Commission endorses Hungary’s €4.6 billion REPowerEU chapter, to complement its recovery and resilience plan

Today, the Commission has positively assessed Hungary’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €10.4 billion (€6.5 billion in grants and €3.9 billion in loans) and covers 67 reforms and 47 investments.
The 27 “super milestones” to ensure the protection of the Union’s financial interests, and to strengthen judicial independence, remain unchanged in Hungary’s revised plan. This means that no disbursement following a payment request under the Recovery and Resilience Facility (RRF) is possible until Hungary has satisfactorily implemented these “super milestones”.

Hungary’s REPowerEU chapter, worth €4.6 billion, includes 13 new reforms and 16 investments, including two scaled-up investments drawing on existing measures. The implementation of these measures will help deliver on the REPowerEU Plan’s objective of making Europe independent of Russian fossil fuels well before 2030. These measures aim to strengthen and modernise the electricity sector, accelerate the deployment and use of renewable energy, improve energy efficiency, promote sustainable transport, upskill and reskill the workforce for the green transition, decarbonise industry and invest in green technologies and value chains linked to the green transition.

In addition, Hungary has proposed changes to 19 measures contained in its original recovery and resilience plan. New investments were added in the fields of circular economy, sustainable transport and energy, which will be financed through the removal and decreased scope of other measures in these areas, as well as in water management. An investment in the original plan was scaled up to create additional places in crèches.

Hungary’s proposed changes to the original plan are based on the need to factor in:

• objective circumstances hindering the fulfilment of certain measures as originally planned, including the high inflation experienced in 2023 and supply chain disruptions caused by Russia’s war of aggression against Ukraine;
• the request to take up €3.9 billion in available RRF loans and incorporate €0.7 billion in additional grants under REPowerEU.

Hungary’s RRF and REPowerEU grants allocation (€5.8 billion and €0.7 billion respectively), and its request to take up RRF loans (€3.9 billion), make the modified plan worth €10.4 billion.

An additional boost to Hungary’s green transition   

The modified plan has a very strong focus on the green transition, allocating 67.1% of available funds to measures that support climate objectives (up from 48.1% in the original plan).

A wide range of measures in the REPowerEU chapter focuses on strengthening the electricity sector and on promoting the uptake of renewables and energy efficiency to make the Hungarian energy system fit for the future. The reforms and investments mutually reinforce each other and will help build a flexible electricity market with a high share of renewables. This will enable Hungary to ultimately reduce its reliance on fossil fuels.

The REPowerEU chapter includes reforms related to the introduction of dynamic pricing in the retail electricity market, improving regulatory reserve markets, strengthening the role of energy communities and aggregators, incentivising the uptake of electricity storage, increasing the number of consumers to use smart meters and harmonising the ways the connection application rules are applied by the distribution system operators. Several measures aim to boost the integration, production and more effective use of renewables. These range from grid development to allow for the integration of further energy from renewable sources to supporting the deployment and use of renewables, such as solar energy, renewable hydrogen, geothermal and sustainable bio-methane. Hungary plans to increase the ambition for grid connection authorisations issued for power plants based on renewable energy sources and raises the corresponding target envisaged in the initial plan to 12 GW by 2026.

In addition, significant investments, some of which will be implemented through financial instruments, will also boost sustainable transport and energy efficiency of households, companies and the public sector. The REPowerEU chapter also includes measures aiming at industry decarbonisation, upskilling and reskilling of the workforce and increasing production capacities and services for the green transition.

Reinforcing Hungary’s digital preparedness and social resilience 

The Hungarian revised plan’s digital ambition remains high (29.1% of the plan’s total allocation). The REPowerEU chapter also includes measures that contribute to the digital transition. These cover support for digital developments to energy system operators, for additional smart meters, for digital solutions at energy companies to improve the security of electricity supply and the operational efficiency of the electricity system, and for the development of digital learning materials for green skills.

The modified plan’s social dimension remains important. In addition to the transformative reforms and investments in the original plan, several additional measures aim at strengthening social resilience. For example, the REPowerEU chapter includes support for vulnerable households for energy renovation, and training the current and future workforce to acquire green skills. Moreover, the modified plan further increases the availability of early childhood education services by creating additional new crèche places.

Next steps

The Council will now have, as a rule, four weeks to endorse the Commission’s assessment.

The Council’s endorsement will allow Hungary to receive €0.9 billion in pre-financing of the REPowerEU funds.

The Commission will authorise regular disbursements based on the satisfactory completion of the reforms to ensure the protection of the Union’s financial interests, and to strengthen judicial independence, as translated into 27 “super milestones”.