Hungary's energy transition: a solar success story ready for the next step

Hungary's energy sector is undergoing a profound transformation. Once heavily dependent on conventional power sources, the country has emerged as a regional leader in solar energy deployment. For investors seeking opportunities in Central Europe, Hungary presents a compelling landscape marked by ambitious renewable targets and a rapidly evolving storage market.

Electrification and reindustrialisation are driving a sustained increase in Hungary's electricity demand. This trend was starkly illustrated in January 2026, when cold weather caused historical system load records to be broken on multiple occasions, underscoring the pressing need for additional generation and balancing capacity.

Structural imbalances

Hungary's renewable energy trajectory has been remarkable, if somewhat one-sided. The country's National Energy Strategy initially set a target of 6 GW of solar photovoltaic (PV) capacity by 2030 – a goal that seemed ambitious at the time. By 2025, however, that threshold had already been surpassed, with gross installed PV capacity exceeding 9 GW. The revised 2030 target now stands at 12 GW, and there is widespread confidence that this milestone will be achieved.

Yet this solar gold rush has exposed fundamental vulnerabilities in Hungary's energy system. The development of the renewable energy market has been heavily concentrated on PVs, with virtually no parallel expansion of complementary technologies such as wind or hydropower. This imbalance has created an urgent need for large-scale energy storage solutions capable of stabilising a grid that is increasingly reliant on intermittent solar generation.

Notably, no new feed-in tariffs or CfD subsidies are available for renewable generators, meaning future installations must be developed on a purely merchant basis. The principal exceptions are electricity storage projects, which continue to benefit from dedicated support mechanisms.

BESS takes centre stage

Battery energy storage systems (BESS) have emerged as a critical priority for Hungary's energy transition. Currently, approximately 60-70 MW of storage capacity is operational, with another 550 MW licensed and expected to commence operations by mid-2026. The government's policy objective is to reach 1 GW of installed storage capacity by 2030.

The market is presently shaped by the METÁROLÓ subsidy scheme under the EU RRF, which provides a non-refundable CAPEX grant combined with a ten-year CfD for the deployment of 600 MW of new utility-scale storage. Although the application window has closed and the commercial operation deadline is set for 30 April 2026, market participants anticipate a second funding round later in 2026.

Additional incentives are available through the Jedlik Ányos Plan, enabling SMEs to secure 30-50 % non-refundable CAPEX subsidies for behind-the-meter electricity and heat storage installations. Furthermore, a corporate income tax deduction introduced this year allows companies to deduct up to 50 % of eligible costs for new electrical energy storage investments, with benefits claimable over up to six tax years. New BESS installations also benefit from partial exemption from network charges until the end of 2026.

Grid constraints: the critical bottleneck

Perhaps the most significant challenge facing investors is Hungary's constrained grid infrastructure. The market has been eagerly awaiting the first round of a new competitive grid-capacity allocation mechanism, now expected to launch in Q2 2026. Repeated delays have left developers effectively unable to secure new grid-connection rights for several years.

Under the new framework, available capacities will be allocated through competitive national-level tenders conducted at least every two years. A five-member committee will evaluate bids based on a comprehensive scoring system, with preference given to projects that commit to installing battery or balancing capacities exceeding minimum requirements, integrate hybrid technologies to enhance performance, and provide financial guarantees above the statutory floor. Projects demonstrating lower environmental impact will also receive priority.

In the interim, regulators have encouraged market participants to utilise existing but underutilised grid-connection points by developing co-located or hybrid projects. This has created opportunities for innovative PV-plus-storage configurations and industrial self-consumption schemes.

Wind returns: the end of a decade-long moratorium

In a significant policy reversal, wind energy development has once again become feasible following the end of the government's decade-long restrictive stance. This marks a notable shift in Hungary's energy strategy and opens new opportunities for investors seeking to diversify their renewable portfolios beyond solar. Significantly, Hungary has been among the first EU Member States to designate renewables acceleration areas, with eight designated zones for wind turbine development now in place. This regulatory innovation streamlines permitting procedures and signals that wind projects will be prioritised in upcoming grid-capacity tenders.

Biogas and biomethane: a growing priority

Significant efforts are underway to expand Hungary's biogas and biomethane production capacity. In 2025, the Ministry of Energy announced a new subsidy scheme under the Jedlik Ányos Energy Plan, offering approx. EUR 100m in non-refundable CAPEX grants with aid intensities between 45 % and 65 %. The programme supports investments along the entire biogas and biomethane value chain. To complement state subsidies and facilitate integration into the natural gas system, guaranteed grid access is provided for biomethane producers.

Nuclear and conventional developments

Hungary's energy future is not solely renewable. The state-owned MVM Group is constructing Paks II, a 2,400 MW nuclear power plant that will significantly bolster baseload capacity. Additionally, two new combined-cycle gas turbine plants, each with an approximate capacity of 500 MW, are under development to replace two plants built in the 1970s.

Recent US-Hungarian nuclear cooperation has also prompted preliminary discussions on small modular reactors (SMRs), although details remain limited. Investors should monitor evolving regulatory frameworks, as the government seeks parliamentary approval to commence domestic SMR planning.

Gergely Horváth | Attorney at Law | Schoenherr Hungary
T: +36 70 367 1112 | E: ge.horvath@schoenherr.eu

Daniele Iàcona | Head of Italian Hub | Senior Attorney at Law
T: +40 733 730 119 | E: d.iacona@schoenherr.eu