Hungary’s renewable energy sector has seen rapid growth, primarily driven by solar power. Solar photovoltaic (PV) capacity reached over 5.6 GW by the end of 2023, with 1.6 GW added that year alone, accounting for around 18.4% of electricity generation.

Hungary already surpassed its 2030 solar target of 6 GW by early 2024. In contrast, wind energy has stalled, with only 330 MW installed before 2016 due to strict zoning laws. Although regulations have recently eased, new turbines cannot operate before 2030.

Other renewables play a smaller role. Biomass contributes to electricity and heating, while hydropower (~50 MW) remains marginal. Geothermal energy is used mainly for heating, with Szeged hosting the EU’s largest geothermal district heating system. Geothermal electricity is not yet significant.

Overall, renewables provided about 20% of electricity in 2023, while nuclear power—mainly from the Paks plant—remains dominant at around 45%. Hungary’s renewable sector is now firmly established, led by solar, though wind and geothermal lag behind.

Over the past year, Hungary has made notable legal and regulatory progress in the solar energy sector. Following the temporary moratorium imposed in 2022 on new household solar grid connections due to capacity issues, the Hungarian government committed to lifting this restriction by the end of 2023. This move was partly motivated by European Commission pressure, as lifting the ban was a prerequisite for receiving certain EU energy funds. In parallel, the government reversed its earlier decision to phase out net metering for existing solar users, allowing households that installed panels before 2025 to retain annual balance settlement for a ten-year period. From 2024 onwards, new solar installations are subject to gross monthly metering in compliance with EU regulations, a change designed to enhance grid stability while preserving investor confidence. To further support solar deployment, amendments to the Electricity Act in early 2025 clarified the legal framework for integrating battery storage systems into renewable power plants. The new provisions allow co-located storage and renewable assets to share grid access points, enabling more flexible and resilient energy systems.

Biomass and other bioenergy sources also remain central to Hungary’s renewable energy strategy, even though there were no major legislative breakthroughs in this area over the past 12 months. The government continues to promote the sustainable use of biomass—such as forestry residues, agricultural byproducts, and biowaste—for both heat and power generation. Policy efforts support compliance with EU sustainability criteria and focus on the efficient utilization of local resources. Hungary also maintains a commitment to liquid biofuels through blending mandates and supports waste-to-energy technologies as a means to improve energy diversification. These sectoral developments align with Hungary’s revised National Energy and Climate Plan (NECP), adopted in 2023, which outlines an ambitious increase in the share of renewables in gross final energy consumption to 29% by 2030, up from the previous 21% target. The plan also doubles the country’s solar capacity target to 12 GW by 2030 and reinforces Hungary’s commitment to cutting greenhouse gas emissions by 50% compared to 1990 levels. These legal and strategic developments collectively reflect Hungary’s intent to modernize its energy system, strengthen climate resilience, and comply with EU climate and energy directives, particularly the Renewable Energy Directive and the broader European Green Deal objectives.

Hungary has legally committed to a climate-neutral future. In June 2020, Parliament passed a law setting 2050 as the target for net-zero greenhouse gas emissions. This made the 2050 climate neutrality goal a binding obligation, aligning with the EU’s overall strategy. Hungary’s law also reaffirmed an interim goal of at least a 40% reduction in emissions by 2030 from 1990 levels. (Notably, this 40% goal was adopted prior to the EU raising its 2030 ambition – the EU’s collective Nationally Determined Contribution is a 55% cut – so Hungary may need to update its 2030 target.)

The net-zero commitment is enforced through a national climate framework that includes sectoral strategies and carbon budgets. It is more than aspirational: the 2050 neutrality target is legally binding, and the government is required to prepare a National Clean Development Strategy to achieve it. In practice, Hungary’s pathway to net-zero leans heavily on expanding nuclear energy and renewables. The National Energy Strategy 2030 (with an outlook to 2040) calls for a 90% carbon-free electricity mix by 2030, primarily via new nuclear reactors and solar capacity. Hungary submitted its National Energy and Climate Plan (NECP) under EU rules, which initially aimed for 21% of gross final energy consumption from renewables by 2030 – a target now likely to be revised upward given recent solar growth and updated EU directives.

In summary, Hungary’s net-zero and carbon reduction targets are grounded in law, signalling a firm commitment. The challenge ahead lies in translating these targets into accelerated action (e.g. tougher 2030 goals in line with EU policy) and delivering emissions cuts in sectors beyond power, to stay on track for the 2050 goal.

Hungarian law aligns with EU norms in defining renewable energy sources. While there is no stand-alone “Renewable Energy Act,” the Electricity Act (Act LXXXVI of 2007) and related decrees incorporate definitions consistent with the EU Renewable Energy Directive. In practice, “renewable energy” is understood to include non-fossil, naturally replenishing sources such as solar, wind, hydro, geothermal, and biomass (including biogas and landfill gas). Government regulations have enumerated eligible renewable technologies as solar PV, wind, hydropower, geothermal, biomass and biogas, as well as energy from waste. These sources are treated as renewables for regulatory and support purposes.

Notably, Hungary’s definition mirrors the EU’s – for example, electricity produced from renewable sources is any generation using solar, wind, water, biomass, geothermal, or similar energies. There are some nuances: large hydro is minimal in Hungary’s case, and wind energy, though defined as renewable, has been curtailed by policy. The Electricity Act also provides that renewable and waste-to-energy generation should be promoted and given grid priority. Another piece of legislation, Act No. XXIX of 2011 (on renewable energy resources), introduced guarantees of origin (“green certificates”) to certify electricity from renewables – implicitly confirming what qualifies as a renewable source.

In summary, Hungarian law does have a working definition of renewable energy consistent with international standards, even if it’s embedded across various statutes. It encompasses the full range of typical renewable sources, each of which is subject to specific licensing and support rules.

Hungary’s renewable energy landscape is shaped by both governmental bodies and private sector actors. On the public side, the Ministry of Energy (established in 2022) sets energy policy and long-term strategy, including renewables and climate targets. The Hungarian Energy and Public Utility Regulatory Authority (MEKH) is the independent regulator overseeing electricity and gas – it issues licenses, administers support schemes (like renewable feed-in tariffs/auctions), and regulates network tariffs. MEKH (formerly HEA) plays a crucial role in renewable project approvals and grid integration.

The state-owned MAVIR is the Transmission System Operator (TSO) managing the power grid; it conducts network development and has influence over how much new intermittent capacity (solar/wind) can be accommodated. Politically, the current government has championed the concept of “energy sovereignty,” supporting nuclear and solar development while imposing price controls – policies closely watched by industry. Key political influencers include the Minister of Energy (who advocates domestic generation and has launched subsidy programs) and the Minister of Foreign Affairs and Trade (who negotiates international energy deals.

On the private side, the MVM Group dominates: MVM is a 100% state-owned energy conglomerate, Hungary’s largest utility, and it has made green transition a pillar of its strategy. Through its subsidiary MVM Green Generation, the state indirectly participates in many renewable projects, owning about 200 MW of solar parks and all major hydropower plants. MVM also invests in new capacity (recently acquiring large solar farms) and energy storage. Besides MVM, there is a vibrant mix of international and domestic investors driving renewables. Foreign energy companies are active – for instance, E.ON (Germany) and ENKSZ/EDF historically in distribution and cogeneration and MET Group (a Swiss-based firm with Hungarian roots) which has built utility-scale solar plants. Renewable developers like GoldenPeaks Capital (Singapore-based), Akuo Energy (France), Photon Energy (Netherlands/Czech) and others have financed dozens of PV projects under Hungary’s support schemes.

New players include global oil majors pivoting to green: MOL, Hungary’s oil & gas champion, is exploring renewables and alternative fuels, and international funds (e.g. from China and South Korea) supply much of the solar equipment and have interest in projects. Private corporate demand for renewables is also rising – large industrials such as Audi Hungary (automotive) have installed huge rooftop solar arrays and entered long-term green power deals.

In summary, Hungary’s renewables push is a multi-player effort: policy is guided by the Energy Ministry and regulator, while state-owned MVM and a cadre of private investors (domestic and foreign) are the ones building and financing green capacity on the ground. This combination of clear government support (especially for solar) and active market participation has underpinned the sector’s rapid growth.

Hungarian businesses are increasingly adopting renewables through a variety of approaches, balancing feasibility and impact. One common solution is on-site renewable generation. Many companies have installed solar panels on their facilities – from factory rooftops to open land at industrial sites – to directly supply their operations with green electricity. For example, Audi Hungaria partnered with E.ON to build a 12 MW rooftop solar plant, one of Europe’s largest, on its Győr factory, providing ~9.5 GWh/year of renewable power for its own use.

Such on-site installations (often financed via lease or PPA structures) are attractive as they reduce long-term energy costs and help meet corporate sustainability targets. Another approach gaining momentum is corporate Power Purchase Agreements (PPAs).

Large energy consumers are signing long-term contracts to buy clean energy from off-site renewable projects. A recent landmark example is Holcim Hungary’s 15-year PPA for a 28.5 MW solar park developed next to its cement plant – the largest private renewable PPA in the country to date. Under this deal, Holcim procures roughly one-third of its factory’s power needs at a fixed price, with any excess solar power fed into the grid. Similarly, in 2024 the Danish packaging firm Faerch Group signed a 12-year sleeved PPA to source ~15 GWh/year of solar energy for its Hungarian facilities.

These corporate PPAs allow businesses to lock in cost-effective renewable supply and hedge against volatile energy prices. Other firms use a simpler route: purchasing green electricity products or certificates. Utilities and traders in Hungary offer “green energy” contracts backed by Guarantees of Origin, enabling companies (especially SMEs or those in rented premises) to consume renewables from the grid without owning generation assets. While this approach is easier to implement, it doesn’t provide the direct cost savings of on-site generation or PPAs, but it does satisfy corporate ESG and carbon reporting needs.

Overall, Hungarian businesses are finding that on-site solar installations are relatively straightforward given Hungary’s sunshine and available EU/Hungarian grants, whereas negotiating PPAs is more complex but now increasingly feasible as the renewables market matures. The mix of solutions continues to evolve, with some companies even exploring participation in renewable energy communities or co-developing projects to meet their sustainability goals.

In the past year or so, Hungarian businesses have notably accelerated their engagement with renewable energy, driven by both economic and strategic factors. The 2022 energy crisis – which sent electricity and gas prices soaring across Europe – was a wake-up call. With energy costs spiking, businesses looked for ways to shield themselves from volatility. This led many to fast-track investments in renewables for self-generation or secure long-term PPAs. For instance, energy-intensive manufacturers that had been on the fence are now installing large PV systems or signing green power deals to lock in affordable rates over 10–15 years. High market prices made the business case for renewables (whose marginal cost is near zero) more compelling than ever. At the same time, ESG and climate commitments have risen in importance. Multinational companies operating in Hungary (in automotive, electronics, chemicals, etc.) face pressure from their headquarters and investors to decarbonize operations. Over the last year, this translated into concrete action: more companies set targets for renewable electricity use and began sourcing accordingly.

Policy and regulatory signals have also influenced business behaviour. The government’s continued support for subsidized power to households (and not to most businesses) meant that industrial and commercial users bore the brunt of market prices, creating a strong incentive to seek cheaper renewable alternatives. Additionally, corporate awareness of forthcoming EU regulations – such as the Carbon Border Adjustment Mechanism and enhanced sustainability reporting – has grown.

These impending rules effectively reward lower-carbon operations, nudging Hungarian firms to invest in green energy now to stay competitive. Overall, while one year is a short horizon, there is a discernible shift: businesses in Hungary have moved from treating renewable energy as a niche CSR consideration to a core element of cost management and risk mitigation. This change is largely because renewables offer a hedge against fuel price shocks and align with global climate trends. The result is an uptick in corporate solar projects, burgeoning interest in PPAs, and even exploration of emerging options like battery storage and demand response to complement renewable adoption. The momentum suggests that Hungarian industry now views renewable energy not just as a green choice, but as a strategic necessity considering recent economic and political developments.

Decarbonization has become a mainstream topic in Hungarian business, though progress varies by sector. Large firms—especially multinational subsidiaries in automotive, pharma, and tech—are integrating sustainability into operations, setting CO₂ targets, and engaging in forums like the Hungarian Business Council for Sustainable Development. Energy efficiency, green electricity procurement, and fleet electrification are increasingly sophisticated themes. Mid-sized domestic firms only started addressing carbon issues after the recent energy crisis revealed the economic benefits of renewables and efficiency. SMEs are also becoming more aware, with many conducting energy audits in response to rising costs and government appeals for conservation.

Politically, support for emissions reduction—especially via efficiency—has intensified. In late 2022, facing surging energy prices, the government urged conservation and by 2023 launched a HUF 440 billion program to fund corporate energy-efficiency upgrades. The Jedlik Ányos Program offers grants for equipment upgrades, insulation, lighting, HVAC, and waste-heat recovery. A separate scheme supports SME projects. Backed by EU funds, these efforts underscore a shift toward treating efficiency as the “first fuel.” Hungary also enforces an Energy Efficiency Obligation on energy distributors, who must help customers save energy. The Energy Authority tracks progress and supports regulatory measures, including updated building and appliance standards.

In conclusion, decarbonization is no longer niche in Hungary. It has become a practical business and policy priority, aided by EU alignment and strong state incentives. While smaller firms still need more assistance and enforcement could improve, government–industry dialogue is now focused on real-world implementation, not just high-level goals.

In Hungary, developing a renewable energy project follows a uniform permitting system with some technology-specific nuances. Grid-connected plants (solar, wind, biomass, etc.) must obtain an electricity generation license from the Energy Authority (MEKH), unless very small. Projects under 0.5 MW require only registration; those between 0.5–50 MW use a simplified one-stop permit, while projects above 50 MW need separate establishment and operation licenses. Developers must secure land use rights, planning approval, and a grid connection agreement from the TSO or distribution company. While renewables have grid priority by law, access depends on available capacity. As of 2023, grid saturation has become a bottleneck—MAVIR has suspended accepting new large-scale solar/wind projects until upgrades are made.

Requirements differ slightly by source. Utility-scale solar projects often involve converting leased farmland, as direct purchase is restricted. Rooftop solar (<50 kW) follows a light-touch process but is currently barred from feeding into the grid due to capacity issues. Wind power faces stricter constraints: a 12 km zoning limit from residential areas has blocked onshore wind since 2016. Although eased in 2022, no new wind plant may operate before 2030. Wind projects also require environmental permits due to noise and visual impacts. Hydropower (rare and small-scale) needs water rights and must comply with Danube regulations.

Geothermal is split by scale: shallow systems need local permits, while deep geothermal requires a state concession and environmental approval. Biomass and biogas follow general licensing rules but also need air and waste permits; some may require integrated pollution permits. Nuclear energy, though non-renewable, is significant—new projects like Paks II need atomic energy licenses and Parliamentary approval. Emerging sectors like CCS and hydrogen currently lack specific laws; CCS would require mining-type permits, and hydrogen projects are handled under general industrial rules, pending a dedicated hydrogen law.

Project rights and licenses can be transferred with MEKH’s approval, allowing ownership changes via project companies. Overall, Hungary’s licensing framework is centrally administered and mostly technology-neutral, though wind and geothermal face specific challenges. EU environmental and safety rules also apply, adding further regulatory layers for certain technologies.

The Hungarian government plays a key role in the renewable energy sector, mainly through the state-owned MVM Group rather than direct project development. MVM and its subsidiary, MVM Green Generation Ltd., operate over 200 MW of solar and all major hydropower assets. MVM aims to expand its domestic renewable capacity to 800 MW by 2025 and 3,000 MW by 2035, aligning with government goals to position it as a national leader in the green transition. The state supports MVM financially and strategically, including through capital injections.

Beyond MVM, the government influences the sector through policy tools and ownership in key energy infrastructure, including recent re-nationalizations. However, there is no legal requirement for public ownership in renewable projects, and private developers remain active. State financial institutions like MFB and Eximbank also back projects through funding and guarantees. While nuclear energy (via Paks) is a separate, state-led low-carbon initiative, the government’s approach to renewables is more indirect. Still, it asserted more control in 2023 with a pre-emption right on foreign acquisitions of major solar assets, indicating a willingness to intervene when national interest is at stake. Overall, Hungary uses MVM and market-based incentives to drive renewable growth, without creating a separate state-owned “RenewableCo.”

The Hungarian government plays a key role in the renewable energy sector, mainly through the state-owned MVM Group rather than direct project development. MVM and its subsidiary, MVM Green Generation Ltd., operate over 200 MW of solar and all major hydropower assets. MVM aims to expand its domestic renewable capacity to 800 MW by 2025 and 3,000 MW by 2035, aligning with government goals to position it as a national leader in the green transition. The state supports MVM financially and strategically, including through capital injections.

Beyond MVM, the government influences the sector through policy tools and ownership in key energy infrastructure, including recent re-nationalizations. However, there is no legal requirement for public ownership in renewable projects, and private developers remain active. State financial institutions like MFB and Eximbank also back projects through funding and guarantees.

While nuclear energy (via Paks) is a separate, state-led low-carbon initiative, the government’s approach to renewables is more indirect. Still, it asserted more control in 2023 with a pre-emption right on foreign acquisitions of major solar assets, indicating a willingness to intervene when national interest is at stake. Overall, Hungary uses MVM and market-based incentives to drive renewable growth, without creating a separate state-owned “RenewableCo.”

Hungary has outlined clear strategies to expand renewable energy, focusing on a 90% carbon-free electricity mix by 2030 through new nuclear reactors (Paks II) and major growth in renewables, especially solar. The National Energy Strategy and the National Energy and Climate Plan (NECP) guide this vision, with solar capacity goals now raised to 12 GW by 2030. Hungary also joined the EU’s REPowerEU initiative and is promoting electrification of heating and transport to increase renewable electricity demand.

The legal framework is based on the Electricity Act and government decrees. The former KÁT feed-in tariff was replaced in 2017 by the METÁR system, which combines fixed tariffs for small projects and premium auctions for larger ones. METÁR auctions (2019–2022) greatly accelerated solar development, though further tenders have been paused pending grid upgrades. Upcoming reforms are expected to improve incentives for storage and possibly restart wind energy tenders, as Hungary begins relaxing its wind development restrictions.

Following EU electricity market reforms, Hungary will need to encourage long-term contracts like PPAs and implement stronger consumer protections. The government has already established a framework for Corporate PPAs and is working to remove barriers to their use. Other key policies include the Climate Change Act (2050 net-zero target), the Hydrogen Strategy (targeting 240 MW of electrolysis by 2030), and 2022 legislation enabling stand-alone energy storage and modest tax benefits for battery investments.

Hungary also plans to reform net metering: as of end-2023, new rooftop solar systems no longer qualify, and a new net-billing model is in development. This will likely require prosumers to buy and sell electricity separately, possibly with time-of-use pricing.

In summary, Hungary’s energy transition is grounded in firm policy commitments, backed by key legislation and evolving regulatory tools. While solar remains the main focus, complementary steps in nuclear, storage, hydrogen, and market reform show a broader strategy aimed at aligning with EU climate goals and modern energy market trends.

Hungary has used various incentives to promote renewable energy, starting with the KÁT feed-in tariff scheme (in place until 2016), which guaranteed fixed prices and jump-started early projects. In 2017, the METÁR system replaced KÁT, offering three tiers of support: fixed tariffs for micro-plants (<0.5 MW), non-auctioned premiums for mid-sized projects (0.5–1 MW), and auction-based premiums for larger projects (>1 MW). METÁR auctions, held between 2019 and 2022, successfully drove utility-scale solar development, offering long-term contracts and lowering prices. However, auctions were paused after 2022 due to grid constraints and the energy crisis.

In addition to feed-in schemes, investment grants funded by EU programs have played a key role. Notable examples include support for household solar and battery systems (Napenergia Plusz Program) and major subsidies for business energy efficiency and on-site renewables. Tax incentives also support green investments, including corporate tax credits and exemptions from energy-sector surtaxes for KÁT and METÁR participants.

However, some measures have discouraged investment. A windfall profits tax (65%) was imposed in 2022–2023 on producers who left support schemes to sell at high market prices, undermining confidence in regulatory stability. Residential solar expansion also slowed due to a temporary grid connection ban, which the government extended into 2024. Moreover, historically low regulated electricity prices weakened the economic case for home solar, though recent reforms have partially addressed this. Strict zoning rules have long restricted wind energy development.

Overall, Hungary’s incentive framework has been instrumental in advancing solar power, combining feed-in mechanisms, grants, and tax benefits. Yet emergency taxes, grid limits, and wind restrictions have dampened momentum. Future policy is expected to focus on new incentives for energy storage and possibly emerging technologies like hydrogen. Maintaining regulatory stability will be critical for sustained investment.

Since 2013, Hungary has implemented a Utility Cost Reduction program that fixes residential gas and electricity prices at low, politically determined levels. During the 2021–2022 energy crisis, maintaining these caps became financially difficult. In response, the government limited subsidies to average consumption levels, charging higher (but still regulated) rates above that. Despite this, state-owned MVM incurred major losses from selling expensive imported energy at capped prices, with the government providing direct subsidies and capital support to maintain affordability.

These interventions placed Hungary among the EU’s top energy price suppressors relative to GDP. Businesses largely paid market rates, though SMEs and energy-intensive firms received some temporary aid. The crisis fuelled debate over Europe’s marginal pricing system, where electricity prices are set by expensive gas generation. Hungarian officials criticized this model, arguing that cheap nuclear and renewables were being priced unfairly high due to gas coupling.

When the European Commission proposed electricity market reforms in 2023, Hungary opposed the plan, fearing it would restrict its ability to control retail prices. Instead, Hungary took its own approach—directing nuclear output from Paks to be sold to households at regulated prices, partially decoupling from market rates. This was a crisis-driven measure rather than a structural shift.

With energy prices stabilizing, Hungary has extended price caps into 2024, reaffirming its commitment to regulated tariffs. Though the EU’s 2024 market reform promotes mechanisms like long-term contracts and capacity payments to stabilize prices, Hungary is expected to implement only the minimum required changes. The government remains committed to national price control policies and sceptical of broader EU market liberalization, preferring its own tools to protect consumers.

Despite recent progress, Hungary faces several key barriers to renewable energy expansion and broader corporate access to clean power.

Grid constraints are the most urgent issue. The electricity grid is saturated in many regions, especially for solar, leading to a freeze on new utility-scale PV permits and residential feed-in connections. Delays persist even for licensed projects due to insufficient infrastructure. While grid upgrades are planned with EU support, short-term limitations remain severe.

Wind energy restrictions are another major obstacle. A de facto ban since 2016, due to strict zoning rules, has blocked new onshore wind projects. Though slightly eased in 2023, new wind installations are unlikely before 2030, limiting Hungary’s renewable diversification.

Administrative and land-use hurdles add complexity. Developers must navigate slow permitting processes and complicated land acquisition, especially for solar projects on farmland, which cannot be directly purchased by companies and must be rezoned after leasing. Local cooperation is essential but not always easy.

Regulatory and investment risks include sudden policy changes (e.g. a 65% windfall tax on solar profits in 2022) and foreign direct investment (FDI) screening, which require government approval for non-EU investors. A new pre-emption right for large solar asset sales adds further uncertainty, potentially deterring foreign capital.

Financing and market integration challenges persist. High interest rates have made financing more expensive, particularly for smaller developers. Corporate PPAs face bank scepticism due to perceived credit risk. Additionally, Hungary lacks flexible backup capacity and storage, posing integration and curtailment risks. Many businesses also lack the expertise to manage PPAs or self-generation.

All things considered, unlocking Hungary’s full renewable potential will require overcoming grid bottlenecks, enabling wind, simplifying land and permitting procedures, and fostering a stable, investor-friendly environment. These steps are crucial for scaling up renewables and allowing more businesses to access reliable green energy.

Corporate Power Purchase Agreements (PPAs) are rapidly gaining traction in Hungary, marking a new phase in corporate renewable energy procurement. A key milestone was the 2023 PPA between the Faerch Group and GoldenPeaks Capital, enabling Faerch to secure around 15 GWh of solar power annually for 12 years, covering 30% of its electricity needs. The deal was facilitated through a trader and marketplace, offering long-term price stability and green certificates. It is seen as one of the first major corporate PPAs in Hungary.

Another prominent example is Holcim Hungary’s 15-year PPA with ID Energy for a 28.5 MW solar park at its cement plant. The project meets about one-third of the plant’s power needs and cuts CO₂ emissions by approximately 6,000 tons per year. It also allows excess energy to be sold to the grid, showcasing flexible deal structures.

These developments reflect a broader shift as Hungarian businesses move from relying on utilities to directly sourcing clean energy. PPAs are enabling the construction of new renewable capacity, supported by international partners and innovative financing. This trend is growing, especially among energy-intensive industries aiming to meet ESG targets. The Hungarian government supports these initiatives as a complement to public incentive schemes, reinforcing PPAs as a key tool in the country’s renewable transition.

Developing a renewable energy project in Hungary involves a complex set of interrelated contracts that cover every stage of the project’s lifecycle, from securing land to selling power and ensuring ongoing operation.

The process typically begins with acquiring land rights. Depending on the legal and zoning status of the land, this may involve either purchasing the land (if reclassification is possible after construction) or, more commonly in the case of solar farms on agricultural land, entering a long-term lease. Securing legal access to the site is a critical prerequisite before any construction can begin.

Once land rights are in place, the developer must conclude a Grid Connection Agreement with the relevant network operator—MAVIR for transmission-level projects or the appropriate regional distribution company for smaller-scale developments. This contract sets out the technical and financial terms of connecting the project to the grid, including responsibilities for any necessary infrastructure upgrades and timelines for grid access. Typically, this agreement is contingent on the project receiving the appropriate energy production license from the Hungarian Energy Authority.

During the construction phase, the central legal instrument is the EPC (Engineering, Procurement, and Construction) contract. This is usually a turnkey agreement with a contractor who is responsible for delivering a completed and operational plant on time and within budget. The EPC contract covers equipment procurement (such as solar panels or wind turbines), construction works, grid connection, and commissioning tests. It generally includes performance guarantees and completion deadlines, as delays could risk the expiry of permits or licenses. In addition to the EPC, developers may enter into equipment supply agreements (if not bundled into the EPC contract) and sometimes retain an owner’s engineer to oversee construction quality and progress on their behalf.

Once the plant is operational, electricity sales are governed by a Power Purchase Agreement (PPA) or a state support contract. For projects participating in Hungary’s METÁR feed-in premium system, the agreement is with MAVIR, which acts as the mandatory off taker and pays either a fixed tariff or a premium above market price. Projects outside of the state support scheme will sign commercial PPAs with utilities, traders, or increasingly with corporate consumers seeking to meet sustainability targets. In merchant scenarios, where power is sold on the spot market, developers also sign contracts for balancing services and trade access through HUPX, the Hungarian power exchange.

To ensure reliable plant operation, developers typically enter long-term Operation and Maintenance (O&M) contracts with specialized service providers. These contracts include routine maintenance, repairs, and system monitoring to maximize uptime and efficiency. For example, solar farms require services such as panel cleaning and inverter checks, while wind projects often involve agreements with turbine manufacturers to ensure ongoing performance.

If the project is debt-financed, a suite of financing documents is also required. These include loan agreements with banks, security documentation (such as pledges over project assets and rights), and direct agreements between the lender and key project stakeholders (e.g. the PPA off taker or O&M provider) to ensure lender protection through step-in rights if needed.

Additional supporting contracts may be required to round out the project structure. These can include insurance policies (covering both construction and operation), grid code compliance agreements, and shared infrastructure agreements, especially where multiple projects connect to a common substation or transmission line.

Altogether, these contracts form the legal backbone of a renewable energy project in Hungary, each playing a vital role in ensuring the project’s successful development, connection, operation, and revenue generation.

In summary, a new renewable project in Hungary will typically have to line up: (i) Land lease/purchase agreements, (ii) Grid Connection Agreement with technical conditions, (iii) EPC contract (turnkey construction), (iv) PPA or METÁR Offtake Agreement securing revenue, (v) O&M agreement for ongoing operations, and (vi) Financing contracts if needed. These contracts collectively ensure the project is permitted, built to specification, interconnected, has a buyer for its power, and is properly operated and maintained throughout its life. Each must be negotiated carefully to meet both Hungarian regulatory requirements and international bankability standards, especially as more projects are financed by global investors.

Hungary imposes no restrictions on the export of renewable electricity and does not require local content or domestic supply obligations for renewable energy projects. As part of the EU’s internal electricity market, Hungary allows free cross-border electricity trade, with exports and imports governed only by grid capacity and market coupling. Even during the 2022 energy crisis, Hungary continued electricity exports, only temporarily restricting natural gas exports.

Renewable energy developers are not legally required to use Hungarian-made equipment or hire local labor. While the government encourages renewable manufacturing through tax incentives, particularly for solar and battery technologies, these are voluntary and not linked to project approvals or support schemes. METÁR auctions are purely price-based, with no preference for domestic sourcing.

There are also no obligations requiring renewable energy to be sold domestically. Developers can contract freely with foreign or domestic buyers. Although MAVIR, as the state off taker under feed-in schemes, distributes power within Hungary, this mechanism does not amount to a legal domestic supply mandate. A recent pre-emption right for foreign acquisitions of strategic renewable assets focuses on ownership control rather than energy allocation.

Overall, Hungary maintains a liberal, EU-aligned regulatory environment for renewables. Electricity is treated as a freely tradable commodity, and the country’s energy strategy focuses on increasing domestic capacity—especially solar and nuclear—rather than limiting exports or mandating local content.

Hungary’s renewable energy sector has been significantly affected by global economic and policy trends over the past two years. Rising inflation and interest rates, especially Hungary’s peak rate of 13% in 2022, made project financing more expensive and delayed some developments. Though bond yields began to fall in early 2024, the era of cheap capital has ended, requiring developers to adjust to higher costs of financing and potentially slowing investment.

Supply chain disruptions also impacted project costs, particularly in solar. Key inputs like polysilicon and steel saw price spikes, pushing up equipment and construction costs. Module prices rose 20–30% at times, though this eased by late 2022. Most solar components are imported, especially from China and South Korea, prompting concerns over dependence on foreign suppliers. In response, Hungary is encouraging diversification and exploring domestic manufacturing options for solar equipment.

Construction and labor costs have also increased, driven by global commodity inflation and domestic labor shortages. These cost pressures have somewhat reduced the competitive edge of renewables, though not enough to halt growth. On the contrary, soaring fossil fuel prices made renewables more attractive, boosting corporate interest in PPAs and increasing revenues for some projects—though this triggered a windfall tax on excess profits.

Hungary is advancing a diverse set of major energy projects that are shaping its low-carbon future. Central among them is the Paks II nuclear power plant, which will add two 1,200 MW reactors and is expected to supply over 60% of Hungary’s electricity by the late 2030s. Though not renewable, Paks II is a core element of the country’s emissions reduction strategy and its largest energy investment to date.

In the renewables sector, solar power dominates. Hungary connected its largest-ever solar plant (~100 MW) in 2023 and has over 5,000 MW of new solar projects in the pipeline. Total installed solar capacity surpassed 7 GW by early 2024, with multiple large-scale projects under construction. This solar boom is being supported by early battery storage projects, including MVM’s 20 MWh facility and MET Group’s planned 20 MW/20 MWh storage park—paving the way for larger future deployments.

Geothermal heating is also expanding. The Szeged Geothermal District Heating Project, completed in 2022, is now the largest of its kind in the EU and supplies 60% of Szeged’s heating needs. Similar projects are being planned in other Hungarian cities, reducing reliance on natural gas for urban heating.

Hungary is also part of the Green Energy Corridor, an international initiative to import Azerbaijani renewable electricity via a 1,100 km undersea cable through Georgia and Romania. This strategic infrastructure could diversify energy imports by the late 2020s and position Hungary as a transit hub for green electricity.

While onshore wind remains restricted, a new decree allows for potential wind tenders after 2029, hinting at future development in this sector. Meanwhile, major corporate renewable projects are gaining momentum: Audi Hungaria expanded its rooftop solar by 18 MW in 2024, and MOL is piloting a green hydrogen project at its refinery, scheduled to start by 2025.

To support this energy transition, Hungary is also investing in grid infrastructure, including a new interconnector with Serbia and a flexible 500 MW gas-fired plant at Tiszaújváros, aimed at balancing renewable output and replacing coal capacity.

Altogether, these large-scale solar, nuclear, geothermal, storage, and infrastructure projects are moving Hungary toward a more resilient, diversified, and low-carbon energy system, aligned with its 2030 climate and energy goals.

Hungary is unlikely to lead in offshore wind due to its landlocked geography, but it is positioning itself strategically in other emerging energy technologies, particularly hydrogen. While offshore wind development is not feasible domestically, Hungary plays a key role in the Black Sea Green Electricity Corridor, a major international project that would deliver offshore wind power from Azerbaijan to Central Europe via undersea cable, with Hungary as the endpoint. This makes Hungary a transit country for offshore wind energy, not a producer or developer.

Hydrogen, however, represents a more promising area for regional leadership. Hungary’s National Hydrogen Strategy (2021) sets ambitious 2030 targets: producing 36,000 tonnes of low-carbon hydrogen annually (split between blue and green hydrogen), deploying 240 MW of electrolysis capacity, building hydrogen fueling infrastructure, and injecting hydrogen into the gas grid. Pilot projects are already underway, such as MOL’s green hydrogen electrolyser at its Danube refinery and hydrogen storage studies by Hungarian Gas Storage Ltd. Hungary’s robust automotive and battery industries further support its role in developing hydrogen-fuelled transport.

Another emerging area is small modular nuclear reactors (SMRs). Hungary, already strong in nuclear energy, has expressed interest in SMRs as a post-2030 option to complement large reactors like Paks II. While not a first mover, Hungary could become a regional SMR user, given its nuclear expertise and interest in partnering with countries like the U.S. or Canada once designs are proven.

In energy storage and smart grids, Hungary is taking early steps. Projects like MVM’s and MET Group’s battery storage units are laying the groundwork, and Hungary’s growing battery manufacturing capacity (e.g., CATL and SK Innovation plants) may support future leadership in storage deployment in Central and Eastern Europe. However, countries like Germany are far ahead, and Hungary will likely act as an adopter of mature solutions rather than an innovator.

In conclusion, Hungary’s energy strategy focuses on being a fast follower in emerging low-carbon technologies. Offshore wind will be accessed through international partnerships, while hydrogen and SMRs offer more realistic leadership opportunities within Central Europe. Hungary’s central location, technical expertise, and government support position it well to become a regional hub for hydrogen and advanced nuclear, provided that pilot projects succeed and EU funding continues. The country isn’t aiming to invent new technologies but seeks to be among the first in the region to integrate and scale them effectively.

Renewable energy projects in Hungary are primarily financed through a combination of project finance debt and equity, with long-term offtake contracts—especially under the state METÁR support scheme—ensuring predictable cash flows that make projects bankable. Local banks such as OTP, Erste, and K&H have become active lenders, offering loans with 10–15-year terms, often covering 70–80% of project costs. Equity is typically provided by developers, strategic investors, or infrastructure funds. The METÁR system, offering 15–20-year Contracts-for-Difference with the state off taker MAVIR, has been key to unlocking bank financing.

Multilateral lenders like the EBRD and EIB have also co-financed large solar portfolios, and the Hungarian Development Bank (MFB) has provided credit facilities. During the pandemic, the National Bank of Hungary’s FGS Green program further encouraged domestic lending by offering cheap refinancing.

While most financing is still tied to state-backed schemes, corporate PPA-based models are emerging. Some solar projects have secured financing through private long-term contracts with companies instead of state premiums. Pure merchant projects, however, remain rare and are typically equity-funded due to limited bank appetite for market-price risk.

Hungary has also seen interest from foreign investors acquiring operational solar assets, often refinancing them at better terms. Innovative financing mechanisms like green bonds are developing, though not yet widely used in the private renewables sector. The state issued a €1.5 billion green sovereign bond in 2020, and MVM has considered green bond options. Smaller projects rely on leasing, EU grants, and co-financing, especially in the agricultural and community sectors.

Overall, Hungary’s financing environment for renewables is considered mature, with sufficient capital available for well-structured projects. The main constraint today is not funding, but the limited number of new projects due to grid capacity issues and a pause in METÁR auctions.

Looking ahead, if new opportunities emerge—such as wind tenders, large-scale battery storage, or expanded corporate PPA markets—strong interest from both domestic and international financiers is expected. Hungary’s EU membership, established financing frameworks, and stable returns continue to make it an attractive market for renewable energy investment.

Hungary’s renewable energy sector stands at a crossroads, with significant opportunities ahead but also persistent challenges that could hinder progress if not addressed.

Key challenges include the need for substantial grid upgrades, as current infrastructure cannot fully support the existing and planned influx of renewable capacity. Delays in expanding transmission lines and interconnections could stall solar projects and future wind developments. Policy uncertainty is another risk, with recent windfall taxes and sudden regulatory changes (e.g. net metering rules) affecting investor confidence. Ensuring predictable auction schedules and stable rules will be crucial going forward.

Hungary also faces an issue of technological concentration: over 88% of renewable electricity in 2023 came from solar, creating overreliance on a single, intermittent source. Wind remains restricted, biomass use is declining, and geothermal power is virtually undeveloped. Public acceptance of large-scale infrastructure may also become a barrier, especially for wind and new transmission lines. Additionally, ongoing political tensions with the EU have delayed funding disbursement, which could impact renewable investment flows.

On the opportunity side, Hungary has demonstrated its capacity to scale up solar quickly, exceeding 7 GW of installed capacity and reaching record solar generation levels in 2023. The country is well-positioned to surpass 10 GW by 2030, and potentially earlier. This solar momentum is driving growth in energy storage and smart grid technologies, supported by Hungary’s rapidly expanding battery manufacturing industry (CATL, SK Innovation, Samsung), which creates synergy between industrial development and clean energy demand.

Hungary’s geographical location also offers strategic value. Its participation in international infrastructure projects like the Green Energy Corridor could position it as a regional transit and trading hub for clean electricity. Enhanced cross-border interconnections with Slovakia, Romania, and Serbia will further enable regional energy sharing, improving resilience and cost-efficiency.

Further policy innovation could unlock additional potential. EU electricity market reforms encourage long-term power contracts and faster permitting, which Hungary could capitalize on by expanding corporate PPAs and implementing pre-zoned “go-to” areas for renewables. The country’s interest in new technologies, such as small modular reactors (SMRs) and hydrogen, also points to future growth paths, supported by Hungary’s engineering expertise and central European location.

Finally, rising carbon prices in the EU ETS and access to substantial EU funding (e.g. Modernization Fund, cohesion funds) create favorable financial conditions for clean energy investments. These funds could help address current barriers, such as grid limitations and regional transitions away from coal.

In sum, Hungary has the ingredients to become a regional leader in clean energy deployment, but success depends on timely grid investments, diversified technology support, regulatory stability, and strategic use of EU funding.

In light of the above, Hungary’s renewable future is bright but requires navigating the current hurdles. The challenges of grid capacity, policy consistency, and technology diversity need focused attention – these are solvable with the right investments and political will (e.g. the ongoing grid enhancements, and hopefully a revisit of the wind policy). The opportunities – huge solar growth, potential wind introduction, advanced nuclear and hydrogen plans, EU integration – give Hungary a path to not only meet but potentially exceed its climate targets, and to do so in a way that spurs economic growth (through green industries and innovation). If Hungary can strike the balance of reinforcing its infrastructure while maintaining investor-friendly policies, it is well positioned to transform its energy sector from one historically reliant on imported fossil fuels to one that is a regional exemplar of clean, secure, and modern energy.

The period leading up to and beyond 2025 will be pivotal for Hungary’s energy transition. The country’s ability to navigate the challenges of its accelerating renewable expansion will ultimately define how successfully it can unlock its full potential in the sector.