Rising energy prices have put the Municipality of Budapest in an extremely difficult situation. The council does not yet know for how long it will be able to cover the electricity consumption of the Budapest Transport Company’s (BKV) vehicles.
In response to the explosion in energy prices, at the end of August, the Council of Representatives adopted an energy package to increase efficiency and save money. However, this does not yet answer the most pressing question of BKV: what will provide electricity for trams next year?
No valid offers to BKV
The legislation obliges all municipalities and municipal-owned companies to carry out energy procurement. As long as energy prices were low, this system worked well, with electricity trading companies competing in tenders with downward electronic bids for the large and reliable BKV, Index writes.
However, for months BKV has not yet received a valid offer from the electricity trading companies eligible to bid. In the absence of such a bid, the transport company’s so-called traction power tender is still running.
“BKV has an electricity contract until 31 December, so there is still time to find solutions,” Ambrus Kiss, the Deputy Mayor General, calms our worries.
Huge electricity prices – what will happen next year?
The transport company’s annual energy demand is 246 GWh, compared to 86 GWh for the capital’s total street lighting demand. This has so far meant an annual expenditure of more than HUF 20 billion (EUR ~50 million) for BKV. However, looking at the figures on the electricity exchange, they could now be expecting a multiplier of 10-15.
Based on the projected figures for the 2023 budget, a successful public procurement to cover next year’s electricity needs at these prices is out of the question, Blikk writes. If the current procurement fails, Plan B will try to tender for a period of less than one year, in which case the tenders will be more frequent.
The capital cannot buy its own electricity
While the capital has its own generating base capable of producing electricity (such as the Budapest Waste Utilisation Plant or the Pusztazámori Regional Waste Management Centre), it cannot directly supply energy to the BKV (also owned by the capital). This is because of the legal ban. It must export the electricity generated to the market by feeding it into the MAVIR network.
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Source: Index, Blikk
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