Hungary moves to resolve permitting uncertainty for power plants on third party land

In response to market feedback, the Hungarian government has issued a draft bill that proposes replacing a problematic provision in the Electricity Act with a clearer standard.  Under the new proposal, a developer can apply for a building permit for a power plant on third‑party land if it holds a right that secures the site and operation of the facility.

The draft bill was deemed necessary after a 2024 amendment to the Electricity Act, which introduced a new requirement for developers planning power plants on third-party lands. It mandated an “easement of use” (haszálati szolgalom) agreement with the landowner, presumably under the Civil Code, as a precondition for applying for a building permit.

This 2024 provision, however, proved unworkable since “easement of use” is not a recognised instrument in Hungarian civil law, which left developers and authorities uncertain about the agreement’s content and legal effect. As a result, projects stalled because they could not meet an undefined pre‑permit requirement. Repeated efforts by CMS experts to obtain guidance from the relevant ministries and authorities did not resolve the issue.

As a result, the Hungarian government issued the current bill, replacing the problematic provision. Under the new proposal, a developer can apply for a building permit for a power plant on third‑party land if it holds a right that secures the site and operation of the facility.

The rights in the bill under which a permit can be issued include:

• a land use right;
• a right of use;
• a building right;
• an easement; or
• a right of use for public purposes.

Although the bill has not yet been passed into law, it represents a pragmatic step forward. Each of the above rights has a defined legal content, giving developers a predictable selection of options to satisfy permitting requirements and proceed with project development.

For more information on the proposed amendments to the Electricity Act and the Hungarian power sector, contact your usual CMS advisor or the CMS experts who wrote this article.