In April 2025, the Hungarian Parliament adopted significant amendments to the Act on Energy Efficiency, bringing about a major revision of the Energy Efficiency Obligation Scheme (EEOS). The new legislative package introduces a range of substantial changes aimed at accelerating the country’s transition toward a more sustainable and energy-efficient building stock while also providing a much-needed stimulus for the domestic construction and renovation sectors.
A central element of the reform is the sharp increase in annual energy-saving targets for the so-called obligated parties: a group that includes electricity, gas, and fuel distributors. From the second half of 2025, these companies must achieve verified savings equivalent to 1.4% of their annual energy sales. This obligation remains at 1.4% in 2026, drops slightly to 1.0% in 2027, and returns to the previous level of 0.5% from 2028 onwards. This near tripling of the current obligation represents a major step change for energy distributors, who will now be required to finance, implement or support a significantly broader range of energy efficiency measures at the consumer level.
This increase is expected to have a transformative effect on the Hungarian renovation market. With more funding and legal incentives driving energy efficiency, the demand for construction services, particularly in residential retrofits, is forecast to grow rapidly. Experts anticipate a strong rebound in the renovation sector in the second half of 2025, offering relief to the Hungarian construction industry that has recently experienced a slowdown. Public buildings and family homes alike are likely to see a wave of upgrades, driven by both regulatory compliance and state-supported schemes.
One of the most consequential outcomes of the amendment is the reinvigoration of the Verified Energy Savings (VES) market. This system, which tracks and certifies energy savings resulting from specific interventions, will play a critical role in enabling obligated parties to meet their targets. With increased savings quotas now in force, the demand for VES credits is expected to rise sharply. Government-backed renovation programs, such as those supported under the EEOS, are therefore likely to scale up significantly. In the past year alone, approximately 40,000 households benefited from free attic insulation through these programs. The revised law could easily double that figure, while also expanding the types of eligible improvements. In addition to attic insulation, future measures are expected to include façade insulation, window and door replacements, heating system modernization, and more comprehensive, integrated energy upgrades.
Another key shift in the amended legislation is the prioritization of long-term, high-quality interventions. Projects with a useful life of under six years, such as replacing incandescent bulbs with LEDs, will no longer qualify under the EEOS. Instead, only durable, structural solutions that significantly improve building performance will be credited. These include thermal insulation, HVAC modernization, and full envelope renovations. This move aligns Hungary’s approach with the EU’s broader “Renovation Wave” initiative, promoting deeper and more impactful retrofits while discouraging superficial or short-lived upgrades.
In summary, the amendment to Hungary’s Energy Efficiency Act represents a pivotal shift in the country’s climate and energy strategy. It combines stricter legal obligations with market-based incentives to drive energy renovation at scale. For energy providers, construction firms, public authorities and legal advisors, the reforms offer both challenges and opportunities. Compliance will require significant planning, but the growing demand for high-quality energy upgrades presents substantial market potential.
By Denes Glavatity, Attorney-at-Law, KCG Partners Law Firm
