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BMI View: The outlook for Hungary's power sector is mixed. On the one hand
the government is keen to improve energy security and is investing in the
expansion of both cross-border connections and domestic capacity. On the other
hand very slow consumption growth combined with artificially lowered electricity
prices and a lack of investment incentives means the market remains unattractive
to developers, particularly in the underdeveloped renewable energy sector. At
present we are maintaining our forecasts for limited growth in generation and
capacity through to 2025, with the Paks power plant expansion expected to come
online beyond the end of our current forecast period.
Latest Updates and Structural Trends
-Hungary will reportedly be required to fulfil two conditions to get the
European Commission's (EC) approval for the project: the first condition states
all issues associated with the supervision of the power plant should be 'clearly
separated' from existing policymaking and the second is that the power produced
should be sold at a power exchange in line with market principles and not
directly to the Hungarian national grid.
-Investment is ongoing to modernise and upgrade electricity infrastructure in
Hungary. EON confirmed a number of projects in the last few months, including
the HUF600mn project to replace power lines and gas pipelines in the Kaposvár
region and HUF1.5bn in similar upgrade works in the Győr region.
-Following a fall in electricity generation in 2015, we forecast a slight return
to growth in 2016 with generation expected to increase by 0.62% to reach
29.31TWh - leaving Hungary reliant upon electricity imports.