Certified Energy Savings in Hungary - You may need to redesign

Those obliged to achieve set energy savings in Hungary may be caught by surprise by the significant modifications to Hungary's Act LVII of 2015 on Energy Efficiency (“Energy Efficiency Act”) as of 12 June. Act XXV of 2025 amending the Energy Efficiency Act introduces several challenging changes for energy market participants and obligated parties in the energy efficiency obligation schemes. These amendments primarily affect the calculation of the certified energy savings (“CES”) and counting the CES towards the amount of required energy savings and create new obligations and limitations for participants. 

On the upside, the CES market, where previously only the obligated parties could trade, was opened up to all undertakings (except CES auditors). This may enhance the liquidity of both the bilateral CES market and the regular auctions of CESs through CEEGEX, the CEE Gas Exchange based in Hungary.

1. Key Changes to Certified Energy Savings

The amendments introduce substantial limitations on how CES can be certified, calculated and counted towards the mandatory CES quantity of the obliged parties:

1. Elimination of Multipliers: From 2025 onwards, the formerly used multipliers (i.e. multipliers based on longer lifespan and building renovation) can no longer be applied to energy savings, reducing the potential value of energy efficiency improvement measures. 
2. Minimum Duration Requirement: Only energy savings with a minimum lifespan of six years can now be certified. While previously registered short-term measures can still be counted towards obligations up to 0.5% of the base requirement, new short-term savings cannot be registered except for proportionally adjusted ones until 31 December 2025.
3. Annual Implementation Requirements: At least 30% of the annual energy saving obligation (up to 0.5% of the base) must be fulfilled through measures implemented in the current year with a minimum six-year lifespan. Failure to meet this ratio triggers penalty payments.
4. Residential Building Requirements: Above the 0.5% threshold, only measures from an approved list can be counted, with a specified percentage required to come from residential building measures. Non-compliant measures require recalculation and re-certification, subject to strict time limits.
5. Construction Product Requirements: For residential building measures, certified construction products with simplified qualification and minimum environmental scores must be used.
6. Expanded Exclusion List: Certain measures like water conservation awareness campaigns are now excluded from eligible measures, though exceptions exist for initiatives started before specific dates in 2025 if registered by the stipulated deadlines.

2. Other Adverse Changes for Market Participants

The legislation introduces several additional burdens for obligated parties:

1. New Transaction Fees: Buyers in bilateral agreements now face transaction fee obligations.
2. Increased Obligation Levels: Most obligated parties will see their energy saving requirements increase, except for organisations selling fuel to end users.
3. Restricted Certification Rights: The pool of organisations authorised to certify energy savings has been narrowed, limited to those who have conducted mandatory energy audits or certified at least 200,000 GJ of savings.
4. Reversed Burden of Proof: In cases where documentation doesn't conclusively prove proper energy savings calculations, energy auditors are presumed at fault unless they can prove otherwise.
5. Mandatory Compensation: For residential energy efficiency measures, equivalent compensation must be provided to end users for transferred energy savings.

Corresponding amendments and details are expected to be introduced through the amendment of Government Decree 122/2015 on the implementation of the Energy Efficiency Act as well as the Energy Office (MEKH) Decree 17/2020 regarding the catalogue of CESs.

These changes represent a significant shift in Hungary's energy efficiency framework, creating more stringent requirements and potentially higher compliance costs for obligated parties. Market participants will need to adjust their strategies to navigate these new requirements to maintain compliance with the modified legislation.