With the world increasingly turning its attention to Hungary’s green energy advancements, the country is positioning itself as a critical player in the future of green investments, driving long-term stability and growth.
Hungary’s green energy potential offers not only a response to the energy crisis but also a path to attract future green investments. The country is looking to emerge as a leader in renewable energy, particularly in the solar, geothermal, and biomass sectors. This focus on sustainable energy aligns with Hungary’s goal to reach a 35.5% share of renewable energy by 2030, contributing to a 60% reduction in greenhouse gas emissions compared to 1990 levels, according to analysis by the Green Policy Center.
As Hungary modernizes its grid and expands its renewable energy capabilities, the country becomes an attractive potential destination for international green investors. Investments in solar and wind energy, as well as innovative technologies like geothermal, are crucial to ensuring that the country remains competitive in the European energy market.
Moreover, upcoming EU initiatives and international financial programs aimed at climate mitigation will likely support Hungary’s future developments, according to the Ecoscope blog, which publishes research by OECD economists on various issues beyond the traditional scope of the organization’s reports.
Hungary is well-positioned for several renewable energy sources. Solar installations have seen rapid growth, especially in areas where households are increasingly generating their own electricity. Investors are taking notice of the country’s solar potential.
The total production of solar systems above 50 kW reached a record 3,242 MW on one day in August, the Ministry of Energy Affairs said that month. It also noted that, together with household-sized and private production facilities, the installed solar capacity had already exceeded the 2030 target of 6,000 MW by February of this year.
Geothermal energy is another up-and-coming resource for Hungary. “The way to further increase the renewable energy target compared to the revised draft NECP [National Energy and Climate Policy] could be mainly [through] wind, geothermal and biomethane,” the Green Policy Center said earlier this year. Audi, for example, has utilized geothermal energy at their plant in Győr (120 km west of Budapest by road) since the mid-2010s, showcasing the economic viability and sustainability of the energy source.
However, according to Ecoscope, the regulatory environment for geothermal and wind projects is still restrictive, despite recent improvements in the latter case in particular.
“Hungary could make better use of its potential for wind and geothermal energy, but that will require removing restrictive rules on windmill installation and easing licensing procedures for geothermal energy projects,” Ecoscope says.
Across the past decade, Hungary has developed a history of government-backed programs that have helped businesses and households transition to renewable energy. In the past, households were incentivized to install solar panels, and the government would purchase the excess power generated by these systems. This initiative spurred investments in the solar sector.
However, Hungary has somewhat become a victim of its own success. Electricity grid capacity has become a problem. As Ecoscope notes, “The development of intermittent energy sources like solar and wind energy will require massive investments in the electricity grid.”
Anar Karimov, an international real estate developer and founder of the Green City residential complex in Győr, shares his perspective.
“We’ve seen a significant drop in demand for large homes as energy costs have surged. In response, our company has created autonomous power stations for clients, allowing them to generate their own electricity independently. This has become a key selling point for us, as homeowners increasingly prioritize energy efficiency and autonomy.”
Csaba Bartal, a project manager at City Construction Global Kft., which is involved in international real estate developments using green energy, comments that the firm he works for is a good indicator of what is a growing trend.
“The adoption of green energy, especially geothermal, in real estate projects is becoming more common in Hungary. We’ve integrated this into several developments, and it’s clear that the financial benefits for property owners are substantial. Energy autonomy will be a game-changer for both residential and commercial real estate projects across the country.”
MMNZ, an energy consulting group, argues that fixing the grid connections and reinstating government programs could significantly reduce Hungary’s reliance on imported energy and create a more resilient energy infrastructure while also attracting further green investments into the economy.
This article was first published in the Budapest Business Journal print issue of October 4, 2024.
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