Hungary’s state energy giant makes green transition a pillar of long-term strategy

State-owned Hungarian energy group MVM aims to become the region's leading energy company by 2035 and has made green transition a pillar of its new strategy. The company is also planning further expansion in the Balkans, CEO Karoly Matrai said in an interview with Index.hu published on January 24.

MVM plans to make infrastructure investments in the coming 10-12 years that support a reduction in greenhouse gas emissions and an advance toward carbon neutrality, Mr Matrai told the news portal.

"We're going to undertake power plant and grid upgrade investments that reduce greenhouse gas emissions by at least 50% until 2035," he added. Diversifying MVM's portfolio is another pillar of the strategy, he added.

The emergence of new energy-intensive industries requires an increase in energy output, which is supported by the lifespan extension of all four blocks (500 MW each) of Hungary’s sole nuclear power plant at Paks and the construction of new two blocks (1,200 MW each), he added. In the long run, there could be further smaller modular reactors in Hungary

Serbia, Romania and the Balkans could be the regional focal points MVM’s expansion plans, but it is not inconceivable that MVM will tie up LNG capacity in Germany or Poland.

MVM’s primary market is Hungary, but the company has 1.5mn retail customers in the Czech Republic, with a 40% share of the natural gas market, and 10% in Slovakia.

The company, which has one of the largest built-in solar capacities in Hungary, aims to increase its portfolio by an additional 3,000 MW, which will reduce the country's dependence on foreign energy sources and improve energy sovereignty.

"In addition to regulated businesses such as transmission system operation, running distribution networks or gas storage, we want to build a strong portfolio of market products to establish a healthy balance," he added.

MVM’s chief said the company is working on an IPO on the Budapest bourse. When asked about the stage of maturity, he said the company is at the 30km stone if it was a marathon (which is 42km long).

MVM has been present on the international capital markets, with a one bond on the Budapest Stock Exchange and two on Euronext Dublin. In June, it issued a $750mn green bond listed in Dublin to finance  the green transition.

The company also aims to be a "customer-oriented and adaptive organisation", while striving for "financial excellence", Mr Matrai said.

He added that maintaining MVM's current credit rating, or improving it in parallel with a sovereign upgrade, was a "top priority".

MVM Group is the second-largest company in Hungary and is in the top 15 in Central Europe, present in 23 countries and more than 120 member companies, employing 18,000 people. It booked HUF72bn (€190mn) in profit in 2022 on HUF7.6 trillion revenue.

It is the exclusive provider of electricity and gas to residential clients and has a 50% share of the gas market for industrial users. Its subsidiaries provide 70% of Hungary's electricity generation, and the nuclear power plant in Paks accounts for 50%. The company is also one of the largest producers of renewable energy.