Download - Hungary – from Gas to Geothermal
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TrustOpen- mindednessKnowledgeWell-being
Hungary – from Gas to GeothermalÁrni MagnússonManaging Director, Renewable Energy & TransmissionAugust 27, 2014
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Mannvit at a glance
An international consultancy offering a wide range of services in the fields of engineering, consulting, management, operations and EPCM contracting.
• Founded in 1963. • Employee-owned by over 100
shareholders• Management Systems certified:
ISO 9001, ISO 14001, OHSAS 18001
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Headquarters in Reykjavík and 8 office in Iceland
HUNGARY
UK
NORWAY
USA
GERMANY
CHILE
ICELAND
Mannvit‘s Offices
Mexico (agent)
Kenya (agent)
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HUNGARY
Mannvit has been active in
Hungary since 2006. The Budapest
office, which is the base for
Mannvit‘s Central and Eastern
Europe operations, was
established in 2008. The office is a
multi-market, multi-disciple
consultancy capable of offering a
broad range of engineering,
technical, research & project
management services to its clients.
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Hungarian Heat MarketGreat potential for geothermal development
• Hungary has 220 district heating systems in 92 cities supplying around 650,000 homes with heat and hot water. A total of 16% of the housing stock.
• Natural gas is the main source of district heating, accounting for around 75-80% of the market.
• Heat producers sell to district heating service providers which sell to end-users.
• The end-user price is mainly comprised of a base tariff (e.g. system usage fee) and a heating tariff based on consumed amount (HUF/GJ for heat, HUF/m3 for hot water).
• Prices differ from city to city, can be up to a 40% difference.
• Municipalities aim to reduce district heating prices by 10-20%.
• The National Action Plan on District Heating and Power Plants aims to reduce both the base and heating tariff.
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Geothermal District HeatingSimple technology
Secondary LoopHeat Service Provider
Primary LoopHeat Producer
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Benefits of Geothermal Geothermal energy offers several advantages over natural gas
• Lower heat price for end-users‒ In the current environment geothermal district heating can
reduce the heat price to end-users by 10-20%
• Energy independence‒ Important for municipalities to be independent of external
factors when it comes to energy supply
• Sustainable resource‒ Unlike natural gas, geothermal energy is a sustainable source
of energy which can provide a consistant base-load of heat
• Clean energy‒ Geothermal energy is considered a zero-emissions
technology
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Funding PossibilitiesGrant schemes, banks and equity investors
• Two grant schemes available to geothermal district heating developers‒ KEOP (Környezet és Energia Operativ Program, Environment and Energy Operational Program)‒ EFTA (Iceland, Liechtenstein, Norway & Switzerland)
• Awarded grant amounts vary but can cover up to 30-50% of project cost
• Majority of the grant amount is drawn down in parallel with project development
• Debt financing available to developers, although banks reluctant to finance production drilling
• Equity required to complete production drilling
• Projects generate returns in the high teens for equity investors
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Project ExampleSzentlörinc geothermal district heating system
• A district heating system in Szentlörinc, a town in the southwestern part of Hungary
• Project data:‒ 3.1 MWth; 1,820m; 87°C; 26 l/s‒ 55,000 GJ annual deliverable heat‒ 900 flats and two schools‒ End-user price reduced by 5-10%
• Project cost:‒ €4 million (with a 34% subsidy)
• Mannvit’s role:‒ Geological & geophysical studies‒ Licensing & permitting‒ Well siting, design & testing‒ Drilling supervision‒ Reservoir modelling‒ EPCm contractor
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www.mannvit.com