Hungary’s new PM faces tough choices amid energy policy rethink

Péter Magyar and his Tisza party won a landslide victory in elections in Hungary on 12th April, putting an end to Viktor Orbán’s 16 years in power. A close ally of Vladimir Putin, Orbán’s energy policy was effectively to secure almost all gas and oil from Russia while subsidising household energy bills in order to keep prices low.

Magyar will want to reduce this exposure to Russia, although as a landlocked country Hungary will probably ask the EU for some exemptions to the Russian gas ban which takes full effect in Autumn 2027. Importing more LNG via the Krk terminal in Croatia is one possibility, but likely a more expensive option. Nevertheless, Hungary is well interconnected with neighbouring countries and also boasts over 6 bcm of gas storage capacity.

Hungary’s new economy and energy minister, former Shell executive István Kapitány, will now carefully plot a plan to diversify supplies.

“The new Hungarian government is expected to adopt a more distanced, but ultimately pragmatic approach to Russian energy imports – not one driven by ideological anti-Russian sentiment, but by hard economic and political calculus,” Gergely Horváth, Senior Associate and Head of Regulatory and Energy Practice in Hungary at law firm Schoenherr, told Gas Outlook.

Energy security and prices were a hot topic during the election campaign and subject to a fair amount of fear-mongering. The Orbán government warned voters that Péter Magyar was a ‘Brussels’ puppet’ who would immediately cut off Russian energy supplies and send household utility bills soaring.

“In response, Magyar’s Tisza Party repeatedly affirmed its commitment to maintaining low regulated energy and fuel prices for households, and never made statements suggesting an abrupt break with Moscow,” Horváth said.

Horváth added that on the election night, one of the most frequently heard chants on the streets of Budapest was “Ruszkik haza” – which means “Russians, go home.”

“So while the new government has no mandate for a reckless energy divorce from Russia, there is a clear, at least symbolic, expectation of reorientation away from Moscow.”

Gradual phase-out

The incoming government’s programme sets out a headline commitment to end Russian energy dependence by 2035 and to diversify the country’s energy supply.

Importantly, Horváth said, it speaks of diversification, not a full import ban, and only over the medium term. Future energy policy will also hinge on the much-delayed, 2.4 GW capacity Paks II nuclear power plant, which is being developed by Russia’s Rosatom, but whose future now looks increasingly uncertain.

“The programme does not specify how this target breaks down across natural gas, crude oil, and nuclear fuel supplies. Nor does it clarify the future of the Paks II nuclear project, which is being built with Russian involvement,” Horváth said.

Jozsef Feiler, Director for South East Europe and Hungary at the European Climate Foundation, told Gas Outlook that EU alignment will “stay as the primary compass” for the new government and that the prospects for further collaboration with Rosatom look unlikely.

Hungary’s “relationship with Russia is anticipated to go colder as we anticipate the termination of the Rosatom deal regarding the new nuclear power plant,” he said.

Unlocking frozen EU funds

One of the absolute top priorities for the new government is unlocking frozen EU funds which were blocked by Brussels due to rule-of-law disputes with the Orbán regime.

For certain funds – notably the Recovery and Resilience Facility funds – the new government has until the end of August to strike a deal and gain access to around 10 billion euros.

“The new government desperately needs the EU funds to jumpstart a stagnating economy,” Horváth said. “But it also faces a clear voter expectation to maintain regulated household gas and electricity prices – a system that, in its current form, is vulnerable to challenge under EU internal market rules, and which would be more difficult to sustain if Russian oil and gas deliveries were significantly curtailed.”

Brussels, for its part, will want to make tangible progress on phasing out Russian energy – something the Orbán government partly obstructed.

“But it will also look to reward the new Hungarian government in exchange of the promised anti-corruption and rule of law related measures by releasing frozen funds, signalling to all Member States that compliance with EU law carries real benefits,” Horváth said.

Shifting from solar-only

Hungary has installed nearly 9 GW of solar PV over the past decade, but with limited growth in wind or other complementary technologies. Solar accounted for over 27% of electricity generation in 2025, with nuclear power accounting for 40% and gas just over 20%, according to statistics from climate think tank Ember.

Battery storage and grid upgrades will be needed to accelerate the energy transition, Feiler said.

“Gas price volatility and the high exposure of the state budget to residential gas utility subsidies is a very strong driver for moving away from gas – and that is the direction of electrification.”

The electrification transition, he said, needs demand side measures as well as diversifying away from solar-only approach with a larger role for wind power. “Also it is a rational business case to deploy large scale battery storage as well as distribution grid related measures to enhance residential solar intake,” said Feiler.

Meanwhile, Horváth added that the “one-sided expansion” of renewables has led to recurring episodes of sharp price volatility on the electricity market, making battery storage one of the most attractive emerging segments. 

He noted that Hungary currently has around 500 MW of operational Battery Energy Storage System (BESS), with an additional ~2 GW expected in the upcoming years.

“With solar capacity set to exceed 12 GW by 2030, the strongest opportunities now lie in co-located solar-plus-storage, industrial self-consumption, and hybrid projects – particularly as long-standing wind restrictions are lifted,” Horváth said.

As for gas-fired power, Horváth noted that state-owned utility MVM is developing two new CCGT plants – at Mátra (500–650 MW) and Tisza (2 x 500 MW) – to replace ageing lignite generation and provide the flexible backup capacity that the system increasingly needs.

(Writing by Andreas Walstad; editing by Sophie Davies)