New market study, "Slovakia Power Report Q3 2016", has been published

The medium term outlook for Slovakia's power sector is quite encouraging. With two new nuclear reactors set to come on stream in the next couple of years, our core scenario envisages that there will be a near 30 % increase in total gene rating capacity by the end of 2018, relative to our core forecast for the end of 2016. After that, generation is likely to plateau, given the absence of any significant new projects in the pipeline, a possible modernisation of the Vojany thermal station aside. Consumption will remain subdued, at a maximum growth rate of 1.0% per annum. On a t wo- year view, there are downside risks to our generation forecasts. Slovakia's economy ministry revealed in May 2016 that a further hike in costs for the Mochovce project - to above even the previously revised figure of EUR4.6bn - was in the pipeline. The announcement came after a meeting between the economy ministry and SE. Meanwhile, a spokesperson for Enel told the Reuters newswire that a team was undertaking a fresh cost analysis of the project. These additional uncertainties - particularly, whether Slovakia's government would have the appetite (or even the capacity) to absorb a further hike in costs - provide significant downside risks to our core forecast that Mochovce will be fully online in 2018.

Full Report Details at
- http://www.fastmr.com/prod/1197557_slovakia_power_report_q3_2016.aspx?afid=301

Latest Updates And Structural Trends

Investments in nuclear power mean we expect this sector to drive overall growth in the Slovak power industry, with nuclear power generation forecast to increase from 14.0TWh in 2015 to 21.1TWh in 2025, while total generation will increase from 25.0TWh to 32.6TWh.

Slovenske Elektrarne's (SE) work on the Mochovce Nuclear Power Plant is on course to result in reactor 3 coming onstream in Q416 or Q117 while reactor 4 should be complete a year later. Total power generation in Slovakia is therefore expected to increase substantially over the next couple of years, to 32.1TWh in 2018 (a rise of 29% over two years).

Consumption should accelerate from 2016 onwards, though annual growth will remain below 2%, which, combined with the improving generating capacity, will ameliorate the overall shortfall.

Italian power utility Enel in December 2018 concluded an agreement with Czech energy player EPH to sell SE, in a two-phase deal likely to total EUR750mn. However, the complex nature of the arrangement - which will not be completed until both new Mochovce reactors are online - could impair the strategic direction of SE over the medium-term, especially given the added lack of full clarity over whether the state or EPH will end up as the majority shareholder.

The Slovakia Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.

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