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MET lifts renewables target to 1 GW by 2026, eyes solar in Spain, Italy
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MET lifts renewables target to 1 GW by 2026, eyes solar in Spain, Italy

August 3, 2022
European integrated energy company MET Group has doubled its renewable capacity target to 1 GW as it expands into Italian and Spanish solar, its head of renewables Christian Huerlimann told S&P Global Commodity Insights.

Source: S&P Global Platts

MET, created in 2007 with a focus on the Hungarian gas market, has expanded into a pan-European trader with 55 billion cu m of gas and more than 50 TWh electricity traded in 2021.

"Our goal is to build a geographically diversified 1 GW renewables portfolio in Europe," Huerlimann said in the interview.

Construction on a 50 MW solar project in Andalusia, Spain, is to start in September with commissioning planned for third-quarter 2023.

MET bought the project in April alongside a 213 MW project pipeline in Italy.

"Having implemented an appropriate power offtake structuring and sourcing strategy, we could take advantage of substantially increased power offtake prices," Huerlimann said.

Despite increased engineering, procurement and construction costs, "we have a really interesting business case developing," he said.

The company was on track to have 500 MW renewables operating by 2023, with 168 MW of Hungarian solar due online this year.

For MET's Italian projects, Huerlimann noted "delays for the grid connection of up to half a year."

"We try to maximize opportunities on the offtake side with structured fixed price components, but leave some volumes open for the spot market on a merchant basis," he said.

"For project financing, we see that there is increasing appetite to finance also with mid- to longer-term fixed offtaking for just a part of the volume," he said.

RES revival in CEE

MET noted a pickup in corporate power purchase agreements after utilities dominated the first phase of renewables development in Italy, Spain and Hungary.

"New players are entering the market in the CEE region as in Hungary, while we also see a revival of projects in Romania and continued strong interest in Poland," Huerlimann said.

Challenges remain in securing grid connections, involving either high additional costs or delays.

Grid access barriers are best tackled at an early stage, Huerlimann said, citing Spain's change to tenders for available grid capacity as a good example.

Meanwhile, the addition of storage was an increasingly attractive option to optimize capture prices, with MET's Spanish project developed as battery-ready.

"There is a general capture price across technologies, but in the end its the capture price for each project that is important, depending on project location and other aspects," he said.

Low prices for support contracts made participation in solar tenders currently less attractive than the merchant route to market in Hungary, Huerlimann said.

Platts assessed Italian solar capture prices highest across its range of five markets, while Spain was lowest due to the current cap on gas-for-power prices, according to data from S&P Global.

Hydrogen at Lubmin

MET is also getting involved in the hydrogen market, having joined a renewable hydrogen pilot project at Lubmin in northeast Germany.

Construction of the Eur200 million project developed by HH2E is to start 2023 for commissioning in 2025.

"The market in Germany is showing an extraordinarily high level of interest in green hydrogen as part of the energy transition," MET Germany head Joerg Selbach-Roentgen said.

Huerlimann said current hydrogen projects still required support.

"We are closely following trends especially if there would be locational advantages in terms of gas infrastructure," he said.

MET operates Hungary's biggest gas-fired power plant, the 795 MW Dunamenti combined cycle gas turbine, and has added green assets like solar and batteries to complement its trading strategy.

The concept of guarantees of origin for renewables is a "helpful tool, especially when we think about cross-border PPAs."

"From a price point of view revenue contributions are still relatively minor," he said, but stricter rules on the demand side could help to lift GOs values as could deeper integration into the power market.

"You may have seasonal price differences, you might see different players come in and the market could evolve, but regulators would need to do more," he said.