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The European Commission has approved a €1.1 billion Hungarian scheme to support electricity storage facilities to foster the transition to a net-zero economy. The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 to support measures in sectors which are key to accelerate the green transition and reduce fuel dependencies in the context of Russia’s war against Ukraine. The new Framework amends and prolongs in part the Temporary Crisis Framework, adopted on 23 March 2022 to enable Member States to support the economy in the context of the current geopolitical crisis, already amended on 20 July 2022 and on 28 October 2022.
The Hungarian measure
Hungary notified to the Commission, under the Temporary Crisis and Transition Framework, a Hungarian scheme to support the installation of at least 800 MW/1600 MWh of new electricity storage facilities. The scheme aims at enhancing the flexibility of the Hungarian electricity system by supporting storage investments to facilitate smooth integration of high capacity of variable renewable energy sources in the Hungarian electricity system.
The measure will be open to companies active in the energy sector in Hungary, with the exception of financial institutions. It will also be open to cross-border participation (i.e. storage facilities in neighbouring Member States), within the limits of available transmission capacity and taking into account the share of renewables in the energy mix of neighbouring Member States. All storage technologies will be eligible.
The storage projects to be supported under the scheme 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.
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The aid will be granted in two cumulative forms: (i) an investment grant, which will be paid during the construction phase of the supported projects; and (ii) support in the form of a two-way contract for difference (“CfD”) to be paid annually during the 10 first years of the operations phase of the supported projects.
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.
The Commission found that the Hungarian scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework. In particular, (i) the scheme will be open to all storage technologies; (ii) the aid will be granted through a competitive bidding process; (iii) the aid will be granted before 31 December 2025; and (iv) the storage facilities will have to be completed and put in operation within 36 months from the signing of the contract.
The Commission concluded that the Hungarian scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) Treaty on the Functioning of the European Union and the conditions set out in the Temporary Crisis and Transition Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.