Managing Energy Supply Security and Gas Diversification in Hungary : Putting Theory into Practice

For a long time, gas has been the fuel that Hungary is particularly sensitive to in terms of security of energy supply; thus, gas diversification has become a key issue. However, along with the 2014 decision on the construction of new units at the Paks Nuclear Power Plant (Paks-2), the energy agenda has changed considerably. Paks-2 will have a decisive role in ensuring security of supply, and, in fact, it has already begun to perform a role in energy decisions. This paper aims to assess, on the one hand, the security of the stationary fuel supply in Hungary by applying the conventional three-dimensional approach, encompassing availability, affordability and sustainability, and, on the other, use our own gas diversification scheme to analyse the issue of gas diversification. We find that considerable progress has been made on gas diversification, and Paks-2 can also be included in our diversification scheme as a kind of sectoral diversification option. Prior to the Paks-2 decision, Hungary had followed an upward trajectory for its security of supply, despite certain negative developments. With Paks-2, Hungary’s dependence will both decrease and increase – as new types of risks emerge. There is great uncertainty about Hungary’s energy policies and security of supply, with the role of coal, gas and renewables in the energy/electricity mix still not settled. Their future is expected to be heavily dependent on political decisions rather than energy market factors, though energy market uncertainties are also high