Narrative
The objective of the project, planned to be financed by the Recovery and Resilience Facility, is to create at least 25 000 kWP of renewable community energy production capacity. The revenues from the sale of the energy generated by the small renewable energy power plant will be used for social housing in the 300 most disadvantaged municipalities through prepaid meters. Families to be included in the programme will be selected through a competitive tender process, with priority given to families with young children, in order to ensure that families with young children do not have unheated rooms. During the RFF implementation phase, the proceeds from the sale of the generated energy will be used to support families in need. However, following the RFF implementation phase, the proceeds can be used for any social, non-profit activities by the selected beneficiary organization, the Hungarian Charity Service of the Order of Malta. The selection process of the beneficiary organization raises questions about transparency and equal opportunities, and possible conflicts of interest (e.g. the president of the financial beneficiary organization also holds a high level political position, as the Prime Minister's Commissioner of social cohesion). A specific objective of the project is to propose legislation for energy communities.
Financial data
Total Budget: 12,919,814,279 HUF (~34 mil EUR)
EU Funding: 10,314,455,929 HUF (share of EU funding: 80%)
Hungary: 2,605,358,350 HUF
Recommendations
- Supporting energy communities of disadvantaged families using renewable energy is a much needed measure, as it addresses key issues, such as the low rate of renewables in the Hungarian energy mix, and energy poverty. However, such projects should be preceded by energy efficiency measures to reduce energy demand first. This is extremely important because the residential buildings where disadvantaged families live are almost in all cases very obsolete and energy-inefficient. This means that if the community energy will be used for heating, most of this energy will be wasted. If it will not be used for heating but only for other purposes, then it will reduce the costs of those affected only to a very limited extent.
- Community energy programs should also provide an opportunity for the consumers to be active, and participate in flexibility or energy efficiency schemes. The legal, regulatory and administrative framework of energy communities should be created, including public participation.
- Sharing the produced energy locally should be of key importance in energy communities. However, in the current system, the system use fees are not incentivizing local sharing, although it would mean a smaller load for the higher levels of the electricity supply system. Tarifs should be just and proportional to system-usage, incentivizing the local sharing of the produced energy.
- A non-profit community energy agency should be created to facilitate the creation of energy communities by providing information, advising, and even providing financial aid.
- There should be a reliable/predictable roadmap for price regulation to allow long term planning and realistic calculations of risks and viability. “Energy communities” is a priority area for EU funding (they are present in the RRF, OPs). To ensure that real, viable energy communities will be created, calls should contain detailed rules and conditions, allowing applications for each of the gradual steps of creating energy communities: founding an energy community, the planning of operations, and the realization of the prepared plans.
- The project goal of directly helping families in need should be set for a longer term than proposed in this project. According to the current plan, the sale of the generated energy will benefit families in need only during the RFF implementation phase. After that period, the generated income can be used for general social and non-profit activities by the selected project manager organization, the Hungarian Charity Service of the Order of Malta. Instead of this vague goal, families in need should be supported directly, in the long run.
- The selection process of project beneficiaries (and subcontractors) should be transparent, competitive and ideology free, based on professional criteria, references and numerical indicators. This is especially important, because the RRF funds have looser financing reporting requirements than the EU Cohesion Funds. Attention should be paid to possible conflicts of interest (e.g. political position and financial beneficiary position held by the same person should be excluded).
