On 30 September 2022 the Council of the European Union discussed and adopted a draft EU extra tax regulation aimed at the energy sector. Under the regulation, member states will receive, as budget revenue, part of the windfall profits generated by the energy sector. For Hungarian operators, the legislation is particularly important in view of the windfall taxes introduced for renewable energy producers in June 2022.

Recently an increasing number of market players operating under the mandatory off-take regime (KÁT) have taken the opportunity to sell their renewable energy in the free market and thus, due to the current favourable market situation, sell their electricity at a much higher price than the subsidised price paid by the state. This flexibility, however, has disappeared overnight.

While market players are finding it increasingly difficult to acquire energy in the quantities needed for their operations, and with skyrocketing energy prices only making matters worse, the government incentive schemes that are available no longer provide a financially viable alternative for power plant developers. The solution may lie in selling electricity on the open market – though key to this will be deciding on a legal framework that’s acceptable to all parties involved, including the lending banks.

A common stereotype prevails that banking contracts are non-negotiable, and borrowers hardly have a say in the terms of their contracts. However, this is not the case: like any economic operator, banks are also willing to compromise. Banks’ flexibility varies depending on who and when is seeking preferential treatment and on the contractual terms subject to negotiations.

The healthcare emergency situation has accelerated the digitisation of tasks and processes in a wide range of areas. Enforcement proceedings based on notarial deeds are no exception, where an electronic procedure became mandatory a few months ago. The only question is how long the signature itself will still need to be in writing.

If you decide to apply for bank financing, you will need to consider not only the financial terms of the loan but also whether you are ready to allow the bank to access your assets as collateral. It will probably ask for the following guarantees.  

A trendy investment product of recent years has been solar energy projects: under the feed-in tariff (FIT) scheme, the government guarantees what looks like a cash cow for all those who choose to seek their fortune in this sector. But as is usually the case, this money won’t just fall into your lap. Without the necessary professional expertise or the proper legal groundwork, solar power projects can easily run out of steam too.

Although the new Civil Code that took effect in 2014 made it impossible to use a good few commonly used types of loan security, since then the legislature has gradually restored them to their rightful place. Indeed, the amendments to the Bankruptcy Act coming into effect on 1 July will go further than the previous rules, giving security options and security assignments, the same priority status as mortgages. This case is a good example of the effective cooperation between the legislature and the banking industry in Hungary.