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Central And Eastern Europe Power Risk/Reward Index: Limited Competitive Landscapes And Low Power Capacity Growth Across Most Markets

Fitch Solutions Sector Intelligence  


    THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

    Central And Eastern Europe Power Risk/Reward Index: Limited Competitive Landscapes And Low Power Capacity Growth Across Most Markets

    • 03 May 2022
    • Central Region
    • Power

    Key View

    • A lack of power capacity and generation growth across most markets in the CEE region means that, on average, the region ranks below the global average for Industry Rewards.
    • For overall risks, the region's Caucasus and Central Asia markets continue to underperform on their overall Risks profiles given high levels of perceived corruption, high financial barriers and poor political and economic risk profiles.
    • In terms of its overall competitive landscape, the CEE region is the worst-performing region globally as most markets maintain a high level of state dominance in their respective power sectors.

    Most Of Region Falls Below Global Average For Rewards

    Central & Eastern Europe - Power Risk/Reward Index Heat Map

    Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions Power Risk/Reward Index

    Main Regional Features And Latest Updates

    • The Central and Eastern Europe (CEE) region is characterised by most markets having limited power capacity and generation growth, which drags down the region's average Industry Rewards profile below the global average. Turkey and Poland will be the two markets with the highest amount of capacity growth in the region at 19.2GW and 11.3GW respectively, from end-2021 to 2026.
    • 17 out of 26 of the region's markets will experience negative population growth over the next five years given labour migration or even refugees fleeing the Russian invasion of Ukraine. We expect that this will limit the demand for new power capacity growth across most markets.
    • Overall, the region's Caucasus and Central Asia markets underperform overall for their respective risks profiles given poor political and economic risk outlooks, while these markets also have high levels of perceived corruption and high financial barriers.
    • The CEE region is also the worst-performing region globally for its average competitive landscape ranking, particularly the region's Caucasus and Central Asia markets. We maintain our view that high levels of state dominance in the power sector across most of the region and limited openness to private investment will hinder the development of power capacity across many markets. On the other hand, Turkey and many of the region's markets within the EU have a better ranking in this regard with a wider range of firms competing in the power sector.

    Poland Overall Outperformer

    Central & Eastern Europe Region - Power Risk/Reward Index


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