Hungary Electricity Security Policy

Organisation

The TSO, MAVIR, is responsible for transmission grid management and system security. The TSO coordinates the activities of distribution system operators (DSOs), which are responsible for distribution network management and security, and may issue direct commands in case of an emergency. MAVIR and the DSOs operate under the supervision of the Hungarian Energy and Public Utility Regulatory Authority (HEA). Every year, the HEA assesses the security of electricity supply for the coming winter, taking into account maintenance plans, electricity capacity, the electricity balance, reserve capacities and the availability of cross-border capacities.

As part of the EU Winter Package, Regulation (EU) 2019/941 on risk-preparedness in the electricity sector, the HEA is in the process of preparing a comprehensive risk-preparedness plan for the electricity sector. The risk-preparedness plan will outline measures that can be taken to enhance electricity security, prevent the occurrence of crises and provide details of the steps to be taken in the event of an electricity supply emergency. The plan is to be updated every four years.

MAVIR updates its reserve requirement forecast quarterly. In 2021, the increased cost of balancing production and consumption prompted MAVIR, in cooperation with the Ministry responsible for energy and the HEA, to commence a review aimed at minimalizing the cost of balancing. The review is considering a number of measures including prohibiting capacity withholding, and various regulations to promote competition.

Government Decree 280/2016 outlines the broad measures to be taken in the event of a major disruption in the supply of electricity. Based on this decree, the energy regulator, the HEA, in conjunction with the TSO, MAVIR, designed a ‘Crisis Plan’ to specify the roles and responsibilities of different entities during a supply emergency.

In accordance with the Crisis Plan, MAVIR should first attempt to increase electricity imports, request international assistance and modify the export-import schedule. If these measures do not successfully resolve the situation, the Crisis Plan notes that measures should be taken to reduce electricity demand. The plan stipulates that, where possible, no group of consumers should face more than three hours without supply. A list of essential consumers, who would not be subject to supply losses, is updated regularly by the HEA, and then provided to the TSO, and relevant DSOs. Essential consumers include defence facilities, medical services and airports.

Voluntary load shedding (interruptible contracts) is not available to the TSO in the event of a supply disruption.

Generation adequacy

Hungary does not face immediate generation adequacy concerns. With total installed capacity standing at 9 900 MW in 2020, well above the record peak load level (7 095 MW as of 2020), the country as a whole enjoys a comfortable capacity margin.

With coal-fired electricity generation expected to be phased out by 2030, Hungary’s future generation adequacy will be dependent on the timely completion of the Paks 2 nuclear project, and the Mátra gas-fired plant. In the longer term, and particularly following the phase out of the existing units at the Paks nuclear plant, Hungary’s generation adequacy will become heavily reliant on the realisation of plans to significantly increase installed renewables capacity, and in particular, on solar photovoltaic (PV) capacity installation.

As such, in its effort to bolster the security of electricity supply while integrating variable renewables capacity, the government aims to increase energy storage capacity to at least 100 MW and to add 100 MW capacity of demand side response by 2030. In order to facilitate and increase storage capacity, the government is considering updating Hungary’s existing legislative framework to facilitate market-based commercial storage investments and promote advanced technologies for electricity storage.

Demand side response

As a demand side response measure, a target has been set to install one million smart meters by 2030, compared to the currently installed 100 000 smart meters (or just over 1% of low-voltage connection points). By promoting domestic solar power generation alongside the use of smart meters, the Hungarian government is aiming to increase the “localisation” of electricity production and consumption, as well as to reduce wasteful consumption and create a more “conscientious” electricity consumer. Around 500 000 households, with an annual electricity consumption of over 5 000 kWh, will be obliged to install smart meters, with installation costs covered by the DSOs. A wider rollout of smart meters to meet the government’s target of one million by 2030 could be hindered by the current regulated end-user electricity prices, however, as the scheme does not provide for time-of-use pricing.

Climate resilience

In its second National Climate Change Strategy of 2018 (NCCS-II), Hungary included a National Adaptation Strategy that assesses and seeks to adapt the potential effects of climate change in Hungary. It covers the period to 2030 and includes an outlook to 2050. It gives direction for climate change mitigation and adaptation policies that are being translated into specific measures in the National Climate Change Action Plans (NCCAP).

The first NCCAP, which was adopted in 2020, includes measures to strengthen the resilience of the electricity transmission and distribution systems during extreme weather events to ensure security of supply. The plan also addresses the need to make the electricity system more flexible to accommodate an increasing share of variable renewables and to be prepared for the planned electrification of the energy sector that will see strong demand growth.

The draft of the second NCCAP proposes to undertake an “assessment of the climatic and geological vulnerability of critical energy infrastructure elements in the electricity, gas and heating sector”. Key objective is to explore the effects of climate change on the energy supply system, assess the system components vulnerabilities and the adaptability of the system. The findings of this assessment will be published in the National Adaptation Geo-Information System that is designed to inform policy makers, energy service providers and infrastructure operators.

Cybersecurity

The electricity sector (in addition to the oil sector, the natural gas sector and district heating) is considered as a potentially vulnerable sector for cyberattacks within The “Act on the Electronic Information Security of Central and Local Government Agencies” (Act L of 2013/Information). A number of relevant operators participating in sectors regarded as potentially vulnerable are required to carry out risk assessments regarding cybersecurity. According to government decree 374/2020 (30 July) on the identification, designation and protection of critical energy systems and facilities, HEA is responsible for designating which entities are potentially vulnerable to cyberattacks within the electricity sector. The Ministry of the Interior, National Directorate General for Disaster Management (BM OKF) plays a key role in the implementation of cybersecurity exercises.

In December 2020, the National Security Service's National Cyber Defence Institute published a cybersecurity manual for industrial surveillance systems used in the electricity sector. The manual was compiled with the involvement of SeConSys, a Public Private Partnership initiated in 2018 to strengthen cybersecurity in the electricity system.

The HEA has also established an Energy Security Forum, which includes various entities involved in the electricity sector, with the aim of facilitating a regular flow of information and dialogue related to cybersecurity challenges in the electricity sector.