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The Eropean Union

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The European Union pays particular attention to supporting electricity generation from renewable energy sources and from co-generation in order to

    HUNGARIAN ENERGY OFFICE

    INFORMATION

on the Introduction of Certificates of Origin related to Renewable Energy Sources,

    Waste and Co-generation in Hungary

1. What is the Certificate of Origin?

The European Union pays particular attention to supporting electricity generation from

    renewable energy sources and from co-generation in order to accomplish the environment

    protectional goals. The system of “certificate of origin” serves the implementation of these

    goals and the EU Directive 2001/77 provides in case of renewable energy sources and the EU

    Directive 2004/8 in case of co-generation. The Climate Package adopted on December 17,

    2008 by the European Parliament and to be probably enforced in 2009 and the new Directive

    will create an opportunity for the new certificates of origin to be traded among the member

    states, as well.

    The introduction of certificates of origin in Hungary is prescribed by ? 12 of Act LXXXVI of

    2007 on Electricity (hereinafter VET). The Governmental Decree 389/2007 (XII.23.) on

    Feed-in Obligation and Price of Electricity Generated from Renewable Sources or Waste or

    Co-generation (hereinafter KÖT) provides that the certificate of origin is a certificate

    acknowledging the quantity (in MWh) of electricity generated from renewable sources, waste

    or co-generation in the given calendar year, which agrees with the provisions of GKM Decree

    110/2007 (XII. 23.) on the Calculation Method of the Co-generated Electricity and the

    Determination of the Amount of the Useful Heat Generated with Great Efficiency.

2. What is the purpose of the Certificate of Origin?

In case of electricity generation from renewable energy sources or waste under Directive

    2001/77 the certificate of origin shall prove that the generator of electricity generated electricity and sold electricity within the obligatory takeover system by using energy sources

    according to this directive.

    In accordance with Directive 2004/8/EK in case of electricity generated from high efficiency

    co-generation (of heat and electricity) the certificate of origin shall prove that the generator of

    electricity has complied with the conditions determined in decrees on electricity.

In accordance with the Directives the regulation in Hungary is also definite that the disposal

    of the certificate of origin itself does not mean the right for sale and support within the

    obligatory takeover system.

The certificate of origin serves chiefly the purposes of supervision in Hungary. Under

    section (1) ? 8 of KÖT decree the Seller in the obligatory takeover system shall prove

    with the certificate of origin after the relevant year that the quantity of electricity

    generated and sold in the obligatory takeover system complies with this decree, or in

    case of co-generation with the provisions of GKM Decree 110/ 2007 (XII.23.).

The quantity of electricity sold in the obligatory takeover system may not exceed the quantity

    of electricity justified by the certificate of origin.

3. What does the Certificate of Origin contain?

The contents of the certificate of origin are prescribed by the Directive 2001/77 for

    renewable energy sources and by Directive 2004/8 for co-generation. The member states

    may supply additional data. The certificate of origin can be issued on paper or in a

    digital form. In Hungary the certificate of origin is issued on paper.

    Justified quantity: unit: MWh, the smallest quantity to be justified is 1 MWh.

Justified period: calendar year.

Annex 11 of the KÖT Decree contains the elements of the certificate of origin in

    Hungary, which are as follows:

a) Certificate of origin justifying energy from renewable energy sources or

    waste:

    ? Serial number of certificate

    ? Name and headquarters of Seller

    ? Denomination of the period (calendar year), during which

    electricity was generated

    ? Denomination and address of site, where electricity was

    generated

    ? Name, identification and type of main equipments ? Nominal power capacity of power plant unit

    ? Partial and total efficiency value of electricity generation ? Name and quantity of energy carriers used for power generation - in case of waste being the energy carrier the EWC code

    according to the European Waste Catalog

    - in case of biomass type and origin ? generated and sold quantity of electricity generated from

    renewables or waste

    b) Certificate of origin justifying energy from co-generation

    with useful heat and great efficiency:

? Serial number of certificate

    ? Name and headquarters of Generator

    ? Denomination of the period (calendar year), during which

    electricity was generated

    ? Denomination and address of site, where electricity was

    generated

    ? Name, identification and type of equipments

    ? Nominal heat and power capacity of equipment ? Name, heat value and quantity of energy carriers used for

    energy generation

    ? Quantity of co-generated electricity with efficient useful heat ? specific electricity co-generation index of equipment ? Value of partial or total efficiency of heat and power generation ? Value of reference efficiency considered when calculating

    energy savings (heat and power generation)

    ? Expressed in % the value of primary energy source ? Method and purpose of usage for co-generated heat energy

    4. Who can ask for the issuance of the Certificate of Origin?

It is an obligation for

Generators generating electricity from renewable energy sources or waste or from co-

    generation which sell electricity under KÖT decree with the exemption of those listed

    below (article (3) ? 11 of KÖT decree):

    a) in case of electricity from renewable energy sources and waste, if

    - the Hungarian Energy Office granted in a resolution the right for obligatory takeover

    under GKM decree 56/2002 on Definition of Rules of Receipt and Prices Applied to

    Electricity under Obligatory Takeover (hereinafter 56/2002 GKM decree) before the

    enforcement of KÖT decree

    b) in case of co-generation if

    - small power plant, not license-bound, sold electricity under the framework of obligatory

    takeover according to GKM decree 56/2002

    - the generation license for the power plant was issued before the enforcement of KÖT

    decree and it had a right for obligatory takeover under GKM decree 56/2002 on Definition

    of Rules of Receipt and Prices Applied to Electricity under Obligatory Takeover

Sellers, mentioned above, in KÖT decree shall not be obliged to ask for the certificate of

    origin until December 31, 2011. These sellers shall be obliged to prove their generated and

    sold electricity first for the year 2011 (deadline for their first application is February 28, 2012).

It is not an obligation for

The generator generating electricity from renewable energy sources or waste or co-generation

    not wishing to sell within the obligatory takeover system or in case of exemption from the

    certificate of origin under section (3) ? 11 of KÖT decree.

The certificate of origin is issued by the Office for the quantity generated and sold under

    KÖT decree.

5. What happens if electricity is sold under the obligatory takeover system without the

    Certificate of Origin (with the exemption of (3) ? 11 of KÖT Decree)?

Under section (1) ? 9 of KÖT decree, if the Office during its supervision ascertains the

    lack of the certificate of origin or that the Seller or the energy (or part of the energy)

    sold under the enforcement of this decree does not comply with the legal regulations for

    the given generation period, or after this period or in a given time, then in a resolution

    a) the Office determines how many kWh were sold within the obligatory

    takeover system in relation with the violation of the decree

    b) the Office determines the conditions to be complied with and in case

    of compliance the Seller may keep on selling electricity in the

    obligatory takeover system

    c) the Office determines the legal consequences to be applied under

    VET and fines the Seller.

6. Who issues the Certificate of Origin?

The Certificate of Origin is issued by the Hungarian Energy Office on the request of the

    applicant within 90 days under article a) section (4) ? 168 of Act on Electricity.

7. How can the Certificate of Origin be applied for?

A Certificate of Origin can be applied for by submitting an application. The application of

    the certificate of origin can be submitted in an application form on the certificate of

    origin published on the Office’s homepage. The applications on the certificate of origin

    shall be submitted not later than February 28 after the relevant year. When submitting a

    receipt (from the bank) justifying the transfer of the administration fee to the Office and other

    documents (statements) shall be enclosed. To grant the application the Office, giving a

    deadline, may ask for further information or data from the applicant, the buyer of heat or

    electricity. In case the applicant will not submit the data or information required within the

    given deadline, the Office may reject the application.

8. When can the Certificate of Origin be applied for first?

The Certificate of Origin can be applied for electricity generated first in 2008; applications

    shall be submitted not later than February 28, 2009.

In case of further questions please contact our colleagues:

    a) Questions related to the Certificate of Origin concerning energy from renewable

    energy sources and waste: E-mail to Mr. Tamás Tóth: totht@eh.gov.hu Tel: (06)-1-459-7808

b) Questions related to the Certificate of Origin concerning energy from co-generation:

    E-mail to Mr. Tibor Bartha: barthat@eh.gov.hu Tel: (06)-1-459-7798

Budapest, December 2008

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