Hungary: What to Expect from Guarantees of Origin in the Energy Sector
→ Dániel Varga
By introducing a new concept of guarantees of origin on 17 August 2013, positive changes took place in the certification of renewable sources of electricity in Hungary.
A new concept in the green energy sector
With guarantees of origin introduced in the Hungarian energy sector on 17 August 2013, the government intends to satisfy EU requirements applicable to renewable energy sources and energy efficiency. The changes will likely make the whole sector more flexible and open up new opportunities for electricity generators.
Changes in electricity generation from renewable sources
The new concept of guarantees of origin that replaced the formerly applicable rules of certificate of generation brought an important change to electricity generators that utilize renewable energy sources and take part in the mandatory off-take regime.
Prior to the introduction of guarantees of origin, electricity generators were obliged to obtain a certificate of generation from the regulator in order to certify the green source of the energy and to be entitled to sell electricity within the framework of the mandatory off-take regime. Under the rules of guarantees of origin, generators may obtain guarantees of origin on a voluntary basis.
The mandatory off-take regime is implemented in order to support renewable energy generators. According to the rules of the regime, a certain amount of electricity generated from renewable sources must be taken off by the transmission system operator at regulated prices, the calculation of which is determined by government decree.
The procedural steps necessary to take part in the mandatory off-take regime were also simplified. Electricity generators who intend to take part in the mandatory off-take regime must obtain by 1 March 2014 a qualification from the regulator authority to certify that a generator site is capable of generating electricity from renewable sources or from high efficiency cogeneration. The qualification remains valid for five years. But obtaining a guarantee of origin is no longer a requirement.
Obtaining guarantees of origin
To obtain guarantees of origin, an electricity generator must be qualified by the regulator authority as mentioned above, and must open an electronic account managed by the regulator authority. Guarantees of origin will be set out by the regulator authority in connection with 1 MWh units upon the request of the electricity generators as of 1 January 2014. Newly obtained or transferred guarantees of origin will be registered with electronic accounts managed by the regulator authority.
Functioning of guarantees of origin
Following the rules applicable to guarantees of origin entered into force, electricity generators may certify with guarantees of origin exclusively that a given amount of electricity was generated from renewable sources or from high efficiency cogeneration.
The basic use of guarantees of origin is that its owner certifies towards end-users that the electricity supplied was generated from renewable energy sources or from high efficiency cogeneration. The most important change of guarantees of origin, though, is that they are transferable electronic documents that may be transferred to third persons together with, or even without, the actual transfer of electricity. As a result, a separate market of guarantees of origin may evolve, which was formerly unknown in the Hungarian energy sector. On the basis of this separate market of guarantees of origin, an electricity generator may be able to make the electricity sold green, even without renewable energy sources.
Effect of the new concept
Since guarantees of origin will be set out as of 1 January 2014, it is yet to be seen whether guarantees of origin will have a significant influence in the renewable energy sector. Nevertheless, it is expected that they will enhance the flexibility of the sector. Furthermore, new possibilities for electricity generators will open up in connection with the transfer of guarantees of origin independently from the actual transfer of energy.