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Subsidies for combined cycle power plants to be scrapped

An agreement on the restructuring of Hungary's mandatory energy purchase scheme has been reached that will eliminate subsidies for electricity, but not heat, generated by combined cycle power plants, government officials said on Monday.

Earlier proposed changes to the scheme, under which combined cycle power plants and companies that generate energy using renewable fuel are guaranteed a market and a subsidized price for their output, will be withdrawn said János Lázár, head of the parliamentary group of governing Fidesz.

The proposed amendments, submitted by Lázár himself, would have cut the guaranteed purchase price for all energy generated by combined cycle power plants and plants that use renewable fuel by 25% from 2011 and by 35% from 2012.

At the heart of the compromise reached on the restructuring of the scheme is that the price of heat generated will be subsidized but not of electricity, said state secretary for energy affairs János Bencsik.

Subsidies for energy generated using renewable fuel will remain unchanged until the end of 2011, but a new system will be introduced, with the involvement of local councils and industry professionals, from the start of 2012.