Czech Republic Power Report Q1 2008

The new Czech Republic Power Report from BMI forecasts that the country will account for 3.80% of Central and East European (CEE) regional power generation by 2011, and will remain a net exporter of electricity to neighbouring states. BMI's CEE power generation estimate for 2006 is 2,006 terawatt hours (twh), representing an increase of 4.00% over the previous year. We are forecasting an increase in regional generation to 2,451twh by 2011, representing a rise of 22.14%.

CEE thermal power generation in 2006 is estimated by BMI at 1,247twh, accounting for 62.23% of the total electricity supplied in the region. Our forecast for 2011 is 1,527twh, implying 22.54% growth that raises the market share of thermal generation to 62.32% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. The Czech Republic's thermal powergeneration in 2006 is estimated at 54.3twh, or 4.36% of the CEE total. By 2011, the country is expected to account for 3.77% of thermal generation.

For the Czech Republic, coal is the dominant fuel, accounting for 44.6% of PED, followed by oil at 22.6%, gas at 17.6% and nuclear energy with a 132.6% share of PED. Regional energy demand is forecast to reach 1,724mn toe by 2011, representing 19.8% growth over the period. The Czech Republic's 2006 market share of 3.02% is set to fall to 2.83% by 2011. The Czech Republic's 26.0twh of nuclear demand in 2006 is forecast to reach 30twh by 2011, with its share of the CEE nuclear market falling to an estimated 7.29%.

The Czech Republic's overall business environment can be considered fairly neutral in a regional context, with particularly low long-term economic and political risk, and an advanced state of deregulation and market liberalisation. It is let down by poor forecast growth in power consumption and generating capacity, as well as a relatively high level of energy import dependence. In the BMI Business Environment Ranking matrix, the Czech Republic now receives a higher composite score of 31, which ranks the country equal fourth out of nine states included in the CEE region, alongside Hungary.

BMI is now forecasting real GDP growth averaging 5.2% per annum between 2006 and 2011, and 2007's forecast is 6.0%. Population is expected to contract from 10.2mn to 10.0mn over the period, but GDP per capita and electricity consumption per capita are forecast to increase significantly, with the latter increasing by an estimated 10.4% by 2011. The country's power consumption is expected to increase from an estimated 71.2twh in 2006 to 76.9twh by the end of the forecast period, providing exports rising from 13.1twh in 2006 to 16.1twh in 2011, assuming 2.0% annual growth in generating capacity.