Energy Initiative Blogs

Taxing solar panels? The price of environmental waste and the future of energy in Hungary

by Dora Gacsi | Apr 17, 2015

The Hungarian government introduced a new tax on solar panels. According to the European Union, the main reason for this tax is that solar panels are hazardous electronic waste, made mostly of silicon and other materials that are supposedly 100% recyclable. So we should look a little closer at this reasoning.

Technically, the tax is on factories and/or companies that manufacture or sell solar panels. The Hungarian government requires that solar panel manufacturers and sales companies collect solar panels that are no longer viable or usable.  After their useful life, it should not be the responsibility of the government to collect or be responsible for collecting private industries’ electrical and potentially toxic waste. It should be the manufacturer of the product.

So then why have a tax? Well, in Hungary like in many other countries and large metropolitan areas, waste management is the responsibility of the state (or government). Oftentimes, there is a surcharge for waste outside of what is considered normal waste. For this reason, this new tax is considered acceptable. 

So this brings us to another important question - Why does the Hungarian President think the new tax is a failure, yet this policy still needs to stay in place?

The answer is cultural.  People in Hungary oftentimes don’t look into the real reason for governmental financial decisions.  Whenever there is an additional cost to them (as individuals or as companies struggling to survive), there is a general sense that additional taxes or costs to people or industry are not worth it in the long run.  

Hungary is currently trailing, compared to other European countries, with the implementation of solar panels (see Figure 1 below) to diversify their energy portfolio and move toward more renewable and carbon free energy generation options. Currently, the installation of a solar panel system (before the tax) is costly compared to the U.S.  It takes more than ten years to recover your investment in Hungary, while in the U.S. it takes a little more than four years. If this trend continues, Hungary may be on the brink of being the only EU country who utilizes the least amount of renewable energy.

Usage of the solar energy in Europe

Figure 1: Usage of the solar energy in Europe

Source: Wikipedia

Although nuclear energy is carbon free, it still has its own set of environmental concerns (a topic that I will not cover here.)  Decisions about the type of energy in which Hungary should invest moving forward have created disagreements across various intellectual circles. Some think the tax is for increasing financial gain at the expense of environmental protection, and at the expense of the country’s own inhabitants. The common people of Hungary find this unacceptable, as they feel they are not kept informed about the various benefits and consequences of decisions on Hungary’s energy future.

In the end, is the tax on solar panels really necessary?  Will this be perceived as a demotivating factor for the installation of renewable energy?

Perhaps the Hungarian government has weighed the scales on where its scarce financial resources should be spent and decided that nuclear is the primary means to secure energy independence for Hungary and yet protect its small land area from having to absorb any additional debt or consequences from the toxic waste of one of the best know solar energy generation sources out there today – solar panels. 

It seems that integration of more than one type of energy generation will eventually help Hungary to be energy independent, while waiting for current technologies to find more environmentally-friendly options for the integration of renewables may fall to a secondary position for the time being. 




Napelemadó: kínos a minisztériumi magyarázkodás – (accessed online on April 17, 2015)


Zöldadó napelemekre - (accessed online on April 17, 2015)