Hungary still faces a number of challenges however. In the electricity sector, it needs to ensure that MVM, the largest utility, does not cause distortions through its market power. Security of gas supply is vital for Hungary. Opening the Hungarian upstream market to increase indigenous gas production and to facilitate competition is a positive step. But domestic production is not sufficient. Limited gas-to-gas competition, uncertainty as to future gas demand and the oligopolistic structure of gas distribution companies may constrain the development of competition. Finally, policies which cap energy prices to address social welfare concerns discourage energy saving, distort fuel choices and discourage investment by energy firms.
As part of the IEA’s periodic review process of its Member countries, this report analyses Hungary’s energy sector and policies, and provides proposals and recommendations for the Hungarian government.