BMI's Executive Summary

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The new Czech Republic Power Report from BMI forecasts that the country will account for 4.01% of Central and East European (CEE) regional power generation by 2011, and will remain a net exporter of electricity to neighbouring states. BMI's CEE power generation estimate for 2006 is 1,995 terawatt hours (twh), representing an increase of 3.39% over the previous year. We are forecasting an increase in regional generation to 2,398twh by 2011, representing a rise of 19.4%.

CEE thermal power generation in 2006 is estimated by BMI at 1,230twh, accounting for 61.6% of the total electricity supplied in the region. Our forecast for 2011 is 1,440twh, implying 17.1% growth that reduces the market share of thermal generation to 60% – in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. The Czech Republic's thermal power-generation in 2006 is estimated at 51twh, or 4.15% of the CEE total. By 2011, the country is expected to account for 4.02% of thermal generation.

For the Czech Republic, coal is the dominant fuel, accounting for 46.2% of primary energy demand (PED), followed by oil at 22.3%, gas at 17.3% and nuclear energy with a 12.6% share of PED. Regional energy demand is forecast to reach 1,676mn toe by 2011, representing 18.1% growth over the period. The Czech Republic's estimated 2006 market share of 3.19% is set to fall to 2.98% by 2011. The Czech Republic's estimated 25.1twh of nuclear demand last year is forecast to reach 30twh by 2011, with its share of the CEE nuclear market remaining at an estimated 7.11%.

The Czech Republic's overall business environment can be considered neutral in a regional context, with particularly low long-term economic risk, moderate long-term political risk, and an advanced state of deregulation and market liberalisation. It is let down by poor forecast growth in power consumption and generating capacity, as well as a relatively high level of energy import dependence. In the BMI Business Environment Ranking matrix, the Czech Republic receives a composite score of 30, which ranks the country fifth out of nine states included in the CEE region.

BMI is forecasting Czech real GDP growth averaging 5.0% per annum between 2006 and 2011, and this year's forecast is 5.3%. Population is expected to contract from 10.2mn to 10.0mn over the period, but GDP per capita and electricity consumption per capita are forecast to increase significantly, with the latter increasing by an estimated 10.4% by 2011. The country's power consumption is expected to increase from an estimated 70.7twh last year to 76.5twh by the end of the forecast period, providing exports rising from 14.4twh in 2006 to 19.7twh in 2011, assuming steady growth in generating capacity.