A summary of the conference “Community Energy in Hungary” organized by Solidarity Economy Center.

More than 110 participants – from senior energy executives, through rural municipalities, to representatives of NGOs – were curious to know what the potential of an energy community in Hungary is today as they attended our conference on April 18, 2024.

| The slideshows shown at the conference can be downloaded by clicking on the title of the presentation (available only in Hungarian).

Photo: Fanni Sáfián-Farkas

As we presented at the conference, in Transzformátor we have formulated a novel energy vision: we want an energy system where local, sustainable, bottom-up community energy initiatives are not just beauty spots, but transformative and democratizing forces in the energy sector. Transzformátor seeks to support these community initiatives, while also aiming to support the legislative changes needed for a transforming energy market. Since the regulatory framework is currently still often changing and unfavorable towards energy communities – as was pointed out in several comments during the event – it is not even worth thinking about a registered energy community in Hungary today. Márton Fabók, coordinator of the energy working group of the Solidarity Economy Center, mentioned these barriers as well in his welcome speech. He also highlighted that we should talk about community energy initiatives, since that category is not as restrictive and already includes many more projects than the 3 officially registered energy communities that exist in Hungary.

Photo: Fanni Sáfián-Farkas

“Energy communities appear in EU directives because they can effectively transform the energy system in a sustainable direction” – said Ferenc Matisz, energy community expert at the Solidarity Economy Center with 15 years of experience in the energy industry. Can global and local thinking go hand in hand? Is there a chance for energy communities in times of instability like the one we have experienced in recent years? According to the expert, unconventional solutions, such as the transfer of renewable electricity production at a fair price, or even free of charge, to a local school or workplace through an agreement between local actors, can bring benefits that go beyond financial returns.

Photo: Fanni Sáfián-Farkas

Dr. Andrea Kondorosi, Head of the Electricity Department of the Ministry of Energy of Hungary, presented the latest legislative changes, in particular the recently introduced EU and domestic legislative amendments that allow electricity sharing. She admitted that domestic harmonization and legislation have been very reactive so far, and the system was not really ready for such changes. She detailed the possibilities of energy sharing at three levels: condominiums, private-line networks, and communities on public networks. Attendees asked about the previously promised test environment in 2021, to which Kondorosi answered that these changes would be coming soon. She said that the ministry had already received recommendations, and they were confident that legislation along the lines of the needs expressed would be possible in the second half of 2024, complemented by broad consultation.

Photo: Fanni Sáfián-Farkas

Dr. Péter Grabner, energy expert and advisor to the Hungarian Charity Service of the Order of Malta, presented the government programme that enabled them to install 25 MW of social solar capacity, where 20 out of 40 solar power plants are already close to commissioning. Although the project did not include the creation of energy communities – attempts to do so have failed repeatedly, the main reasons cited were a lack of regulatory and political will, a stable energy policy strategy and the current utility cost reduction system. He underlined that they see that if stakeholders could work together locally, they could overcome many of the problems, but restructuring the universal service providers and a sub-balancing solution would also be necessary.

Photo: Fanni Sáfián-Farkas

Energy expert Dr. Balázs Kecskeméti added the energy market aspect and the issue of return on investment to the debate: gross billing and the increasing solar production make renewable energy less and less valuable and the return on investment is getting worse. In any case, diversification of the energy mix, savings on the network tariff (especially for condominiums), flexibility on the consumer side and changes in consumer habits would be key elements of the solution, complemented by investments in energy efficiency.

Photo: Fanni Sáfián-Farkas

Turning to the practical approach, Márton Fabók presented specific energy community models and payback calculations. He pointed out that an energy community or community energy initiative can deal with many activities, only one of that is electricity sharing, which many people equate energy communities with. He added that what really differentiates these initiatives from, for example, an industrial renewable energy investment, is the community-based operation methods, with the key features of local, community ownership, proportional decision making and equitable revenue sharing. 

The payback of power sharing is based on the existence of different price levels in the system, which can be bridged by power sharing to achieve savings. The expert showed with calculations that energy sharing can be profitable for the participants, especially in the case of free transmission, but it may not be worthwhile as a financial investment alone.

However, 3+1 conditions still have to be met with changes in the legal and infrastructural framework

  1. legal opportunity for partial electricity supply, which would allow energy sharing even when benefitting from universal service;
  2. simple balancing integration, without which there would be the unrealistic situation where a local initiative would have to deal with scheduling and balancing;
  3. real-time data access, especially for gross billing. The current option of time series tariff would be an unrealistically expensive alternative, as it is currently designed for large consumers only;
  4. and finally, proportional system usage charges would be needed, i.e. network tariffs should reflect less network usage.
Photo: Fanni Sáfián-Farkas

The issue of how system charges are set up generated a lively debate during the roundtable discussion, which also included participants from the audience. One of them was the head of department of the Hungarian Energy and Public Utility Regulatory Authority (MEKH), making a separate speech explaining that 80% of their costs are maintaining the electricity network availability, even if local initiatives only need it 10% of the year, in addition to self-supply. He gave the example of distance-based system charges that can create inequities such as Paks (a town close to a nuclear power plant) not having to pay network tariff while municipalities close to the state borders would have to pay a much higher charge – while acknowledging that there are many disproportionalities in the system now and that the cost allocation system should be fine-tuned.

Dr. Péter Grabner said that there is currently no political will to change the tariff system, but the regulator will have to do so soon, and that international examples do not apply distance-based tariffs, but differentiate costs in another way.

At this point, representatives of local energy community initiatives – for example from Kistelek and Veresegyháza – spoke one after the other, describing how the current tariff system makes it impossible for them to operate and create a functioning business model. While the roundtable participants acknowledged that local production and use do have a win-win effect, for example, by reducing grid losses or eliminating the need for additional infrastructure investments, still it is necessary to modify the framework and to implement the 3+1 conditions mentioned by Márton Fabók above.

Photo: Fanni Sáfián-Farkas

“We can work together in a community energy coalition to make the necessary legislative changes.” Fanni Sáfián-Farkas PhD, co-coordinator of the Solidarity Economy Center, announced the organisation’s newly launched community energy coalition building movement.  It has already been prepared by several months of assessment work and will gradually open up to dozens of domestic stakeholders, from NGOs to companies, including of course community energy initiatives, as they really know what demands and barriers are sorrounding the need for change. Sáfián-Farkas also presented SEC’s recently launched EU-funded project, Life COMET, which will provide methodological support for this energy coalition building at a national level, as well as direct training and technical assistance to local initiatives over the next two and a half years.

During the afternoon, a lot of diverse community energy initiatives were presented in person. Presenters included two municipal initiatives in the capital city, who spoke about their varying successes and their vulnerability to tenders.

László Francsics from Erzsébetváros (the 7th district of Budapest), representative of EVIN (Erzsébetváros Real Estate Management Nonprofit Ltd.), and Gyula Kerényi from Pesthidegkút, representative of the Mayor’s Office of the 2nd District, spoke about their experiences so far and plans for the future.

Photo: Fanni Sáfián-Farkas

The framework for the Erzsébetváros initiative is set out in the local Climate Strategy, which includes reducing emissions from the energy supply and operation of buildings and increasing the use of renewable energy sources as key elements. In addition, the characteristics of the district were of course a key factor in the development of their project idea, as solar energy production and sharing would be a very good option for condominiums in an inner city environment.

Their project involves the installation of solar panels on three sites: a 100% municipality-owned apartment building, the Klauzál Square market and an office building. Although they cannot currently share production, the individual elements are designed to function as stand-alone units, but will be interconnected in a transformer circuit as soon as legislation allows.

Photo: Fanni Sáfián-Farkas

The Pesthidegkút initiative is motivated by environmental awareness: creating an energy community is a responsible and conscious step to mitigate the effects of climate change, and also contributes to strengthening decentralisation and energy independence. On the other hand, local patriotism, building on local resources, creating value and strengthening the community are also important.

Unfortunately, the municipality has not yet succeeded in winning a tender for its plans, but it is still trying. Alternatively, in the spirit of building on existing resources, they are considering a model where existing residential solar panel owners could organise themselves into an energy community and work with the municipality to ensure that the electricity generated is used locally. In this way, the sharing scheme would enable the supply of energy to municipally owned buildings, including the Gyarmati Dezső Swimming Pool.

Photo: Fanni Sáfián-Farkas

Csaba Jelinek from ACRED (Association for Collaborative Real Estate Development) presented the Kazán Community House building-level community energy initiative from the 8th district of Budapest. The 440 m2 community office has 11 rooms, including a community workshop, office, day care and editorial office. In addition, the building is also home to the Gólya Cooperative Pub. The building, which was purchased in 2019, has been partially renovated by the member organisations, and in 2021 they started to install solar panels and to organise an energy community. During the energy crisis, it became clear that running a building with poor energy efficiency is very costly, so the focus of the initiative broadened to include a vision and understanding of whole building energy.

Minor energy improvements and reorganizations have been implemented (e.g.: insulation of windows and doors, DIY central heating control system), but there has also been a community organizing part of the initiative (e.g.: a multi-gear tenant model has been developed, a community renovation fund has been started to be formed from the revenues generated by the solar panel).

These have resulted in a 50% gas saving in the building, which is a huge success, but the current changing market and regulatory environment presents a major challenge for the development of the energy community.

Photo: Fanni Sáfián-Farkas

Ágnes Szalkai-Lőrincz, an expert from Friends of the Earth Hungary (MTVSz), presented the activities of the Közösségi Energia Szolgáltató (Community Energy Provider, KESZ). The initiative currently operates as a non-profit limited liability company and, unlike in the past, focuses on a national rather than a local level. It was set up in the framework of a 2022 call for proposals in cooperation with 4 NGOs, with the aim of supporting the development of energy communities through advice and awareness-raising.

The initiative follows community ESCO funding. The aim is to install solar PV systems on buildings where important activities for the community take place. The model is based on minimizing grid feed-in and the energy communities connected to the grid all become part of the grid. And the large community fund is designed to support further energy improvements.

Photo: Fanni Sáfián-Farkas

The last speaker of the afternoon, Gabriella Zagyva, presented a complex approach of the municipality of Alsómocsolád, a small rural settlement in the Hungarian countryside. The aim of the municipality is to tackle the opportunities and problems of energy consumption and production at community level. The initiative is based on three pillars: renewable energy, energy efficiency and energy saving.

Among other things, the municipality has carried out a solar potential and building condition assessment; a climate strategy and SECAP have been prepared; and an environmental and climate advisor (her, Gabriella Zagyva) is being employed. Solar panels have already been installed on several buildings and smart energy management is being applied in the nursing home. Their current plans include the creation of an energy community finance fund to provide local residents with opportunities for energy renovations and improvements.

The roundtable discussion revealed that most initiatives were not driven by financial returns: the main motivations were the local community, addressing economic injustices (including recent crises), energy efficiency improvements, or even in a small town, retaining the local population and ‘survival’, or moving forward. It was stressed that the more people think together with local actors, find common ground and form alliances, for example between local NGOs, local government and businesses, the more likely it is that initiatives will be implemented. New initiatives are advised by the roundtable participants to be patient, seek help from more experienced partners and to stay within the current framework of informal community energy initiatives rather than becoming registered energy communities.

Photo: Fanni Sáfián-Farkas

The organizers concluded that they will continue the dialogue in a further forum in the autumn, and in the meantime they are looking forward to receiving feedback on the concept of a community energy coalition, hoping that it will be worth thinking about being a registered energy community as soon as possible.

Photo: Fanni Sáfián-Farkas
Photo: Fanni Sáfián-Farkas