Slovakia Power Report Q4 2009

BMI forecasts that Slovakia will account for 1.16% of Central and Eastern Europe (CEE) regional power generation by 2013, and remain a modest net exporter of electricity to neighbouring states such as Hungary. CEE power generation in 2008 was 2,610 terawatt hours (TWh), representing an increase of 1.35% over the previous year. We are forecasting a rise in regional generation to 2,884TWh by 2013, representing an increase of 10.51%.

Thermal power generation in 2008 was around 1,342TWh, accounting for 51.42% of the total electricity supplied in the region. Our forecast for 2013 is 1,384TWh, implying 3.11% growth that reduces only slightly the market share of thermal generation to 47.99% – in spite of environmental concerns promoting renewables, hydro-electricity and nuclear generation. Slovakia’s thermal generation in 2008 was 8.2TWh, or 0.61% of the regional total. By 2013, Slovakia is expected to account for 0.72% of thermal generation. Gas was the dominant fuel in Slovakia in 2008, accounting for 28.4% of primary energy demand (PED).

Gas was followed by oil at 23.6%, coal at 21.7%, nuclear at 20.8% and hydro weighing in with 5.5% of PED. Regional energy demand is forecast to reach 1,518mn tonnes of oil equivalent (toe) by 2013, representing 11.84% growth over the period. Slovakia’s 2008 market share of 1.33% is set to ease to 1.32% by 2013.

In 2008, Slovakia accounted for 4.73% of regional nuclear energy consumption, with a forecast market share of 3.98% by 2013. Slovakia now shares eighth and last place with Ukraine in BMI’s updated Power Business Environment Rating, behind even Hungary. Hungary is probably within Slovakia’s reach over the medium-term, and it should be able to pull away from Ukraine during the next few quarters. The current score reflects the modest size of the country’s electricity market and infrastructure, a low level of population growth, plus its high level of import dependence. Country risk factors offset the industry scores to some extent. BMI now forecasts Slovak real GDP growth to average 1.46% per annum between 2009 and 2013, although the 2009 estimate is for a decline of 4.20%.

Slovakia’s population is expected to remain around 5.4mn until the end of the period, and GDP per capita and electricity consumption per capita are forecast to increase by 5.7% and 1.6% respectively. The country’s power consumption is expected to increase from an estimated 26.4TWh in 2008, to 26.8TWh by the end of the forecast period, while theoretical surplus output should rise to a forecast 6.7TWh in 2013, assuming 3.0% annual growth in generation.

We forecast an increase in Slovakian electricity generation of 33.7% in 2008-2018, which is towards the top of the range for the CEE region. This equates to 17.7% in the 2013-2018 period, up from 13.6% in 2008-2013. PED growth is set to rise from 10.5% in 2008-2013 to 15.0% in 2013-2018, or 27.1% over the forecast period. An increase of 50% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise around 35% over the period, with nuclear demand up almost 29%. More details of BMI’s long-term forecasts can be found later in this report.