EU State Aid: Commission Approves €1.1 Billion Hungarian Scheme to Support Electricity Storage Facilities, Accelerating Transition to Net-Zero Economy

The European Commission has given its approval to a €1.1 billion Hungarian scheme aimed at supporting electricity storage facilities and fostering the transition to a net-zero economy. This scheme, implemented under the State aid Temporary Crisis and Transition Framework, seeks to accelerate the green transition and reduce fuel dependencies in the context of Russia’s war against Ukraine. The approval of this scheme comes as part of the Commission’s ongoing efforts to support measures in sectors crucial for achieving a sustainable future.

The Hungarian scheme, notified to the Commission under the Temporary Crisis and Transition Framework, aims to facilitate the installation of at least 800 MW/1600 MWh of new electricity storage facilities. By enhancing the flexibility of the Hungarian electricity system, these storage investments will enable the seamless integration of high capacity from variable renewable energy sources.

Under the scheme, companies operating in the energy sector in Hungary, excluding financial institutions, will have the opportunity to participate. Cross-border collaboration, involving storage facilities in neighboring Member States, will also be permitted, taking into account available transmission capacity and the renewable energy mix in those countries. All storage technologies will be eligible for support.

The selection of storage projects to receive support will be conducted through a competitive bidding process. Grant contracts for the selected projects are expected to be awarded before the end of 2024.

The aid provided under the scheme will be granted in two forms: an investment grant disbursed during the construction phase of the supported projects, and a two-way contract for difference (CfD) offering support during the initial ten years of the operational phase.

Financing for the investment grant will come from the Recovery and Resilience Facility and the Modernisation Fund, while the 10-year annual support will be financed through a levy.

The Commission has determined that the Hungarian scheme complies with the conditions outlined in the Temporary Crisis and Transition Framework. Notably, the scheme is open to all storage technologies, aid is granted through a competitive bidding process, and the storage facilities must be completed and operational within 36 months of contract signing.

In approving the scheme, the Commission concluded that it is necessary, appropriate, and proportionate in accelerating the green transition and facilitating the development of key economic activities aligned with the REPower EU Plan and the Green Deal Industrial Plan. This decision aligns with Article 107(3)(c) of the Treaty on the Functioning of the European Union and the conditions set out in the Temporary Crisis and Transition Framework.

The European Commission’s approval of the Hungarian scheme falls within its broader efforts to support Member States in their transition to a net-zero economy. By providing regulatory guidance and financial assistance, the Commission aims to ensure a sustainable and environmentally friendly future for Europe.

https://ec.europa.eu/commission/presscorner/detail/en/IP_23_2583


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