 Hungary and Iceland are readying themselves for a great renewal of an ancient technology: geothermal energy. By ELISABETH JEFFRIES
Széchényi Spa, in Budapest’s City Park, is Europe’s largest thermal bath, constructed in neo-baroque style in the early 20th century to soothe the digestive systems of the empire’s decaying bourgeoisie. Budapest, like the whole of Hungary, is awash with thermal springs, which gush 70 million litres of water each day over the torsos of hundreds of tourists and locals. The springs are the only visible sign of a hotter, stronger and unused resource lying thousands of metres below ground level that could power thousands of homes and businesses – water at 140oC or more. The water can be pumped, which then produces steam that can be used to drive a turbine and generate electricity. It is an opportunity that Gábor Szita, managing director of Hungarian geothermal development company Porcio, would like to seize. “The resources are huge. There are about 40,000 existing drillings in Hungary – the country’s like a cheese,” he remarks. Hungary lies in the Carpathian basin, where the earth’s crust is thinner than average, and is also located in an area where two ancient tectonic plates touch. These geological features explain the area’s abundant thermal waters. About 1,000 of the drilled or natural wells in the region are used for bathing or drinking, 120 are used for heating, and the rest lie disused, like wartime bomb craters. Some projects functioning during the Soviet era were abandoned in the 1970s, perhaps for cash flow or administrative reasons. Speculators were looking for oil and gas, but mainly found water. But now Szita, president of the Hungarian Geothermal Association, is working with the national energy company, MOL, on plans to create Europe’s first new geothermal power plant for decades. It is in the west of Hungary at Iklódbördöce in the county of Zala, near the Slovenian border, that MOL has been testing two wells (more than 2,000 m deep) since the beginning of this year. Nitrogen is injected into the bottom of the well, which brings up hot water; this rises to the surface, producing steam. If the tests, due to be completed by the end of this summer, are successful, the 3.5MW plant will start up in 2009. It will be able to power the equivalent of around 2,500 houses, but in fact most of the electricity will go to horticultural businesses. Second and third plants will follow. The project has a 10-year payback period for a plant with at least double that lifespan, and will become profitable once the initial subsidies have been absorbed and loans repaid. “The technology will be cheaper than for hydrocarbon projects, but not very much. As in hydrocarbon plants, well and drilling costs are the largest portion of the exercise,” comments Attila Kujbus, the MOL manager running the project. MOL, Icelandic geothermal experts Enex and an Australian clean energy investor called Green Rock Energy are putting up the lion’s share of the project’s €18.3m funds, though it is also backed up by the World Bank’s Geothermal Energy Development Fund. Why should they go to the trouble? Hungary has enough energy to meet its requirements, though it relies on good neighbours – 37% of its electricity, 71% of its oil and 78% of its gas are imported. But as the economy grows and consumption rises, that ratio is likely to tighten. In addition, renewable energy producers will enjoy higher rates for electricity sold to utilities, amounting to €0.09 per kWh. “If the subsidy did not exist, we’d not do the project – it would be a very unstable investment otherwise,” explains Kujbus. Additional income will arise out of heat generation to agricultural consumers, as well as carbon credits under the Joint Implementation mechanism, which exists under the Kyoto Protocol. Geothermal power can be more productive than other clean energies. The Iklódbördöce plant would function for 7,000-8,000 hours per year compared to 1,800 hours per year for a wind farm in the same region, according to Kujbus. But the most obvious reason for considering geothermal is the efficiency of the technology involved. The oldest geothermal power plant in Europe, in the Italian region of Tuscany, dates from nearly a century ago, unlike the oldest wind farm or solar power plant. It started operating in 1913. With geothermal energy, there is no need to wait for the existing technology to become cheaper, as there is with offshore wind or solar – most of the R&D is already done, although some completely new techniques are emerging with their own life cycles. These include producing power purely from the warmth of rocks and producing energy from water at lower temperatures. The maturity of current deep geothermal technology explains its low cost base relative to many other renewables. It can be as cheap as low-cost biomass alternatives, and maximum costs are nowhere near as high as most competition, ranging from around €45 to €110 per MWh. Philippe Dumas, secretary of the European Geo-thermal Energy Council, predicts that European investment in the sector will nearly triple between now and 2020, from around €6bn in 2001-2010 to €15bn in the next decade. “It’s been forgotten about in the past,” he says, explaining the main reasons for this growth: geothermal was previously considered a niche market. Put on the backburner decades ago, geothermal energy is now undergoing a complete revival. Still, even by 2020, geothermal will only be responsible for 1% of the EU’s electricity production from renewable sources – about the same as marine power, according to the European Renewable Energy Council’s Technology Roadmap published earlier this year. This low figure is partly explained by the limited number of locations where deep geothermal resources can be exploited. “[Deep] geothermal energy is very site-specific and depends strictly on certain technical and economic conditions,” explains Dr Guido Cappetti, who runs Italian utility ENEL’s geothermal power operations in Tuscany. He says there is no point in developing solar in the region because geothermal is far cheaper; it is not available everywhere, however. Investors are also picking up on a decades-old type of geothermal power: shallow geothermal energy, through which energy is extracted from the ground from wells around 100m deep. Shallow geothermal energy can be used for district heating systems and has already been competitive with oil and gas for a year or two. Dumas reckons that the ground source heat pumps involved in the process, which pump the water taken from the shallow aquifers and heat it to 50-60oC for domestic use, are competitive when oil exceeds $40 a barrel. Sales of ground source heat pumps are due to double within the next two to three years, because this established technology allows householders to cut their heating bills by 75%. New low-carbon building policies all over Europe are beginning to bite.  Europe owes much of this new venture to Iceland, whose geo-thermal expertise is most developed. Iceland’s carbon emissions are low due to its volcanic terrain, which has enabled it to enjoy the benefits of geothermal energy for over 50 years.
It is not surprising, then, that Geysir Green Energy, funded largely by Glitnir, an Icelandic investment bank that specialises in sustainable energy, announced in February its decision to spend €750m on geothermal energy around the world; opportunities exist in 36 countries. “Countries that have been concentrating on geothermal technology, such as Iceland, have not been focused on marketing their knowledge and skills and haven’t told the rest of the world about it. That’s going to change now,” remarks one geothermal expert. ENERGY SOURCES COMPARISON 
GEOTHERMAL ENERGY Geothermal energy has a lower cost base and narrower cost range than many other clean energy options. The wide bands given to most forms of energy in the chart reflect the importance of location; many locations could theoretically provide some renewables, such as solar, but in such cases the difference between a sun-drenched location and a cloudy one could equate to more than 100% of the cost base of the resulting energy. CHART SOURCE: Future of Renewable Energy Systems study, 2005 |