Power in our hands: building community energy in Hungary

Starting an energy community in Hungary today is a classic case of learning by doing.

Not only for the people and communities involved, but also for the State. Although legislative processes are more and more supportive towards energy community projects, there are other bureaucratic obstacles, like lack of financial incentives, and lack of technical and energy sector specific knowledge.

Despite these hurdles, organisations like Friends of the Earth Hungary (MTVSZ), one of the biggest environmental organisations of the country, and the Solidarity Economy Center, an NGO with a mission to advance towards a solidarity-based economy, are at the forefront of piloting community energy projects in Hungary. 

We interviewed Bence Kovács from MTVSZ and Dr. Fanni Sáfián-Farkas, Márton Fabók from Solidarity Economy Center this past summer to learn more about their shared project in the Gólya and Kazán community house in Budapest.

What exactly is the Kazán Community Energy project? 

BK: A community solar power plant on the roof of Gólya which is basically a cooperative-based pub in a community office building called Kazán where various NGOs operate and run the place together on a solidarity basis. The aim of the place is to make the tenants owners or participants in the operation of the building to some level. 

FM: The project wasn’t really about starting an energy community from zero. It was about an existing community expanding its profile with energy. And I think one of the goals was to find the middle ground between giving an opportunity to these organisations to participate, but at the same time not to give an extra burden on top of their main activity.

What does such a hybrid solution look like?

FM: There are 3 tenant levels. The first one is for the founding organizations. Then there are the so-called committed tenants, who do some activity in relation to the building, which is more than just paying the rent. And there are organisations that are in a normal rental status as well. They go to bi-monthly resident meetings and they can voice their opinions. The revenue from the solar panel goes to a community fund for energy efficiency improvements, but it can also function as a solidarity fund; in case an organisation is in need. 

How did the project start?

BK: In 2020, the Hungarian state announced a call for proposals to set up pilot energy communities. One of the hardships was that the acceptable legal form of an energy community was unknown during the application process, so the project had to create a new legal entity. Hence 4 NGOs set up KESZ (Kozossegi Energia Szolgaltato), a non-profit limited liability company.  Another thing was that the funding was more than what was needed to the Kazán Community Energy project by an order of magnitude. So, we decided that we would start a multi- year project. The community solar farm on Gólya was a trial and in parallel, we were looking for other community sites to do it.*

*Since the interview, the second project was kicked off in November with Jurányi Ház.

You mentioned that the circumstances of the funding weren’t perfect. Were there any other issues stalling the projects?

FM: What we’re doing is alien to the way the energy market works and I don’t think the decision makers are prepared to really deal with that, even if there is a good intention.

FSF: Basically, if you want to register an energy community, it is mostly about how you’re going to do it technically. I have a feeling sometimes that “local community” is a buzzword for the state but there is a lack of understanding of what they are and how they work. Now, mainly industrial energy communities are getting support. 

This was our pilot project, and what we did was blind flying. 

BK: When we submitted the application, the legislation had not yet been finalised. There was no way of knowing what form the energy community could take. Also, in general, these tenders don’t make it easy for grassroots communities to win. The deadline for submissions are very short, one should have a ready concept, and has to be very flexible, which is quite difficult to realise with a community based decision-making.

What could make it easier to start energy communities in Hungary?

BK: Well, there are countries, Ireland for example, where an enabling framework is available  to pilot energy projects including technical assistance or seed funding to form the energy community. There is a so-called regulatory sandbox which gives more room to experiment. They provide an opportunity to step away from the current regulations and technical solutions, and if it works, it could be the regulation of the future. We hope that this opportunity will be available in Hungary later this year. 

FM:  We need models that are viable in Hungary, and it is possible to use them for setting up energy communities. The other thing is to change how we talk about the energy sector. To show that this is not just a technical or market process, but a transformation of our society, and that energy communities can’t work without a real community as their base. 

An energy project will not be a community by itself. Communities are built. Structuring our energy system together is a great tool for doing so.

And what does the future hold for the Kazán Community Energy project and the energy communities in Hungary?

FM: The Kazán Community Energy project goes towards its second stage, that it’s no longer just about the solar energy, but rather filling up the community aspect with substance, and finding out what kind of energetic developments can be done in the short and long term with the solidarity fund.

FSF: Looking at the bigger picture it’s clear that we need to be more efficient and more frugal with energy. Technology has achieved a lot already, but now we must transform the way we consume and produce energy. Exciting things can happen if we think collectively and are willing to share. 

BK: What is important, I think, is not to get bogged down in complying with the rules. Be bold and start thinking together about how to suffice local energy needs. We do not necessarily have to wait for legislation and subsidies, hopefully they will find the project on the go.