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Hungary Power Report Q1 2012
Business Monitor International, Jan 2012, Pages: 60
Hungary Power Report provides industry professionals and strategists, corporate analysts, power associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Hungary's power industry.
Hungary is currently faced with modest power demand growth, relatively high electricity pricing and some tough decisions over the timing and type of supply expansion. It harbours long-term ambitions to export surplus power to Germany, but this probably requires an early decision on nuclear capacity investment. Meanwhile, there is a concerted effort to enlarge the country’s renewables capability, but progress is slower than for a number of European peers.
While renewables are also a core part of power supply growth, Hungary accepts that expansion of wind and solar cannot alone meet rising demand, with nuclear the only realistic low-carbon option available to state generator MVM. It has been estimated by the government that 9GW of installed capacity will need to be added by 2025, and that nuclear will account for the single biggest addition.
Key trends and recent developments in the Hungarian electricity market include:
- The likely average annual growth rate for Hungarian power consumption is just 1.1% between 2011 and 2016, continuing around this stately pace until 2021. This represents less than half the BMI-forecast real GDP growth rate and reflects the relative maturity of the energy market.
- Growth in power generation over the next five years is almost 2.0% per annum, allowing for a gradual reduction in import dependency. Continuing expansion of supply above the rate of demand growth could ultimately deliver the country’s desired export potential.
- The time taken to connect wind farms to the grid, and the high costs of doing so, are the main barriers to wind energy development in Hungary, it has been revealed by the European Wind Energy Association (EWEA) and the Hungarian Wind Energy Association (HuWEA). EWEA and HuWEA would like to see at least 1.2GW installed in the country by 2020, which would provide about 5% of its electricity demand.
- According to BMI forecasts, non-hydro renewables generation should reach 3.9TWh by 2016, climbing further to 5.0TWh by 2021. Within this total, wind power is put at 0.7TWh in 2016 and 1.1TWh by 2021. These figures fall well short of government targets, but policy revisions are clearly capable of accelerating the growth in wind power use.
- Power prices are relatively high when compared with European peers. June 2011 data, for example, show that household customers were paying around 17% more than equivalent users in the Czech Republic. Hungarian prices are slightly below those of Germany, providing support for long-term export plans.
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