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Can Hungary become an electricity exporter?

Once Germany’s nuclear power plants are closed as planned, the energy map of Europe will change. The Hungarian government has even considered a scenario that would enable the country to export electricity, moving away from its current status as a net importer.

Although many actions of the current government are driven by a declared policy of independence from foreign pressure, when it comes to energy distribution, dependence is exactly the right word to describe the country’s position. Hungary, like most of Europe, is painfully reliant on foreign energy resources. That is particularly true of gas, but also of electricity – even though Hungary produces plenty of its own electricity, it is cheaper to import it.

So when Germany announced at the end of May that it would shut down all its operating nuclear power plants after the catastrophe at the Fukushima power plant in Japan, the Hungarian government’s proposition that it could start exporting electricity came as a surprise.

Export power

The ministry, grid operator Mavir and an energy research institute made a study on the impact of closing seven German power plants. The findings were included in Hungary’s new national energy strategy, approved on October 3.

The Budapest Business Journal also found the idea worth toying with. Is an energy scenario in which Hungary becomes an electricity exporter, turning on its head its current status as net importer, realistic?

It doesn’t look like it is, at least in the short-term. The current capacities at Paks are not sufficient to serve Germany and would not be competitive with Czech or Polish electricity. Besides, “no country would build a nuclear power plant for export purposes only”, says András Perger, an energy expert at research firm Energiaklub. “Even if the expansion of the power plant in Paks started soon, it would be well overdue by 2022. The building of a reactor takes at least 15 years. By that time, Germany will have already solved its problem.”

Edit Herczog, a Hungarian Socialist MEP who sits on the Committee on Industry, Research and Energy in the European Parliament agrees. “Building a plant in ten years is difficult. So the path for the EU to follow is to better exploit its existing capacities.” She believes the German decision may speed up the building of power plants already under construction, but that will not favor Hungary either. “The whole region is very active: Poland has just issued permits for two new nuclear plants,” she added.

András Gyürk, Hungarian MEP in the Industry, Research and Energy Committee in the European Parliament representing the European People’s Party, also ruled out this possibility. “After shutting down seven German nuclear power plants, Germany has become a net electricity importer country. Phasing out the remaining nuclear capacities by 2022 would cause an overall 23% decrease in Germany's electricity production, and these capacities might be replaced by renewable and additional gas-fired production capacities domestically within Germany."

Transport hopes

Still, the expansion of Hungary’s nuclear energy capacities is on the table. The upfront investments of such power plants are by far the highest, but the cost-to-energy-unit ratio is still the lowest of all energy sources, so it sounds reasonable to keep them.

The government also mentioned the transportation industry as a potential user of nuclear energy. In the next couple of years, the electricity market of the EU is projected to increase by 40%, Herczog said, 20% of which will be due to electric vehicles. This translates into increased demand for the lithium batteries that fuel such cars. “The countries that become part of the production chain will greatly benefit from the process.”

Perger disagrees. “It is just another excuse for the government to pursue its nuclear plans. The market for electric cars in Hungary is small and their price is not competitive. I don’t see that this segment could take up the energy generated by new reactors at Paks, and neither will public transport do so.”

Who would finance the construction of the new reactors mentioned in the National Energy Strategy is far from clear. Experience shows that investors are more willing to get involved with other energy sources: the building of a gas plant could be done entirely without state subsidies, while a nuclear plant usually requires heavy government participation. Hence the opposition would like to see nuclear energy phased out of Hungary as well.

But that is not going to happen. The government is set to diversify, so nuclear energy is likely to remain a stable element of the national energy portfolio for quite some time.