Hungary Energy efficiency report

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1 Hungary Energy efficiency report Objectives: o 1.4 Mtoe of end-user energy savings by 216, including 312 ktoe in industry o 1.9 Mtoe of primary energy savings by 23, including around 4% in the power sector Overview - (%/year) Primary intensity (EU=1)¹ % ++ CO 2 intensity (EU=1) % ++ CO 2 emissions per capita (in tco 2 /cap) % - Power generation - (%/year) Efficiency of thermal power plants (in %) % + Rate of electricity T&D losses (in %) % ++ CO 2 emissions per kwh generated (in gco2/kwh) % + Industry - (%/year) Energy intensity (EU=1) % ++ Share of industrial CHP in industrial consumption (in %) % -- Unit consumption of steel (in toe/t) % + * and - for steel ++ Among the best performing countries + Above the EU average 1 - Below the EU average 1 --Among the worst performing countries Latest update: March The European Union, as the best performing region, is used as the benchmark.

2 1. Overview 1.1. Policies: 1.4 Mtoe energy savings target for 216 Hungary s National Energy Efficiency Action Plan (NEEAP) for the period -216 lays down a final energy savings target of 9 percent between and 216, ie 1.4 Mtoe. Of those savings 37 percent should be achieved in the residential sector, 26 percent in public administration, 23 percent in industry, 8 percent in transport and 7 percent through cross-sectoral measures. The National Energy Strategy until 23, adopted in July, sets a total primary energy savings target of 4. Mtoe by 23, 9 percent of which should be achieved through the building energy program and 41 percent in the power sector. According to the Renewable Plan adopted in January, by 22 energy savings should amount to 1 percent. The Environment and Energy Operational Program (KEOP, -212) aimed to contribute to the targets set by the NEEAP and focused on achieving greater energy efficiency in public buildings, modernizing district heating and reducing heat losses, and achieving efficiency gains in the competitive sector Energy consumption trends: few changes in energy consumption since Hungary s energy consumption per capita is about 24 percent below the European average (2. toe/capita in ). Total energy consumption increased slightly between and and has been declining since then (-1. percent/year until ). In alone it decreased by 6 percent as a consequence of the global economic slowdown. Figure 1: Energy consumption trends by sector 3 Other Industry Power generation 2 2 Mtoe 1 1 The power and industry sectors account for 2 percent each of total energy consumption 2. Gas and oil cover more than 6 percent of primary energy consumption, with 37 percent and 2 percent, respectively, in, followed by electricity with 17 percent. The share of coal in primary consumption is declining rapidly, from 2 percent in to 11 percent in, to the advantage of biomass (from 2 percent to 7 percent). 2 Including non-energy uses Hungary Country reports 2

3 Hungary s electricity consumption per capita is 36 percent lower than the EU average (around 3,6 kwh in ). Total electricity consumption has been increasing regularly since (+1.4 percent/year), with the exception of a.7 percent drop in caused by a sharp fall in industrial demand (-18 percent). The residential and services sector is the largest electricity consumer in Hungary. Its electricity consumption grew steadily over the - period, at a faster pace than that of industry. As a result, the share of electricity consumed by industry has fallen from 46 percent in to 34 percent in. Figure 2: Electricity consumption trends by sector TWh Industry Others 1.3. Energy efficiency trends: significant energy intensity reduction Total energy consumption per unit of GDP (primary energy intensity) has decreased regularly since. This gain in overall energy efficiency was similar to the EU trend. However, Hungary s primary energy intensity, measured at purchasing power parity, remains 23 percent higher than the EU average. Since, the power sector has driven the reduction in energy intensity: the replacement of oil and coal-fired facilities by high efficiency gas-fired units contributed to 4 percent of the reduction in primary intensity between and. Efficiency gains in industry contributed to 27 percent of the overall decrease. Figure 3: Energy intensity trends %/year.% -.2% -.4% -.6% -.8% -1.% -1.2% -1.4% -1.6% -1.8% -2.% - - Other sectors : buildings, transport and agriculture Industry Power generation Hungary Country reports 3

4 2. Power generation 2.1. Policies: 1.9 Mtoe energy savings target in the power sector for 23 The National Energy Strategy until 23, adopted in July, sets a primary energy savings target in the power sector of 1.9 Mtoe by 23, 47 percent of which should be achieved through the replacement of low efficiency oil- and gas-fired power plants, 31 percent through the replacement of coal-fired power plants, and 6 percent through the replacement of low-efficiency biomass-fired units. The remaining 1 percent would come from the reduction in grid losses Efficiency of the power sector: low but improving efficiency rate The efficiency of the power sector in Hungary is poor, since low-efficiency technologies (nuclear and coal-fired power plants) dominate the power mix. However, over the years the electricity sector has improved its efficiency, from 29 percent in to 34 percent in ; this was achieved through efficiency improvements in thermal power plants, with an increasing share of CCGT facilities in the thermal mix (from 8 percent in to 3 percent in ) and a shift to gas. Figure 4: Efficiency of power generation and thermal power plants Figure : Thermal electricity capacity, by technology % Total power generation Thermal power plants GW 8 Steam Gas turbines Combined cycles Hungary Country reports 4

5 The rate of transmission and distribution losses (T&D) was nearing 9. percent in, ie 46 percent higher than the EU average, despite a significant decrease between and ( 4.6 percentage points). Those losses were over 13 percent between and, and were mainly caused by electricity theft rather than technical problems Figure 6: Electric T&D losses % Industry 3.1. Policies: target of up to 312 ktoe/year in energy savings by 216 The second National Energy Efficiency Action Plan () sets an energy savings target for the industrial sector of 312 ktoe by 216. Measures to reduce the energy use of industrial companies should save 264 ktoe, while the additional 48 ktoe savings should be achieved through the improvement of the district heating network. The measures include the technological modernization of SMEs and the energy-efficient renovation of industrial, agricultural and commercial buildings, which will be financed through grants and credits under the New Széchenyi Plan. Moreover, Hungary will continue the Energy Efficiency Credit Fund included within the PHARE 3 program since, which includes a soft-loan credit facility to support energy-efficiency investments by small and medium enterprises (mainly for the installation of CHP units and the reconstruction of heating systems). The PHARE program could save ktoe by 216. The Environment and Energy Operational Program (KEOP), which aims to reduce energy use in industrial buildings through subsidies for small and medium enterprises, could help save ktoe by 216. Since, large energy consumers in the industrial sector have been obliged to nominate an energy manager and to deliver an energy consumption report, followed by an energy savings plan and implementation report. These two measures are expected to save ktoe by 216. In, voluntary agreements were launched in the energy-intensive sectors with the aim of reducing energy use, applying more efficient technologies, and developing products with higher energy efficiency indicators. Furthermore, a Virtual Power Plant program was launched in in order to reach the equivalent of 2 MW in energy savings (medium-sized power plant) by 22. In, a feed-in tariff scheme for CHP installations was adopted, including industrial cogeneration facilities (not belonging to the district heating network) under MW. Industrial companies that install CHP facilities or renewable systems can benefit from subsidies, as established in the Environment Protection and Infrastructure Operative Program (EIOP). 3 PHARE: Poland and Hungary Assistance for Restructuring their Economies Hungary Country reports

6 3.2. Energy consumption trends: falling energy consumption in industry Industrial energy consumption fell by 6 percent between and. It dropped by 33 percent between and and declined by 1.7 percent/year until. After a 2 percent fall in, industrial consumption recovered slightly but continues to follow its downward trend. Figure 7: Trends in industrial energy consumption 7 6 Mtoe The share of natural gas in the energy consumption of the industrial sector has decreased steadily since (49 percent) and now stands at 32 percent (). Electricity represents 33 percent of industrial energy consumption, up from 18 percent in. The shares of biomass, heat and coal have increased over time, reaching percent, 1 percent and 16 percent, respectively, in. Oil represents just percent, compared with 14 percent in. The share of energy-intensive industries (steel, chemical, paper and non-metallic minerals) in industrial energy consumption is stable at around 6 percent. In, steel and chemicals accounted for 19 percent each. The energy consumption of the non-metallic minerals branch (mainly cement), which had been stable since, fell dramatically in, and now stands at 1 percent. The share of paper is low, at percent. Figure 8: Energy consumption of industry, by source Figure 9: Energy consumption of industry, by branch 1% 1% 9% 9% 8% 7% 6% % 4% 3% 2% 1% % Biomass 8% 7% Heat 6% Electricity % Gas 4% Oil 3% Coal/Lignite 2% 1% % Other Paper Non metallic minerals Chemical Steel Hungary Country reports 6

7 3.3. Energy intensity trends: noticeable energy efficiency improvement Between and industrial energy intensity decreased by 4.7 percent/year; the drop was slightly slower over the - period (-4. percent/year) but remained much faster than the EU average (1.7 percent/year). That improvement was due to efficiency gains in the chemical sector, the largest energy consuming branch (-.3 percent/year), and to a significant fall in the specific energy consumption per ton of cement (-8.1 percent/year). Over the last decades, the cement industry has been intensively cooperating with other industries in terms of best available techniques and energy-efficient processes. In other energy-intensive industries, limited efficiency gains in the steel sector (-1. percent/year between and ) and a 1.3 percent/year increase in the unit consumption of paper have limited the effect of these energy efficiency improvements. Figure 2: Trends in the energy intensity of industrial branches 4.% 2.% %/year.% -2.% -4.% -6.% -8.% -1.% - - *Incl uding construction and mining Total* Steel Chemical Cement Paper, Odyssee The share of industrial CHP in Hungary s electricity consumption is far below the EU average (around 4 percent in compared with 19 percent in the EU) and has been falling since. Over the - period, power autoproduction in the industrial sector dropped at the same pace as energy consumption in industry (- percent). Figure 3: Share of industrial CHP in industrial consumption 1% 9% 8% 7% 6% % 4% 3% 2% 1% % Hungary Country reports 7

8 Between and the energy intensity of the manufacturing industry (ie excluding construction and mining) fell substantially, by 4. percent/year. About two thirds of this reduction was achieved through large efficiency gains in the industrial branches, as explained above. The rest is explained by changes in the structure of industrial value added: the share of the equipment sector, ie the branch with the lowest energy intensity, in the total value added of manufacturing, increased by more than 2 percentage points between and. Figure 42: Trends in the energy intensity of manufacturing and structural effect %/year.% -.% -1.% -1.% -2.% -2.% -3.% -3.% -4.% -4.% -.% - Real variation Change at constant structure Structural effect Hungary Country reports 8

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