Countries in the Central and Eastern European (CEE) region have set ambitious targets to increase the share of renewable energy sources. However, in many cases, there remains a significant gap between planned objectives and the actual installed energy generation capacities. Support schemes implemented in various countries—such as CAPEX subsidies—are increasingly making the sector attractive to investors, which in turn stimulates mergers and acquisitions (M&A) activity. The growing reliance on weather-dependent renewable electricity generation is also driving substantial investment demand in energy storage. Additionally, the region is seeing a rise in R+D projects focused on small modular reactors (SMRs) and alternative fuels, while the Li-ion battery recycling market is expected to experience explosive growth.
A comprehensive analysis by DLA Piper experts offers a strategic guide for investors and industry stakeholders navigating this rapidly evolving and strategically important sector.
The global green energy transition brings both new opportunities and challenges to CEE countries, prompting significant transformation in the region in the spirit of sustainability and technological advancement. By 2035, the region is expected to play a leading role in integrated, low-carbon energy systems, driven not only by innovation but also by sustainability and enhanced grid flexibility.
Green Transition and Its Financing
In recent years, investments aimed at green electricity production have gained momentum in Central European countries—particularly in Hungary, Poland, and Romania. However, the pace of renewable energy development often lags behind the targets set in national energy strategies. The increasing role of weather-dependent electricity generation systems presents new challenges for grid operation, system balance, and security of supply.
Renewable energy development is at the forefront of the region’s investment landscape. The green transition in the energy sector is gaining increasing momentum, and the future energy market in Central Europe will be shaped by financing solutions, development models integrating energy storage, and cross-border cooperation.
Among the countries in the region, Hungary has 7.76 GW of installed renewable electricity generation capacity and an additional 3 GW of photovoltaic projects ready for construction. The Czech Republic aims for a 28% renewable energy share by 2030, supported by grid modernization and energy efficiency programs. Poland leads with 34.3 GW of renewable energy capacity, while in Romania, 76% of total installed electricity generation capacity is based on renewables and the country targets a 38.3% renewable share in gross final energy consumption by 2030. Slovakia is investing in hydro, bio, and solar energy, supported by a €1 billion state funding program.
Solar power plays a dominant role in installed generation capacity, but wind energy is also significant in Poland and Romania’s renewable mix. Poland, for example, plans to increase offshore wind capacity to 5.9 GW by 2030 and to 11 GW by 2040.
Austria, by contrast, is implementing one of the region’s most successful green transition policies: nearly 40% of its energy demand is already met by renewables, primarily hydropower and biomass. Austria aims to raise this to at least 57% by 2030 and to nearly 100% by 2040. Its green strategy emphasizes solar and wind investments, with a strong focus on decentralized, community-based energy production.
From an investment planning perspective, the net CAPEX value of 1 MW photovoltaic development in Hungary currently ranges between €0.8 and €1.3 million, depending largely on grid connection solutions. Meanwhile, CFD-based support schemes, EU and national funding, and new financing models—such as corporate power purchase agreements (CPPAs)—are encouraging further development.
M&A activity is intensifying in the energy sector, with experts noting that mergers and acquisitions have become increasingly significant even during the development phase of renewable projects.
Energy Storage: A Response to Negative Prices Caused by Weather-Dependent Power Generation
The rapid increase in electricity generation from weather-dependent renewable sources and the resulting fluctuations in production pose growing challenges for grid operation and system balancing. The resulting price volatility and occasional negative electricity prices clearly signal the urgent need to develop energy storage capacities—particularly battery energy storage systems (BESS)—across the region. Public subsidies and growing market demand are jointly driving investment activity, which is crucial for improving grid stability and integrating a higher share of renewable energy sources. In Hungary and other countries in the region, significant support programs are promoting BESS development. At the same time, regulatory and technological reforms aimed at enhancing grid flexibility have also been launched across Central and Eastern Europe.
In Austria, the development of energy storage solutions is closely linked to the preparation of industrial green hydrogen projects. The government aims to install at least 1 GW of electrolyzer capacity by 2030. This goal may be supported by a planned legislative amendment that would lift the ban on geological carbon capture and storage (CCS), enabling broader application of carbon-free technologies.
SMRs – Small Modular Reactors Hold Great Promise
Small modular reactor (SMR) technology could offer a new direction in nuclear energy production. These reactors, with a capacity of up to 300 MW, represent one of the most promising technologies for zero-emission, flexible electricity generation.
Hungary, the Czech Republic, and Romania have all taken concrete steps toward preparing for SMR development. In January 2025, Hungary signed a cooperation agreement with the United Kingdom, under which Rolls-Royce—one of the world’s leading generator manufacturers—may participate in the planning of domestic projects. Hungary’s National Energy and Climate Plan and the MVM Group’s strategy both envision the deployment of at least one SMR by 2035.
The Czech Republic has similarly ambitious plans: alongside the gradual phase-out of coal, it aims to increase the share of nuclear-generated electricity to 68% by 2040. Poland, Romania, and Slovakia are also actively exploring the potential for SMR deployment, with realistic prospects for implementation gaining momentum toward the end of the decade.
Alternative Fuels and Energy Storage – New Answers to Sustainability Challenges
There remains significant untapped potential in increasing the use of biogas and biomethane in the CEE region. In addition, a growing number of pilot projects are being launched across Central European countries to explore how electricity generated from renewable sources can be used to produce “green” hydrogen—a key element in the transition to a low-carbon economy.
In Hungary, the Jedlik Ányos Program allocates approximately €240 million to support geothermal energy, biogas, and biomethane production, including drilling and the construction of surface power plants. Meanwhile, Romania and Poland are developing the necessary infrastructure in line with their national strategies. Industrial-scale storage solutions are also being tested, with a focus on hydrogen storage and hybrid systems.
Circular Economy – Focus on Battery Recycling
With the rise of electromobility, the collection and recycling of end-of-life lithium-ion batteries has become a critical issue in Europe. The scale of the challenge is underscored by forecasts predicting that the battery recycling market will reach a value of USD 52 billion by 2045.
Hungary is currently one of the EU’s largest battery exporters, and it is expected to take a leading role in applying circular economy models in practice. Across the CEE region, advanced research is underway to extend the lifespan of lithium-ion batteries and promote their reuse in industrial applications.
Conclusion
The region’s energy mix is undergoing continuous transformation. While the role of renewable energy sources – particularly solar and wind – is becoming increasingly prominent, nuclear energy is also gaining renewed momentum to ensure stable and low-emission electricity generation. To meet sustainability goals, policymakers are increasingly focused on building diversified, flexible, and resilient national energy systems in which various technologies complement one another.
The regulatory environment of the energy market is evolving at an unprecedented pace and complexity. Legislation striving to keep up with technological innovation, the harmonization of EU and national rules, and the interpretation of new support schemes are all demanding increasing resources. In this dynamic context, compliance and adaptation are not merely legal obligations but strategic imperatives that require a comprehensive perspective and swift response from market participants.
By Gabor Simon, Partner, Head of Energy and Procurement, and Peter Gyorfi-Toth, Partner, Head of Project Development and Restructuring, DLA Piper Hungary
