Hungary has so far avoided imposing mandatory electricity consumption restrictions on large industrial users, as voluntary energy savings by businesses and households have helped ease pressure on the power system.

The measures come as the country faces a supply crunch following a sharp reduction in output at the Paks nuclear power plant, which is currently operating at only around 11% of its normal capacity, state news agency MTI writes on August 3.

The decree allowing the disconnection of major industrial consumers from the power grid if they fail to meet required consumption reductions came into force on August 1. Under revised emergency rules, major industrial consumers would face restrictions before residential customers.

More than 300 companies have committed to reducing electricity demand by a combined 400MW, with another 270 firms expected to join the voluntary scheme, according to the government's emergency task force. National grid operator Mavir continues to monitor the system, and mandatory restrictions could still be introduced if needed.

Record-low water levels on the Danube have forced a progressive reduction in output at the four-unit Paks nuclear power plant, which normally supplies roughly half of Hungary's electricity.

Output was scaled back further over the weekend.  By August 3, only one 500MW reactor remained in operation at reduced capacity after another turbine was shut down over the weekend, leaving the plant producing just 240MW, down from its normal 2,000MW.

The final operating unit is expected to shut down if river levels fall below the minimum required for safe cooling-water intake. This could happen within hours, according to MVM, the plant operator.

The state utility company said the shutdown would be carried out under strict safety protocols and that it would not increase nuclear safety risks. Even after power generation stops, cooling and other safety systems will remain in operation.

One positive development is that Dunamenti Eromu, the largest gas-fired power plant in Hungary, located near Budapest, returned to full capacity on August 2 after its output was reduced by 380 MW due to technical issues.

Prime Minister Peter Magyar, in an interview with RTL on August 2, said that Hungary was facing "an unprecedented energy crisis", due to a combination of extreme drought, record temperatures and years of underinvestment in energy infrastructure.

Asked whether the shutdown of Paks could have been avoided, the prime minister said a permanent solution would require the construction of a pumping station to ensure adequate cooling water, but lengthy nuclear licensing procedures mean such a project could not be completed within a year.

He added that temporary options, including damming sections of the Danube or the plant's cooling canal to raise water levels, could also be considered.

Magyar noted that the plant could be shut down for weeks, posing serious challenges for Hungary as the loss of Paks removes around one-third of the country's average electricity demand, which must be offset through imports, reserve generation and lower consumption.

Wholesale electricity prices, imports, neighbouring countries' available capacity and other domestic reserve plants coming online (with only limited capacity), should allow Hungary to maintain grid stability during the coming days, which are forecast to bring temperatures of around 40 degrees and no significant rainfall across the Danube basin.

The prime minister also used the crisis to criticise the previous government, arguing that it failed to build a long-planned pumping station at Paks despite warning signs after the Danube's previous record low water level in 2018.

"MVM spent billions, tens of billions on promotions, advertising and supporting crony clubs instead of building the necessary pumping station,"

The current crisis demonstrates the need for broader structural reforms, including faster development of wind generation, electricity storage and transmission infrastructure, partly financed through EU funds, he added.

In the last days of July, the government called on major electricity consumers, including battery manufacturers, chemical plants, and cement producers, to cut demand between 5 pm and 10 pm. Samsung SDI said it had reduced water use by 50% and electricity consumption by 10%.  

MOL also vowed to reduce its electricity consumption by 10%, while other manufacturing companies put in place measures to cut non-essential electricity use. To reduce peak demand, state railway MAV will suspend freight services between 5pm and 10pm in the coming days. The government has ordered remote work for ministry workers, and many companies have introduced similar measures.

So far, voluntary conservation measures have yielded results. Economy and Energy Minister Istvan Kapitany said electricity demand during Sunday evening's peak reached 5,700MW instead of the expected 6,400MW, meaning consumers reduced demand by 700MW, more than the output of a single Paks reactor. Magyar said similar voluntary reductions by businesses and the public had already cut Saturday's evening peak by around 500MW.

The government is also urging households to postpone high-consumption activities such as electric vehicle charging and air-conditioning use during evening peak hours.

Beyond electricity supply, the drought is also affecting water availability in many areas. Water consumption has risen by more than 25% in recent days due to extreme temperatures, putting significant pressure on the country's water supply system

Appeals to conserve water, voluntary reductions and compliance ance with watering bans have already helped lower demand. With the heatwave expected to continue for another two weeks, the government asked consumers to use water sparingly.

Agnes Forsthoffer, the parliamentary speaker exercising the powers of the president, has called for an emergency briefing with Magyar and parliamentary party leaders over the country’s worsening heatwave and energy situation. The meeting comes as parliament will not convene this week due to the emergency situation.