Slovakia Power Report Q2 2008

The new Slovakia Power Report from BMI forecasts that the country will account for 1.62% of Central Eastern Europe (CEE) regional power generation by 2012, and remain a net exporter of electricity to neighbouring states such as Hungary. BMI's CEE power generation estimate for 2007 is 2,083 terawatt hours (TWh), representing an increase of 3.84% over the previous year. We are forecasting a rise in regional generation to 2,538TWh by 2012, representing an increase of 26.49%.

CEE thermal power generation in 2007 is estimated by BMI at 1,293TWh, accounting for 62.1% of the total electricity supplied in the region. Our forecast for 2012 is 1,577TWh, implying 22.6% growth that leaves unchanged the market share of thermal generation to 62.1% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Slovakia's thermal generation in 2007 is estimated at 10.11TWh, or 0.78% of the regional total. By 2012, the country is expected to account for 0.77% of thermal generation.

For Slovakia, gas is the dominant fuel, accounting for 27.8% of primary energy demand (PED), followed by nuclear at 22.8%, oil at 22.1%, with coal having a 21.5% share of PED. CEE regional energy demand is forecast to reach 1,723mn tonnes of oil equivalent (toe) by 2012, representing 24.5% growth over the period. Slovakia's estimated 2007 market share of 1.29% is set to rise to 1.33% by 2012. Slovakia in 2007 accounted for an estimated 4.61% of regional nuclear energy consumption, with a forecast market share of 4.44% by 2012.

Slovakia ranks sixth in BMI's newly revised Power Business Environment rating, ahead of Ukraine and behind Russia and Turkey which share fifth place. Turkey represents a realistic medium-term target for the country, but it is unlikely to be able to catch Russia. 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 to some extent offset the industry scores.

BMI forecasts Slovak real GDP growth averaging 6.67% per annum between 2006 and 2012, below the 2008 forecast of 7.0%. Total population is expected to remain constant around 5.4mn over the period, but GDP per capita and electricity consumption per capita are forecast to increase significantly. The country's power consumption is expected to increase from an estimated 28.4TWh in 2007 to 33.8TWh by the end of the forecast period, while exports should rise from an estimated 4.0TWh in 2007 to a forecast 7.2TWh in 2012, assuming 3.9% annual growth in generating capacity.