Why are contractors installing photovoltaic panels facing liquidity problems?
ADVERTISEMENTPhotovoltaic companies and contractors who started installing solar panels in Hungary are facing major problems.
The projects were advertised as 100% subsidised, but in many cases it turned out that they required co-financing, with the financially weaker contractors who gave money before receiving the subsidies now facing severe liquidity issues.
As Adam Hazi, Wagner Solar's Director of Strategy and Development, explains, the auction, which started in 2021, has not yet been finalised.
"This is very unfortunate for all members of the industry, as many have pre-financed projects and in many cases the bidders themselves have failed to complete them," he says.
"Sooner or later they will be held accountable. And they have two years from the subsidy to refund their investors."
The problem is partly down to the cumbersome and bureaucratic 2021 tender. Since then, the Hungarian currency has fluctuated, derailing project budgets.
But that was not the only problem, as the Hungarian state can contribute to the funding – if it wants to.
"We can see from the 2023 fiscal data that the Hungarian economy is on a much more difficult path than originally forecast and the government is looking for ways to curb spending," says energy analyst Atila Weinhart.
In the last two years, the PV market has changed. The "goldmine" of 100% subsidies from European funds has been followed by stagnation. This has brought difficulties and costs for Hungary's energy grid, with contractor prices soaring and the industry plunging into uncertainty.
"I am not sure if it is a good solution to continue regulating this market through tenders. It would be good if it was done absolutely on a market basis, because in other Western European countries these schemes have a perfectly viable payback period," says Adam Hazi.
But in Hungary, partly because of the market-distorting effects of artificially low energy prices for households, consumers see things differently.
Contractors are cautious since they have not collected their revenues from the last completed projects. But while the market was frozen not too long ago, the new auction for photovoltaic panels is registering 20,000 entries.