Oppenheim Partner David Hanis, Ban, S. Szabo, Rausch & Partners Partner Gergely Szabo, and Schoenherr Partner Kinga Hetenyi discuss Hungary’s battery push, which now spans grid-scale storage, cells, cathodes, separators, recycling, and soon EV assembly, even as permitting, labor, and contracting models are stress-tested in real time.
A Dynamic Ecosystem
Hungary’s grid storage base is small but scaling fast, while manufacturing anchors have catalyzed a dense supply chain. “Altogether, approximately 600 megawatts of nominal performance BESS capacity obtained a license for establishment and operation,” Hanis begins. “At the beginning of 2025, approximately 55 megawatts of capacity was operational. Now, the Energy Ministry’s expectation is that until the end of 2026, the operating BESS capacity will reach 500 megawatts.”
“The main BESS market actors in Hungary are MVM Group, Greenvolt Group, Alteo Group, MOL Group, and MET Group,” Hanis reports. “The Hungarian TSO also developed its first BESS, being fully integrated into the public grid with a nominal performance capacity of 20 megawatts. BESS projects are typically located around Budapest, in the northeastern part of Hungary, and within the Danube-Tisza Interfluve.”
Hetenyi stresses that “Hungary’s battery industry has evolved into one of the most dynamic manufacturing ecosystems in Europe. What began with a few flagship investments has now become a network of large-scale and mid-tier projects spanning multiple regions.” According to her, the anchor developments are “CATL’s 100 gigawatt-hour gigafactory in Debrecen, Samsung SDI’s long-standing operations in God, SK On’s multi-phase plants in Komarom and Ivancsa, and the more recent entry of BYD’s integrated vehicle and battery complex in Szeged.” As Hetenyi puts it, these “core sites have attracted a dense web of tier-one suppliers,” including Volta, focusing on copper foil in Kornye; EcoPro BM, focusing on cathode materials in Debrecen; W-Scope Hungary, focusing on separator films in Nyiregyhaza; SEM Corporation, focusing on cathode foils; and “EVE Power, which is building a major cell manufacturing facility adjacent to CATL in Debrecen. Together, these create a cluster of industrial capacity that positions Hungary as a critical link in Europe’s EV supply chain.”
Permits and Zoning Under the Microscope
Rising community scrutiny and legal challenges are pushing developers and authorities to clarify environmental triggers and tighten land-use choices. “Hungary’s environmental and zoning regimes are undergoing a tough test due to the battery-related investments,” Szabo reports, with Hanis adding that “development of BESS facilities, on its own, as a business activity in general, is not subject to specific environmental permitting requirements.” He further explains that “the assembly of finished, sealed battery cells into modules, or the assembly of modules into battery packs, is subject to an environmental permit. Because of the concise wording of the legal provision, the question arises whether the installation of batteries on the development site might fall under the category of ‘assembly of modules into battery packs,’ for example.”
Continuing, Hanis says that, as to the zoning regimes, “the Hungarian construction law prohibits the designation of new areas where BESS projects are usually developed – ‘areas to be built-in’ or ‘special areas not intended to be built-in’ – from green, agricultural, and forest areas, except if an equivalent-size green, agricultural, or forest area is provided in exchange on the territory of the given municipality.” According to him, this obligation can result in potential difficulties in future developments.
“Public protests and litigation have pushed regulators to tighten permitting, now mandating full environmental impact assessments, stricter air/noise/water limits, and continuous monitoring, especially in multi-plant zones such as Debrecen. The CATL gigafactory became an early precedent: the Kuria annulled its hazard permit in 2023 after local challenges, while subsequent 2025 hearings on the integrated permit were paused for redesign,” Szabo reports. Moreover, he shares that “Semcorp’s separator plant faced a partial suspension in the summer of 2025 for exceeding emission limits during test runs and subsequently further fines for deviations from its environmental permit.”
Hetenyi believes that “the most visible example remains Samsung’s God site, where environmental permitting and land-use disputes have reached administrative and judicial review. Concerns over water consumption, emissions, and waste management have prompted authorities to tighten environmental-impact requirements and strengthen transparency obligations.” As she puts it, while Hungary continues to prioritize strategic investment fast-tracking, “developers are learning that community engagement and proactive compliance are no longer optional but integral to project delivery and cannot be started too early.”
Incentives, State Aid, and Labor
“The support scheme designed specifically for BESS projects, introduced in 2024, included a non-refundable investment aid and a revenue compensation aid, both granted via tender,” Hanis reports. The source of the non-refundable investment aid available for the construction phase was the EU’s Recovery and Resilience Facility to the tune of EUR 155 million. “The revenue compensation aid is a 10-year-long, contracts-for-difference-type annual operation support where the BESS operator receives revenue compensation, which shall be determined on the basis of the difference between the net revenue requested by the subsidized electricity storage facility in the tender procedure and determined by the Hungarian energy office and the reference net revenue.” As Hanis explains it, “applying for such support is no longer possible. The EU Commission approved the support scheme since it found the scheme necessary, appropriate, and proportionate for accelerating the green transition. Further factors behind the Commission’s approval, amongst others, were that the scheme is technology neutral, awarded via tenders, and the investment aid is capped at 45% of eligible investment costs.”
Additionally, Hetenyi indicates that investment incentives continue to underpin the battery build-out. “Hungary offers a blend of direct grants, tax allowances, and infrastructure co-financing to attract high-value manufacturing. The Hungarian Investment Promotion Agency plays a pivotal role in facilitating such incentives.” According to her, HIPA provides one-stop-shop management services, offering tailor-made information packages and incentive solutions for players in the battery sector. “Its support covers location selection, end-to-end management of state subsidy processes, and mediation between investors, government bodies, municipalities, and potential suppliers.”
Moreover, scaling has outpaced local talent pools in several hubs, pushing employers toward multi-track staffing and training solutions. “Hungary’s battery projects face acute skilled-labor shortages around Debrecen, Ivancsa, Nyiregyhaza, and God,” Szabo explains. “Therefore, employers rely on third-country ‘guest workers’ from Asia and Central Asia, using licensed agencies and fixed-term permits. Companies contract around shortages through EPC-based staffing and manpower outsourcing.” According to him, “at the same time, developers are investing in automation, dual-education partnerships, and retention schemes to build a sustainable domestic workforce, balancing short-term import reliance with long-term skill development and compliance risk management.”
Indeed, Hetenyi believes that labor remains the single most persistent bottleneck. “Demand for skilled engineers, chemists, and production technicians far outpaces supply, particularly outside Budapest. Employers are responding through multi-tiered solutions: establishing in-house training centers, partnering with vocational schools, and importing foreign workers, typically from East Asian countries. Contracting strategies increasingly include retention bonuses, tailored collective agreements, and subcontracting of maintenance and logistics functions. These approaches help sustain project timelines but have also introduced new social integration and political challenges that investors must navigate carefully,” Hetenyi explains.
At the same time, Hetenyi stresses that Hungary’s Labor Code is “widely regarded as employer-friendly, offering significant flexibility in scheduling, fixed-term employment, and overtime management. This regulatory environment allows manufacturers to adjust operations quickly to production cycles and global supply chain needs. The combination of competitive labor costs, adaptable employment rules, and legal certainty is frequently cited as a key reason foreign manufacturers choose Hungary over alternative Central European locations.”
Contracts Built for Headwinds
Execution risk is being priced and allocated with greater precision, from EPC performance to community-related stoppages, under stricter lender scrutiny. “EPC contractors, in general and amongst others, assume liability for the compliance of the work performed with the technical and legal requirements, the successful putting into operation of the BESS facility, and the performance of the BESS facility up to the agreed level,” Hanis stresses. “Generally, EPC contractors’ role also covers the procurement of parts and services required for the construction/installation works.”
Additionally, Hanis shares that “BESS operators shall be liable for any non-compliant use of the public grid under the system usage agreements, any system imbalance caused under the balance circle membership agreements, etc.” He stresses that if an “aggregator is involved in the services provided by BESS operators, further contracting and specific allocation of the parties’ obligations would also be required.”
“Hungary’s giga-projects face complex execution risks, and contractual structures are evolving accordingly,” Szabo adds. “EPC contracts contain strict damages, while contractors try to negotiate carve-outs for permitting processes, grid delays, and disruptions that are likely caused by local protests. Step-in rights for lenders and force majeure for regulatory or community-related stoppages are also crucial.”
Furthermore, Szabo shares that for supply and offtake agreements, “projects linked to OEMs, like the BMW-EVE Power deal, gain increased bankability through mechanisms anchoring revenue, e.g., TOP or fixed-volume. Energy contracts are also essential where developers try to secure corporate PPAs and several energy-related investments to hedge costs.” On the other hand, according to Szabo, lenders scrutinize more the environmental covenants, community-license documentation, and redundancy in utilities. “Execution risk is therefore managed less through warranties alone and more through contractual resilience.”
Finally, Hetenyi shares that EPC contracts are becoming increasingly granular, with “well-defined milestones, liquidated damages, and force majeure clauses reflecting lenders’ expectations for precision and accountability. Battery investors generally prefer to contract with their own established global suppliers and contractors, ensuring technical consistency and risk control across jurisdictions. This, however, raises the bar for local Hungarian suppliers and construction firms, who face demanding performance, warranty, and liability standards. Investors’ risk appetite remains limited, and the contractual frameworks increasingly shift operational and schedule risk toward suppliers.”
In terms of energy supply, Hetenyi posits that developers are showing a growing appetite for on-site generation and electricity storage capacities. “Such solutions significantly reduce the exposure of these energy-intensive plants to grid-price volatility and supply interruptions, enhancing both cost predictability and project bankability,” she concludes.
This article was originally published in Issue 12.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
