Green light to wind energy! Facilitating wind power regulations in Hungary

1. Why has no wind farm been built in Hungary for over a decade?

Initially, the establishment of wind farms above household size were possible only by means of a tendering procedure set out in KHEM Decree No. 33/2009. (VI. 30.) governing the terms of the call for tenders, the requisite tender content, and the procedure's regulations (the "KHEM Decree"). However, despite this framework, no such call for tenders has been issued.

Additionally, from 2016, the protection zone was set at a level that prevented offsetting up wind farms in the whole of Hungary, as Gov. Decree No. 277/2016. (IX. 15.) on the amendment of the rules on wind farms (the "Old Decree") set the protection zone within which the establishment of wind farms are not allowed at 12 km. This requirement essentially implied that a minimum distance of 24 km had to be between two municipalities, meanwhile no such distances between municipalities exist in Hungary.

Another obstacle to setting up wind farms was that if the establishment of the envisaged power plant required using agricultural land, it was necessary to obtain a decision from the competent land registry office that reclassified the land envisaged to be utilised for the project from agricultural land to land not intended for agricultural or forestry purposes, but as land taken out of cultivation long before, i.e., three years prior, construction commences. Furthermore, written consents from all landowners within a 1 km radius of the envisaged wind farm site was required, which significantly limited the ability to find suitable land for the project.

2. Is change finally on the horizon?

In comparison to the previous regulatory environment, on 28 and 29 December, two important regulations were published in issues No. 192-193/2023. of the Hungarian National Gazette (in Hungarian: Magyar Közlöny). The regulations – according to the announcement of the Ministry of Energy published shortly prior to the publication of the two new regulations – aim to simplify the procedure for establishing wind farms and reduce the administrative burden of the Hungarian Energy and Public Utility Regulatory Authority by repealing the KHEM Decree (see Decree No. 30/2023. (XII. 29.) of the Energy Ministry, Hungarian National Gazette issue No. 193/2023.), as well as simplify the material and procedural rules related to the licensing of wind power plants by completely abolishing or amending the previous regulatory environment (see Government Decree No. 650/2023 (XII 28), Hungarian National Gazette issue No. 192/2023).

To achieve the latter objective, Government Decree No. 650/2023. (XII. 28.) amending certain government decrees related to the licensing of wind power plants (the "Gov. Decree") introduced a significant amendment to the protection zone that aligns with European standards. Accordingly, the Gov. Decree revoked the notorious Article 10(4) of the Old Decree and reduced the wind farm establishment zone from the previous 12 km to a mere 700 meters from the borders of build-in areas.

Furthermore, the Gov. Decree, as a completely new provision, has introduced an exception as well: in areas located in zones designated as industrial economic areas and other industrial economic areas, where investments of high national economic importance are being or have been carried out, the general 700-metre protection zone does not apply. Therefore, in these areas wind farms can be established within the 700-metre protection zone.

As far as areas not intended for build-in are concerned, the Hungarian government has maintained and supplemented the previous regulations by prohibiting the establishment of wind farms located in the national ecological network zone, on agricultural lands of outstanding soil quality, in natural conservation areas, and in world heritage sites and sites of world heritage value.

In the framework of the foregoing, it should be highlighted that the amendments apply to all procedures that were already pending on the day on which the Gov. Decree entered into force, i.e., on 1 January 2024.

An additional amendment to the previous regulatory background is that wind farms envisaged to be established in co-called “facilitated areas” must obtain the environmental and building permits necessary for commencing the construction via a streamlined procedure, with a maximum administrative deadline of 50 days, provided that the following conditions are met in respect of the wind farms:

• has an average wind power density of more than 500 W/m2 at a hight of 150 m per administrative district; or
• already has a valid small power plant licence and a grid connection agreement.

Although the detailed rules concerning such facilitated areas are not set out in the Gov. Decree, it is already clear that the involvement of both local and county municipalities will be necessary in order to establish the facilitated areas.

From the permitting perspective, another significant amendment involves the mandatory examination of compliance with local building and zoning regulations during the building permitting procedures of wind farms. This implies that local municipalities will now bear the responsibility for identifying areas designated for wind farm establishment within the local building codes (known as HÉSZ), thereby exempting developers from the application of the previous building height limit of 100 metres.

The HÉSZ thus amended will then undergo assessment by government agencies and the State Chief Architect. Subsequently, for wind farms with a capacity ranging between 5-49 MW, the designated area for the wind farm establishment is required to be reclassified as a “zone intended for the establishment of renewable energy sources” in the county-level zoning plans following the adoption of the revised HÉSZ.

Furthermore, in terms of building permit procedures, a positive development stems from the revocation of all provisions in Government Decree No. 382/2007. (XII. 23.) on the building permitting in the energy sector, which had previously unreasonably restricted wind farm establishment. Consequently, compensation agreements to be concluded with the landowners and the declaration of consent from all landowners within a 1 km radius from the land on which the solar farm is envisaged to the established no longer forms part of the technical documentation required for the building permitting procedure.

3. Remaining grid connection difficulties

While the revised regulatory environment has been eagerly awaited and removes several barriers under which establishing wind farms now would be possible, there is still a long way to go before any wind farm development can commence due to the scarcity of grid connection capacity.

In both the first and – much delayed – second publication procedures, the network operators did not publish any weather-dependent power plant connection capacities, meaning that such connection rights can only be applied for in individual procedures. However, due to the large number of solar investments, even these applications are queuing up and it is expected that these new applications will only be approved with a connection date of 2029 or later.

Therefore, without changes to the Code of Conduct of the transmission system operator (i.e., MAVIR Zrt.) and the Distributions Codes of the distribution system operators, and without new publication procedures and sufficient grid connection capacity, it will be quite a long time before wind power developments may commence.

4. Conclusion

As of now, Hungary remains the last member state in Europe to embrace wind energy, with a wind-power share ranging between just over 1.3% to 1.5% and an installed capacity of less than 324.9 MW. The need for change is pressing, but the new legislative package that has been published and entered into force recently marks a significant step in this direction by removing longstanding licensing and regulatory barriers that hindered establishing wind power plants in Hungary for over a decade.

However, mainly due to the scarcity of the grid connection capacity, it is still uncertain exactly when wind power development can commence. As a result, the need for expansion of the grid connection capacity and development of the transmission- and distribution networks has now come to the fore even more. This seems to be a positive sign that the revised National Energy and Climate Plan foresees a significant expansion in the weather-dependent renewable energy capacities, with solar power remaining the primary source with almost 12,000 MW of planned increase in the capacity by 2030. However, wind power may also finally catch up, so that the planned expansion from the current nearly 330 MW to 1,000 MW may be realised.

Overall, after a prolonged wait, wind as a renewable energy source is getting the green light in Hungary with the recent changes in the regulatory environment. However, Hungary still has a few remaining hurdles to overcome to ensure that the increase in wind power capacity under the climate plans can actually begin to grow and expand in the foreseeable future.