Hungarian Energy Storage Scheme Worth €1.1 Billion Receives European Commission Approval

The European Commission has approved a Hungarian scheme worth €1.1 billion, designed to bolster the country’s shift towards a carbon-neutral economy by supporting the establishment of energy storage facilities with a capacity of at least 800 MW/1600 MWh. The scheme aims at enhancing the flexibility of the Hungarian electricity system by supporting storage investments to facilitate the smooth integration of high-capacity of variable renewable energy sources in the Hungarian electricity system.

This scheme has been approved under the State Aid Temporary Crisis and Transition Framework, implemented by the Commission to assist in sectors crucial for expediting the green transition and reducing reliance on fossil fuels. It comes against the backdrop of current geopolitical stress, especially in light of the ongoing conflict between Russia and Ukraine. The objective of this state aid program is to enhance the flexibility of Hungary’s electricity grid by promoting investments in energy storage and facilitating the seamless integration of a large volume of variable renewable energy sources into the national power system.

The assistance program will be accessible to companies operating in Hungary’s energy sector, excluding financial institutions. Additionally, it will be accessible for cross-border collaboration that includes storage facilities in neighbouring EU member states, subject to available transmission capacity and considering the proportion of renewable energy sources in the energy mix of neighbouring nations.

The scheme is also technology-agnostic, which means all available storage technologies will be eligible for support. The storage projects will be selected through a competitive bidding process. The award of the grant contracts to the selected projects is planned to take place before the end of 2024.

The selected storage projects will have to be completed and put in operation within 36 months from the signing of the contract. The aid will be granted before 31 December 2025, to make the scheme compliant with European Commission’s Temporary Crisis and Transition Framework.

The investment grant will be partly financed by the Recovery and Resilience Facility, and partly by the Modernisation Fund, while the 10-year annual support will be financed through a levy.

In Line with Green Deal Industrial Plan

The new Temporary Crisis and Transition Framework was adopted by European Commission on 9 March 2023, to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan. Together with the General Block Exemption Regulation (adopted on the same day), the Temporary Crisis and Transition Framework are expected to speed up investment and financing for clean tech production in Europe. It will also assist Member States in delivering on specific projects under National Recovery and Resilience Plans which fall within their scope.