Opinion – The emerging warm Hungarian atom: a glimpse into the future

by Marek Szymkiewicz

The European Union is actively discussing the introduction of small modular nuclear reactors (SMRs) into the grid. In early 2024, the European Commission established the European Industrial Alliance with the objective of developing such power plants and called member states to join the project. There are two reasons behind this: environmental and economic.

From an environmental standpoint, the objective is to achieve carbon neutrality by 2050. At last year’s COP28 UN Climate Change Conference, the vital role of nuclear power in mitigating the carbon footprint was acknowledged, resulting in a plethora of countries declaring their willingness to explore possible ways to implement it. A total of 31 countries have signed a declaration of intent to triple the amount of energy produced by peaceful nuclear power by 2050.

It is similarly crucial to consider the economic necessity of increasing electricity production. For the economy to run successfully, it is essential to attain energy security, i.e. such a state of the electric grid that meets all the necessary energy requirements with reliable and cost-effective resources, thereby facilitating sustainable economic growth. As a consequence of the sanctions imposed by the European Union on Russia, the primary energy supplier, the average European electricity prices have skyrocketed. Prior to the sanctions, the average price was 0.13 €/kWh, but it has since risen to 0.2187, peaking at 0.2401. Hungary is currently regarded as the country with the cheapest electricity in the EU, which provides an obvious competitive advantage over the other countries. Such favorable prices are mainly due to the government’s robust stance to protect its national interests, specifically its well-established trade and energy ties, despite the pressure exerted.

The European Union, particularly Germany, has applied pressure to Hungary. It is noteworthy that Berlin’s political aspirations have resulted in economic and living standard challenges for its citizens. Germany currently has the highest electricity prices in Europe, at 0.3951/kWh, compared to Hungary’s 0.1094, representing a nearly fourfold difference. Cheap energy from Russia has been fundamental to the growth of Europe’s most advanced economy. However, the recent surge in electricity prices is now having a cascading effect across all sectors. The once glorified economy experienced a 0.3% decline in 2023 and has remained stagnant in 2024 with indications of a likely onset of a prolonged recession. Volkswagen is shutting down a plant in its home country for the first time in its history and Thyssenkrupp, a giant of steel production, is reporting losses exceeding 1.4 billion for the second consecutive year. Similar challenges are being faced by numerous other German companies. These developments in the German market are complex and multifaceted, but the rise in electricity prices is undoubtedly a significant contributing factor.

The situation has reached a point where other member countries of the Union are reluctant to supply electricity to Germany, as this would result in higher prices in the supplying country. In the summer of this year, Sweden declined Germany’s request to connect the two countries’ power grids via a 700 MW cable, citing the inefficiency of the latter’s grid as the primary reason. Political aspirations have resulted in an economic downturn.