Management of the Hungarian Energy Office - Magyar Energia Hivatal

Wholesale market
The Hungarian generation market
showed a low concentration also in 2009,
using conventional tools for analysing
concentration. In the course of the
privatization of the power plant sector
between 1995 and 1997, the majority of
power plants belonging to the vertically
integrated state corporation (Magyar Villamos
Művek Tröszt) were acquired by
foreign strategic investors (Electrabel,
RWE, AES) (Table 2). The market share of the three largest
generators was 62% in terms of installed capacities and 56%
in terms of generation, while the Herfi ndahl-Hirshman Index
(HHI), which may vary between 0 and 10 000 and measures
the concentration of a market, would be somewhere between
1400 and 1800 depending on the calculation method, which
indicates a less concentrated, multi-participant market in
ordinary circumstances.
While the concentration is relatively low
in terms of power plant capacity, the
concentration is high in the wholesale market.
The reason for this is that the capacity
required for supplying end-customers was
contracted by the former public utility
wholesaler (MVM) in the years of the
privatization of the power plant sector
(1995 to 1997) through long term power
purchase agreements. Although the Act
70 of 2008 on certain issues of electricity terminated these
PPAs by 31 December 2008, MVM concluded new, 5-8-year
agreements with most of the affected power plants. Through
the new agreements, MVM Trade (hereinafter MVM) disposed
over approximately 40 to 50% of the total available capacity
of domestic power plants in 2009, which practically meant
that approximately 62% the generation
of domestic power plants (including
MVM Partner‘s long term purchases from
power plants) was sold through one single
company, the MVM (Table 3).
The structure of the electricity wholesale
market is different in the case of sales to
universal service suppliers and to traders.
Near three fourths of universal service
suppliers’ electricity purchases continue
MVM-PPA
2 Trader
Feed-in obligation
Other
to take place through fi xed channels and at regulated prices
due to HEO’s resolution on signifi cant market power. In November
2007, public utility suppliers concluded electricity
sales contracts (so called VEASZ) with MVM for four
years. The selling prices to universal service suppliers within
the framework of VEASZ were regulated by the resolution
839/2008 (30. 06. 2008) of HEO, while the selling prices
of universal service suppliers to the end-users are regulated
by the decree of the Minister of Economy and Transport
115/2007(19. 12) on the pricing of universal service of the
electricity market and the product packages to be provided
within the framework of universal service. In the universal ser-
2
MVM
Feed-in obligation
Other
2
Import
MVM
Domestic power plants
3
Other
2005
23.8
2.9
4.4
2.1
Electricity sales (TWh)
2006
23.6
3.2
4.5
2.0
2007
26.5
3.6
5.0
1.9
2008
annual report 2009
Table 3 Sales structure of domestic power plant companies
1
3
26.8
3.2
6.5
0.2
2009
19.9
5.0
7.4
0.3
Market
share
2009
61%
15%
23%
1%
1. Purchases by MVM Rt, MVM Zrt., and MVM Trade Zrt. (public
utility wholesaler prior to 2007) in the framework of PPAs and 5-8year
electricity purchase agreements. In 2008, license for public utility
wholesale ceased, MVM Trade Zrt. since then has had only a license
for trade. Purchases of MVM Rt, MVM Zrt, and MVM Trade Zrt. from
sources other than PPAs (e.g. sales of given large power plants in the
framework of feed-in obligation prior to 2007) are excluded.
2. Sales of power plants to traders include MVM Partner Zrt.’s purchases
from power plants.
3. Sales of power plants in the framework of feed-in obligation were
bought mainly by public utility suppliers and in a small proportion by
the public utility wholesaler prior to 2007 and exclusively by MAVIR
Zrt. since 2008.
Table 4 Purchase structure of pubic utility suppliers/universal service suppliers
2005
18.7
3.6
0.7
1
Electricity purchase (TWh)
2006 2007 2008 2009
17.7
3.7
0.9
22.9
4.4
0.8
10.5
2.3
0.0
10.4
3.1
0.5
Market
share
2009
74%
22%
4%
1. The Table contains the electricity amounts bought in order to satisfy
customer demand emerging only in public utility segment and universal
service, respectively. Public utility suppliers’ purchases in order to
satisfy distribution network losses (which were satisfi ed by MVM Rt./
MVM Zrt./MVM Trade Zrt. prior to 2007) are excluded.
2. Sales to public utility suppliers for satisfying distribution network losses
are excluded.
Table 5 Primary purchase structure of traders 1
2005
6.0
6.5
2.9
0.2
Electricity purchases (TWh)
2006 2007 2008 2009
7.7
6.5
3.2
0.2
9.9
5.1
3.6
0.2
11.9
14.3
3.2
4.5
15.0
9.2
5.0
6.3
Market
share
2009
42%
26%
14%
18%
1. Primary purchase of traders is the electricity deriving directly from
domestic power plants or import and from MVM as (the former) public
utility wholesaler. The Table excludes the (signifi cant) electricity
turnover of electricity traded among traders. Traders’ purchases exclude
the purchases of MVM Trade Zrt – vith a view to make possible the
comparison of the periods prior to 1 January 2008 and thereafter.
2. Traders’ import as indicated in the Table excludes the electricity that is
bought and sold abroad.
3. Prior to 2007, it includes primarily the balancing energy bought from
the system operator, and since 2008, it has included also the electricity
bought from the system operator in the framework of feed-in obligation.
vice segment characterised by administrative prices (though
its size is just a fragment of the public utility segment), the
dominance of MVM remained unchanged, as much as 74%
annual report 2009 | 17