The Hungarian government has earmarked HUF 62 billion ($169 million) for grid-scale energy storage projects in a bid to facilitate further deployment of renewable energy sources. Contact online >>
The Hungarian government has earmarked HUF 62 billion ($169 million) for grid-scale energy storage projects in a bid to facilitate further deployment of renewable energy sources.
Wärtsilä''s first EPC energy storage project in Europe in Budapest, Hungary
Image: Wärtsilä
The procurement exercise is part of a broader subsidy program to the tune of HUF 200 billion launched in a bid to support households and businesses to produce and store green energy.
Last Thursday, the government said that it has selected the winning bidders and allocated HUF 62 billion for their energy storage projects.
The selected companies and organizations must complete the installation of projects by the end of April 2026.
"With the successful implementation of the program, domestic energy storage capacity can increase by about 20 times within two years," the ministry said in the announcement.
The subsidies are secured via the National Recovery and Resilience Plan and the state budget. They consist of non-refundable investment support and income compensation for the construction of energy storage facilities and their operation for at least ten years.
The operational support will be provided through two-way contracts for difference. The winners were selected on the basis of the lowest cost principle and the lowest income compensation claim, the ministry said.
With funds obtained through a previous program, transmission system operator MAVIR is already building the country''s largest energy storage system – a 20 MW project in Szolnok, central Hungary, the ministry said. It added that several projects with even bigger capacity will be installed under the tender concluded a few days ago.
Hungary''s renewable energy fleet is heavily dominated by solar, accounting for more than 85%, and followed by wind, which accounts for less than 6% of the total installed capacity.
The country had a record year for new solar in 2023, adding 1.6 GW. Preliminary figures from MAVIR showed the total solar capacity equated to 3.3 GW of industrial solar power plants and 2.3 GW of household-sized installations.
In 2024, the Hungarian government continues to support the growth of residential PV through its newly launched Napenergia Plusz Program, a grant scheme for the installation of modern solar panel and storage systems with a total budget of HUF 75.8 billion. The scheme is expected to support over 15,000 households.
Hungary has set a target of 12 GW of solar capacity by the start of the next decade. However, grid capacity shortfalls have been dire, hampering primarily the rollout of large-scale solar.
The country''s revised National Energy and Climate Plan envisages the construction of a total of 1 GW of storage capacity by 2030. The Ministry of Energy encourages the expansion of the energy storage market with legislative and financial instruments, namely various fee and tax discounts.
The battery storage rollout is expected to be complemented by some pumped hydro capacity. The geological research drilling for a feasibility study of the first such project in the country is already underway.
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How we produce and consume electricity is changing fundamentally. In Europe, the capacity of renewable energy sources is growing very rapidly, while traditional power plants are slowly being decommissioned. That''s creating a unique new opportunity for investors amid the emerging demand for battery storage, which provides balance to electricity markets.
"With energy storage, there''s a new and interesting asset class emerging, and the business model is fundamentally different to that of wind and solar," says Ingmar Grebien, who leads GS Pearl Street and is a managing director in Goldman Sachs Global Banking & Markets. GS Pearl Street is a platform for trading and financing solutions for clean energy technology. Overall, total energy storage in Europe is expected to increase to about 375 gigawatts by 2050, from 15 gigawatts last year, according to BloombergNEF.
We spoke with Grebien about electricity market trends, energy storage technologies, as well as the investment and financing opportunities emerging from these technologies.
What sort of challenges does the rise of renewables pose for European electricity markets?
By 2050, you''ll have about 72% of electricity produced by wind and solar in Europe, which is a massive increase compared to the 30% we have currently, according to BloombergNEF data. This is really a profound structural change in the electricity market. And it''s here to stay. Now, that''s great from a decarbonization perspective. But it also results in issues with regards to the timing and certainty of supply, because renewables are intermittent sources of power. When there''s no wind or no sun, there''s also no power production. Imagine a world where the light switch only works if the sun shines or the wind blows.
As renewables penetration rises, there are increasing imbalances between consumption and production. That can result in market volatility and in some instances extreme price scenarios. For example, some European markets such as the Netherlands or Belgium have already started to see a significant increase in negative hourly prices directly correlated with the rising share of solar and wind power.
Energy storage is the key to shifting electricity and resolving those structural issues in a low-carbon way.
What opportunities does energy storage offer for investors?
With energy storage, there''s a new and interesting asset class emerging, and the business model is fundamentally different to that of wind and solar.
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