Is the industry open to the plans?
When the energy crisis drove up electricity prices in 2022, it became clear: the industry has no interest in fluctuating and high prices for fossil fuels. She installed her own solar systems and continued the boom.
Until this summer, the Paks nuclear power plant also contributed to stable electricity prices. What happens next? Will the Danube be rebuilt so that it doesn't have to be shut down again when the water is low? The plan is actually to expand it and build new reactors - together with Russia.
The fifth reactor block is already under construction. The sixth block should then follow. The new government has not decided whether to stop the project. But she has to weigh up whether Paks can be made so resilient that it will work in future droughts and what that will cost, because we know that building nuclear power plants is extremely expensive. Cooperation with Russia is the third important aspect. That probably depends on the EU.
Unlike the Orbán government, the Magyar government has declared Russia a “threat”. When it comes to nuclear energy, even the EU doesn't know how to deal with Russia. Despite all security concerns, France also works closely with the state nuclear company Rosatom. Hungary would not be alone with this contradiction.
The new government obviously wants to keep as many options open as possible. She wants to normalize relations with the EU and reduce Russian dependence. With Paks II, however, it has inherited a well-advanced project that is intertwined with Russia. Ultimately, regardless of droughts and Russia, they have to consider whether a new, extremely expensive nuclear power plant makes sense, given what is happening in California: Solar power is being curtailed there because it is not possible to shut down a nuclear power plant. It has to run around the clock with at least 80 percent power to be economical. Although nuclear energy can technically be operated in an electricity system with many renewables, it is hardly flexible.
