Research Note
INSIGHT SERVICES:
Solar
The leading provider of clean energy financial research 13 January 2009│8 pages
RISING ABOVE THE HORIZON: THE PV MARKET IN CENTRAL AND EASTERN EUROPE
As more module supply becomes available in 2009 and the existing
Western European PV markets become too crowded for project Figure 1. Annual new installations 2006-2009e:MW
developers, the solar industry is seeking new markets. Incentive
111.41
regimes in some Central and Eastern European countries could yield
Hungary
IRRs as high as 12% with the most cost-effective systems currently Slovakia
available, though the inherent risks are higher than for systems in Romania
most Western European countries. New Energy Finance examines the Slovenia
Bulgaria
countries that we believe could absorb a total of some 112MW of PV in
Czech Republic
2009, up 121% from 50.7MW in 2008. 50.68
New Energy Finance finds:
• Existing incentive regimes in the Czech Republic and Bulgaria
make PV highly attractive at system costs for large-scale projects 5.59
0.67
below EUR 4 per Watt – as is highly likely given probable falls in 2006 2007 2008 2009
module prices.
Note: 2008 and 2009 are expected figures.
• It is expected that Slovenia and Slovakia will pass new legislation
in 2009 that make them interesting PV markets. They currently Source: Warsaw University of Technology/Polish Society of Photovoltaics,
New Energy Finance
have some support for PV, but lack the long-term visibility on this
support that investors require. Project developers with portfolios
close to being permitted in these countries would benefit from new
legislation.
Figure 2. NPV of future revenues from 1MW system
• Hungary and Romania offer little immediate promise for large-scale
plants between now and 2010. From April 2009, Romania will have €3.6m 2008 legislation
a potentially favourable green certificate regime. 2009 legislation
€3.2m
€3m €3m GC price range
• The sovereign risk in these markets is declining, as governments
€2.4m €2.3m
implement measures to increase economic stability and better rule Represents
target capital
of law. This, combined with falling module prices, will fuel strong costs for
growth in the most attractive markets, limited only by planning breakeven
permissions, capital bottlenecks, and technical constraints of the
distribution systems.
€0.1m
Overview
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Historically, there has been little PV activity in Central and Eastern Europe
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ch
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Sl
Sl
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(CEE) - see Figure 1 - because there were no subsidies. When these
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subsidies have been brought in, as with the Czech Republic in 2005 (it was Note: Assumes a 1MW project at discount rate of 13%. Slovakia and Slovenia:
favourably amended in 2007), uptake has been rapid despite the region Model assumes planned legislation passes in 2009. Romania: prices cannot be
being perceived as higher risk than, say, Germany and Spain. There has predicted, see country section for more. GC = green certificate.
been more interest in manufacturing, due to low labour costs, EU grants and Source: National Governments, New Energy Finance
proximity to larger European markets.
In 2009, the cost of PV modules and therefore of installations is expected to decrease sharply (see New
Energy Finance Research Quarterly PV Market Outlook: Weathering the storm, 22 December 2008). This
will make new markets for modules both profitable and sought-after by manufacturers, and CEE includes
some of the most attractive new markets.
As the energy sector in CEE is still recovering from a complete liberalisation of the energy sector, it is too
soon to project the time-scale and likelihood of achieving grid parity for PV. The strongest driver for support
of renewable energy sources is the legacy that has left all countries in CEE heavily dependent on energy
imports from Russia; energy security outweighs environmental concerns at the moment and is a strong
driver for renewable energy policy.
There is a host of newly established local project developing companies, in many cases operating with
capital from Italy or Germany, that are expecting growth in demand for PV installations in this region despite
the insecurity of legislative support in some cases. One of them, the Czech firm Photon Energy
(WAR:PHO), even listed on the Warsaw stock exchange in October. But foreign firms are also active
directly throughout the region. Japan’s Itochu Corporation decided to invest $1bn in Norway’s Scatec for
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
martin.simonek@newenergyfinance.com see www.newenergyfinance.com. Page 1 of 8

Research Note
Central and Eastern European PV
13 January 2009
projects in the Czech Republic and Bulgaria, TGI of the US set up a partnership for 10MW of PV projects in
the Czech Republic and the German company MEPSolar wants to develop projects in Bulgaria.
Table 1. Summary of tariffs
Bulgaria Czech Republic Hungary Romania Slovakia Slovenia
Main system FiT FiT/Green Bonuses FiT Green Certificate Market FiT FiT
Depreciation variable 5% variable variable 10%* variable*
Inflation Index none 2-4% inflation none none none
Duration 25 20 1 15 15* 15*
Tariffs in 2009 in <5kW 395 <30kW 490
>5kW 367 >30kW 486 100 108-220 448 <1MW 350*
EUR/MWh
Tariffs in 2009 in local <5kW BGN 782 <30kW CZK 12,890
HUF 26,410
currency/MWh >5kW BGN 718 >30kW CZK 12,790
*Assumes legislation approval in 2009. All conversions from local currencies done on 5 January 2009.
Source: National legislation/Regulatory Offices, New Energy Finance
Czech Republic - the way to go
Figure 3. Project nominal internal rate of return estimates
The Czech Republic has the most developed PV market in Central and
Eastern Europe, with over 54.2MW of grid-connected installations to date.
12%
Of this, 31.5MW was installed in December 2008 alone (see Figure 6). This GC price range
is almost a 16-times increase in the amount of installed power compared to 10%
what was connected in 2007, with new large-scale projects being 8%
8%
announced every month.
6%
Energy 21, one of the market leaders in large-scale projects, operates over
6.3MW of installations and plans to connect an additional 5.5MW in 2009. 4%
Another developer currently operating power plants with total capacity over
5MW, including the largest plant in the country in Vimperk, with capacity of
3.3MW, is REN Power CZ. Czech Solar Systems is likely to become the N/A
leader for 2009 with their intended installed capacity reaching 40MW. -2%
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Under the EU Directive, the Czech Republic is targeting a 13% share of
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Sl
Sl
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Cz
renewable resources in total energy consumption by 2020, with a national
commitment to achieve a 6% share of renewable energy by 2010 (8% for
electricity). In order to reach these targets, the Czech Republic has set one Note: Assumes a 1MW, EUR 4m project. Slovakia and Slovenia: Model assumes
legislation passed in 2009 compared with current status. Romania: prices cannot
of the highest feed-in tariffs for 2009 PV installations in Europe. The be predicted, see country section for details. No grants included.
producer has an option of choosing between feed-in tariffs and green
bonuses. Source: National Governments, New Energy Finance
The tariff for 2009 installations is CZK 12,890 (EUR 490, $668) per MWh for
installations below 30kW and CZK 12,790 (EUR 486, $662) per MWh for
larger ones. Alternatively, green bonuses are paid at CZK 11,910 (EUR
453, $617) per MWh for installations below 30kW, and CZK 11,810 (EUR Figure 4. Czech Republic insolation
449, $612) per MWh for larger ones. Green bonuses are paid on top of the
market electricity price, which is paid by the utility. This electricity price is
slightly lower than the market price, as the energy supply is intermittent.
The producers can set up their own individual contracts with suppliers and
have the option of switching between these forms of subsidy once a year.
The green bonuses are the only compensation option for those investors
that intend to consume the produced electricity themselves.
The 2007 change in legislation increased the length of guaranteed prices
from 15 to 20 years. Tariffs are adjusted yearly by inflation (range 2%-4%)
and the maximum depreciation of new tariffs is set at 5% each year. This
resulted in a massive increase in installed power towards the end of 2008
(see Figure 6) as investors were trying to get a licence that would guarantee
them a tariff of CZK 13,790 (EUR 524, $711) per MWh during 2009, the
highest in the EU.
The stimulation for investment is further enhanced by a tax break on profits
generated from PV installations in the first six years of operation. In
addition, there are several financing sources provided by the Czech
Source: JRC
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
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Research Note
Central and Eastern European PV
13 January 2009
government and the EU. The government approves preferential-interest-
rate loans that are used for investments in renewable energy for both
Figure 5. Czech Republic PV projects, end 2008: MW
household and business sectors. Households can benefit from an interest-
free loan of up to 35% of the costs, while businesses are entitled to
subsidised interest rates at approximately 4% for loans covering up to of Small (<0.5MW)
95% of the total costs for the period of 12 years. The state programme for Large (>0.5MW)
energy saving and the use of renewable energy sources gives out grants for
investors on an annual basis. Although the limits of grants for 2009 have 14.2 69.0
not yet been revealed, in 2008 private businesses were expected to be able
to gain a grant up to EUR 130,000 through participation in tenders for pilot
projects.
42
The structural funds of the EU provide loans to small and medium-sized
businesses to the maximum value of EUR 2m with a fixed interest rate of
1%. The loan has to be repaid within 15 years with a possible delay in
Completed Announced
payments up to a maximum of eight years. The loan cannot cover more
than 75% of the overall costs of a project. The other form of subsidy, which Installation size <30kW >30kW
is also accessible to large businesses, is a direct grant for which the Feed in Tariff CZK/MWh 12,890 12,790
minimum value is EUR 20,000 and the maximum value is EUR 4m. These Green bonus CZK/MWh 11,910 11,810
grants cannot exceed the total value of investment by 60% for small Guaranteed length 20 years
businesses, 50% for medium-sized businesses and 40% for large Adjustment 2-4%
Annual Depreciation 5%
businesses. These two forms of support cannot be combined.
Note: Data for announced large scale projects based on NEF Desktop which
The Czech Republic is the only country in the CEE region which at present only tracks official announcements of large scale projects >0.5MW.
has a Green Party in the government coalition. The government made it Source: Czech Energy Regulatory Office, New Energy Finance
clear that investment in renewable sources of energy is high on its agenda.
It is clear that, given the natural conditions of the country and the increasing
support by the government, the PV market there will grow in the next few years. As the Czech Republic
takes over the EU presidency in the first six months of 2009, the green agenda will remain strong in the
country with energy stated as among the top three priorities of this presidency.
Figure 6. New build PV and average size of new installations in the Czech Republic, 2004-2008: MW and kW
35 160
New MW Installed 31.52
Average size of new installations kW
30 140
120
25
Average size (kW)
New build (MW)
100
20
80
15 13.56
60
10
40
5.81
5 3.05 20
0.1 0.03 0.2
0 0
2004 2005 2006 2007 Jan-Oct Nov-08 Dec-08
2008
Source: Czech Energy Regulatory Office
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
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Research Note
Central and Eastern European PV
13 January 2009
Bulgaria coming into favour
Figure 7. Bulgarian Insolation
Bulgaria is estimated to have, on average, 30% higher insolation than
Germany, and it introduced several incentives for investors in 2008. As a
result, the first 1MW PV project was connected to the network in November
2008, with several new projects for 2009 announced. It is very likely that the
EU targets of a 16% share for renewable energy in overall consumption by
2020, and a national medium-term target of an 11% share from non-hydro
renewable electricity consumption by 2015, will be met.
The current feed-in tariffs of BGN 782 (EUR 395, $545) per MWh for
installations below 5kW and BGN 718 (EUR 367, $501) per MWh for
installations above 5kW are guaranteed for a length of 25 years, the longest
in the region. This places Bulgaria second in terms of expected IRRs (see
Figure 3).
The present Bulgarian law does not define an adjustment of the tariff rates
by inflation. Instead, the tariffs for every calendar year are set by the State
Energy and Water Regulatory Commission and are expected to be adjusted
annually by the percentage of the electricity price change. This law is valid
for projects installed until 2010 and the government has to review the
mechanism by 2011 at the latest.
Funding for PV projects is available through the Bulgarian Energy Efficiency
and Renewable Energy Credit Line (BEERECL) which has been developed
Source: JRC
by the EU, the EBRD and the Bulgarian government. Under this scheme,
the investor is eligible for a grant of 20% of the value of one loan received
through one of the participating banks: Bulgarian Post Bank, DSK Bank, Raiffeisen Bank, UniCredit Bulbank,
Unionbank, United Bulgarian Bank and Piraeus Bank. The participating banks have different limits on loans
up to EUR 2m, which could result in a grant of EUR 400,000 per project. So far, over EUR 85m have been
allocated in the form of these grants for different projects in Bulgaria, but according to BEERECL, only three
have been awarded for PV projects.
EU structural funds are also available to private investors in the form of Figure 8. Bulgarian PV projects, end 2008: MW
direct grants. The 2007-13 budget on Operational Programme for
Competitiveness provides EUR 97m for renewable projects, estimating an Small (<0.5MW) 338.0
average grant of EUR 350,000 per project. Large (>0.5MW)
However, in December 2008, Bulgaria became the first country in the EU to
be stripped by Brussels of EUR 220m of structural funds due to high levels
of corruption. Although this money will not affect grants for renewable
energy and represents only a fraction of the total EU funding for Bulgaria
(EUR 11bn), it certainly harms the country's image in the eyes of investors.
Bulgaria is trying hard to establish an investor-friendly environment for PV
projects. The tariffs and the length of guaranteed prices place this country 2.4
in the spotlight, but the frequent changes to legislation – another one Completed Announced
expected in 2011 – might well put a hold on some investments until the
government's position clarifies. Installation size <5 kW >5 kW
Feed-in tariff BGN/MWh 782 718
Bureaucratic obstructions – the length of obtaining licences for PV projects Guaranteed length 25 years
varies from one year to a year and a half – are another obstacle, though no Adjustment Follows electricity price change
worse than in Spain or Italy. Despite these barriers, Bulgaria is attracting Source: Bulgarian Ministry of Economy and Energy, New Energy Finance
investor attention. The Itochu Corporation (TYO:8001) has announced
plans to invest USD 900m in order to build a 100MW solar park in 2010.
Another 80MW of installations in Bulgaria have been announced by OptiEnergy, which is developing land
around airports in particular and has a 1MW plant near Sofia.
Slovenia has confidence in sun
Slovenia's introduction of new legislation in 2006 helped to revive the PV market, as the number of kWh
produced by PV plants more than doubled in 2007. Despite the small size of Slovenia, it comes second in
the region after the Czech Republic in terms of capacity installed, at 1025kW at the end of 2007. It is
expected that by the end of 2009 the capacity installed should at least double to 2.5MW. After the expected
2009 amendment to legislation is passed, the internal rate of return on PV installation investments could be
over 8%.
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
martin.simonek@newenergyfinance.com see www.newenergyfinance.com. Page 4 of 8

Research Note
Central and Eastern European PV
13 January 2009
The feed-in tariffs are set at EUR 374/MWh for installations below 36kW and Figure 9. Slovenia insolation
EUR 336/MWh for larger plants in 2008. The proposed legislation that should
be passed in 2009 changes the tariff to EUR 350/MWh for installations
smaller than 1MW. The prices for larger ones are subject to negotiation with
state authorities. The tariff comes on top of the nominal electricity price,
which averages EUR 70/MWh.
The current law guarantees the existence of the contract between producer
and supplier for a minimum of 10 years, but does not guarantee the price.
The proposed legislation should change this and guarantee the actual price
for 15 years.
The tariffs could be reduced if an investor receives a grant from the
government or the EU. For every 10% subsidy of the overall investment cost,
the tariff for the producer would decrease by 5%. Households are eligible for
support of EUR 2.5/Watt or EUR 2,100 for the whole PV system, whichever is
higher.
Government support for new installations is provided through loans with
reduced interest rates. The loans could cover up to 90% of the investment for
both companies and individuals. The rates are fixed at three-month Euribor Source: JRC
plus 30 basis points for a maximum duration of 15 years (plus a two-year
interest moratorium) for businesses and at 3.9% for 10 years maximum for
individuals (up to 50kW). The difference between the preferential interest Figure 10. Slovenian PV projects, end 2008: MW
rate and the commercial one is already considered as subsidy and affects
Small (<0.5MW)
the feed-in tariffs.
Large (>0.5MW)
The target of 25% for renewable energy in overall consumption by 2020, set
by the EU, may be very realistic given that Slovenia will improve conditions
after the expected new Energy Law is passed in 2009. Despite high inflation
throughout 2008, the country has a relatively stable economic environment
1.3
and the adoption of the euro in 2007 reduced currency risk for outside 1.2
investors.
Slovakia's uncertain start
A new energy law is due to be passed in Slovakia in 2009 and is expected Completed Announced
to improve the economics for projects in the pipeline. With Slovakia joining
the euro in 2009, bright days are likely in Slovakia for PV if the government Feed-in tariff (EUR/MWh) 350 for systems below 1MW
Guaranteed length 15 years
sticks to its commitments.
Adjustment TBA*
If the legislation is passed in 2009, the feed-in tariffs for solar energy at EUR *To be approved depending on final legislation proposal.
448/MWh will be guaranteed for 15 years. The proposal does not contain Source: 2009 Energy Amendment Proposal/Enerson, New Energy Finance
adjustments for inflation but might include one by the time parliament votes.
Slovakia's targets set by the EU are at 14% of renewable energy consumption by 2020 This would be mainly
from hydro plants, which presently account for a 90% share among renewable
energy sources. Figure 11. Slovakia insolation
In order to promote solar energy, a separate national target has been set
aiming at an increase of PV energy production to 10GWh per year
(approximately 8.2MW of capacity) by 2010. PV capacity installed at the end
of 2007 was 50kW. Czech-based Energy 21 seeks to invest EUR 300m in the
next three years to build a total capacity of 70MW.
For households the government's strategy for renewable energy, approved in
2007, provides grants for small solar passive installations. PV is not being
prioritised until 2015. Funding of PV projects can be acquired through EU
structural funds, which could provide up to EUR 6m of non-refundable grants
per project, covering between 40% and 50% (depending on location) of the
whole investment cost.
The contribution from structural funds affects the overall tariff more than in
Slovenia. The share of the grant in the overall investment decreases the
tariffs by the same percentage. Under the “de minimis” scheme, small
Source: JRC
businesses are able to receive a grant up to EUR 100,000, and the approval
process is simpler, avoiding ministerial bodies.
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
martin.simonek@newenergyfinance.com see www.newenergyfinance.com. Page 5 of 8

Research Note
Central and Eastern European PV
13 January 2009
There could be a technical problem as well, as distributors are not able to Figure 12. Slovak PV projects, end 2008: MW
accept large amounts of electricity from PV installations on rural grids, which
can cope only with limited intermittent capacity additions.
Small (<0.5MW)
Some developers have announced projects in areas in which the distributors Large (>0.5MW)
would find it difficult to connect them to the grid. Another not uncommon
feature is a property speculation where developers announce PV projects
only in order to increase the value of their land.
21.2
Romania behind the peloton
Romania's regulated market for green certificates was set up in 2004 in
order to reach the country's renewable energy goals for 2020. While the 0.1
market works relatively successfully in reaching the targets, it has not Completed Announced
resulted in a single major PV installation. In November 2008, its
government passed an amending law to the current legislation, but it Feed-in tariff EUR/MWh 448
remains questionable if this will have any major effect. Guaranteed length 15 years
Adjustment TBA
Romania is the only country of the CEE region which uses a system of Annual Depreciation 90%
green certificates (GC) instead of feed-in tariffs. The producers receive Source: Regulatory Office for Network Industries/2009 Energy Amendment
these on top of electricity prices, which are at present EUR 70-80/MWh for Proposal/New Energy Finance
retail consumers. The GCs are only distributed to installations below 10MW,
excluding large hydro plants. The government introduced this trading
system in 2004 but so far generated no GCs from PV energy production
according to the Romanian Power Market Operator (Opcom). Figure 13. Romanian insolation
This was because all renewable sources received the same number of GCs,
and PV as the most expensive option remained uneconomical. In 2008,
according to Opcom, the average price of a GC was EUR 42, which was the
maximum price allowed by the legislation. But better times are expected in
the coming years, since in November 2008 the parliament of Romania
approved an amendment to the legislation.
This not only increases the range of GC prices to EUR 27 to EUR 55 per
MWh produced, it also grants the producers of PV electricity the advantage
of receiving four GCs per every MWh produced, instead of one. The
stability of this system is enhanced by the fact that prices are set in euros
rather than Romanian Leis and with a 15-year guarantee of existence of this
law.
The system is based on regulated trading of GCs which are issued to
producers at a rate of four GCs for every MWh delivered to the grid (starting
2009). The producer sells GCs to suppliers through bilateral agreements
with negotiated prices or on the centralised day-ahead market. The utility is
obliged to buy a number of GCs in order to prove that a certain percentage
of energy supplied to households comes from renewable resources. Failing
to do so would result in a fine for every missing MWh, which is about double
of the maximum GC price. Source: JRC
The quotas for energy to be covered by GCs are set at 5.28% of energy
production in 2008 and at 6.28% for 2009 (target 16.8% in 2020). In 2008 there was a shortage of GCs, so
they were priced at the maximum, EUR 42.
Although the Romanian target set by the EU is relatively high, at 24% of all energy consumption to be
produced from renewable energy sources by 2020, it is feasible to fulfil both the EU targets and the national
quotas under the given system. The legislation also permits the integration of Romania into the European
System of Green Certificates where the producers and suppliers can trade GCs only after the national
quotas have been fulfilled.
The Romanian Energy Efficiency Fund financed by the IBRD provides favourable but very limited (up to
$1m) loans for renewable energy projects. Since the Romanian banking sector is not developed enough to
finance such projects, the fund's role is to fill this gap.
The EU structural funds provide EUR 19m for the period 2007-13 for investments in solar projects, and
these need to be applied for through the Ministry of Trade and Finance. The new legislation passed in
November 2008 also grants investors the benefits of a three-year tax exemption on reinvested profit once
the plant is connected to the grid.
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
martin.simonek@newenergyfinance.com see www.newenergyfinance.com. Page 6 of 8

Research Note
Central and Eastern European PV
13 January 2009
To date, Romania has not been an attractive market from an economic Figure 14. Romanian PV projects, end 2008: MW
standpoint. As in Bulgaria, the attractiveness is further reduced by corruption
and by administrative constraints such as the bewildering number of
required licences - city planning certificate, building authorisation, location Small (<0.5MW)
approval, technical connection approval, setting up authorisation (for less Large (>0.5MW)
than 1MW), renewable energy generation licence.
Hungary at the tail of the race 0.4
The targets set for Hungary by the EU Directive are 16% of overall
consumption of energy to come from renewable sources by 2020. As things
stand, this will be achieved without the contribution of PV plants. The
0
current system does not encourage growth of PV installations. At the same
time Hungary remains attractive for PV as a manufacturing hub given its Completed Announced
technically high-skilled workers, location and relatively low wages compared
Min Max
to the western EU. Green certificate price EUR 27 55
There is currently little interest in Hungarian PV power plants. The feed-in EUR/MWh from PV 108 220
Cap 2009 6.28% of all energy consumption
tariffs, introduced in 2003, apply to all renewable energy sources and are
currently set at HUF 26,410 (EUR 100, USD 135) per MWh produced, Source: Law 220/2008 Romanian Energy Regulatory Authority, New Energy
Finance
annually adjusted for inflation.
This is inadequate to make PV economic, and PV energy production is less
than 0.2% of all renewable energy in Hungary, which is 90% biomass. Even
Figure 15. Insolation in Hungary
these low tariffs are not guaranteed for any period of time. According to
current legislation, they will stay in place until the system of green credit
trading becomes implemented, with no reference when this could happen.
The total PV capacity installed in 2007 was a minute 350kW, with an
average growth of 17% in the last five years. No significant changes are
anticipated. Although the global economic crisis has had a major impact on
Hungary's own economic outlook, it may be that under regional pressure
Hungary will adopt more favourable legislation for PV installations in order to
compete for investments as well as to meet its targets for 2020.
Manufacturing of PV modules and cells on the other hand is relatively well
developed in Hungary. Japan’s Sanyo (TYO:6764) has built its largest
European production facility, capacity of 145MW of modules per year, while
EnergoSolar, a Budapest-based capital equipment manufacturer that ships
manufacturing lines mostly to emerging economies in Asia, has a small
facility for its own production, to be expanded to 48MW by mid-2008.
The Hungarian government encourages investments of this kind much more
than PV plants, providing direct grants and tax exemptions for
Source: JRC
manufacturers. As these vary depending on the location and potential of the
investment in terms of jobs created for example, the tax breaks and other
subsidies are subject to individual negotiations.
Figure 16. Hungarian PV projects, end 2008: MW
Manufacturing
The CEE region has in recent decades become the manufacturing hub for Small (<0.5MW)
European and Asian companies, attracting huge foreign direct investments. Large (>0.5MW)
For the PV industry, Hungary managed to attract cell and module
manufacturer Sanyo, leveraging its well-trained workforce. Czech
companies like Solartec turned former communist industrial facilities into PV
manufacturing site. Unsurprisingly, German companies are particularly 0.5
active: Schott set up a manufacturing site in the Czech Republic in 2006 and
new upgraded metallurgical silicon developer Solarvalue (Frankfurt OTC:
SV7) is planning a polysilicon plant at an old factory in Slovenia, although
these plans have for now been postponed due to difficulties in raising 0
capital. Completed Announced
Feed-in tariff HUF/MWh 26,410
Guaranteed length 1 year (until new legislation introduced)
Adjustment Inflation rate
Source: Hungarian Investment and Trade Development Agency, New Energy
Finance
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
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Research Note
Central and Eastern European PV
13 January 2009
Selected Companies Mentioned in this Report
Company Ownership Relevant Sub-activities
Energy 21 Private/family controlled Developers & utilities – Project developer
OptiEnergy Private/family controlled Developers & utilities – Project developer
Scatec AS Private/family controlled Financial & legal Services – Investor – VC and PE for companies
Itochu Corporation (TYO:8001) Quoted company HoldCos, SPVs & NYA – HoldCo TopCo
Financial & legal Services – Investor – VC and PE for companies
Solartec sro Private/family controlled Components & materials – PV cells – crystalline silicon
Subassemblies – PV Modules/Arrays
Genesis Solar ( BDP:GENESIS) Quoted company Subassemblies – PV Modules/Arrays
Components & materials – PV cells – Thin film (silicon)
Photon Energy AS (Warsaw: PHO) Quoted company Developers & utilities – project developer
Developers & utilities – Builder/engineering contractor
Source: New Energy Finance
Disclaimer
Strictly no photocopying or redistribution allowed without prior written permission of New
Energy Finance. When quoting, please cite ‘New Energy Finance’. The information Martin Simonek
contained in this publication is derived from carefully selected public sources we believe are
reasonable. We do not guarantee its accuracy or completeness and nothing in this document
Analyst, Solar
shall be construed to be a representation of such a guarantee. Any opinions expressed martin.simonek@newenergyfinance.com
reflect the current judgment of the author of the relevant article or features, and do not +44 207 092 8852
necessarily reflect the opinion of New Energy Finance Limited. The opinions presented are
subject to change without notice. New Energy Finance Limited accepts no responsibility for
any liability arising from use of this document or its contents. Nothing in this note constitutes
or should be taken to constitute investment advice. New Energy Finance Limited does not
consider itself to undertake Regulated Activities as defined in Section 22 of the UK Financial
Services and Markets Act 2000 and is not registered with the Financial Services Authority of
the UK.
Lead Author: Martin Simonek © New Energy Finance Ltd, 2009. Strictly no photocopying or redistribution allowed without prior written permission of New Energy Finance. When
+44 207 092 8852 quoting, please cite ‘New Energy Finance’. Published by New Energy Finance Limited of 2nd Floor, New Penderel House, 283-288 High Holborn,
London, WC1V 7HP. Registered in England No. 05179420. Please read important disclaimer on page 8. For more information call +44 20 7092 8800 or
martin.simonek@newenergyfinance.com see www.newenergyfinance.com. Page 8 of 8