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Geothermal district heating in the city of Kecskemét (MLEI GEOKEC - CITY OF KECSKEMÉT (HU))

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Altogether 12 cities run their district heating systems using geothermal energy in Hungary. It leaves further 208 cities which have the possibility to explore the feasibility of using geothermal energy for district heating. Nowadays, natural gas is the main source of district heating, supplying 75-80% of the energy demand of Hungary.The city of Kecskemét has made an initial mapping on the geothermal potential of the city. They are aware of all the parameters and have mapped the demands of the district heating market. The current district heating system of the city generates heat from a gas powered heat plant with natural gas boilers and gas engines. The objective of the municipality is to be as energy independent as possible from natural gas and fossil fuel price fluctuations in order to decrease the price for the consumers. The planned geothermal investment could help to achieve these goals providing up to 85% of the annual heat demand of the city from a reliable and locally available energy source. Establishing a geothermal heating system does not only increase the capacity of the existing system but also enables additional consumers to be connected to the network.

Results

  • Assessment of the feasibility of the geothermal reserve and the adequate re-injection techniques; Preparation of permitting procedures obtaining all the necessary licenses to start execution of the project.
  • Creation of a bankable financial model and a detailed business plan to finance the project; Identification of financial sourcesExpansion of the district heating system to private and industrial users.
  • Altogether the project consits of three phases. Phase 1 relates to this project having achieved the following:
    • Investments for a value of EUR 15 million have been launched for the retrofitting of the city district heating network to deep geothermal. Phase 1 estimates 7,5 MWth installed heat capacity.
    • Reduction of CO2 emissions by replacing fossil fuels (approx. 10,000 tons CO2e/year) and production of 44 GWh/year of renewable energy from sustainable sources.
  • Cost of heating reduced by 15–20% compared to the actual natural gas prices.
  • Geothermal energy replaces imported fossil fuel energy resources.
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Lessons learned

  • Negotiations with the relevant land owners are very time-consuming. Therefore, it is strongly advised to start the negotiations once the first suggestions for the track of the pipelines and for the well sites are known in order to be able to avoid delays in the project implementation, particularly in the licensing procedures.
  • Several unexpected difficulties can arise related to the financing of the planned investment, e.g., calls for proposals are not opened, delays in the announcement of the results, potential financial investors request more information to mitigate the risks, etc. It would be useful to gather information about the investors’ demands and conditions in advance. The continuous monitoring of the direct and indirect EU funds is also inevitable to provide non-refundable sources.
  • Mistakes in the schedule can cause overlaps between the activities which can lead to delays in the completion day of the deliverables. As a consequence, it is really important to create a well-designed schedule at the planning phase of the project proposal.
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Partners and coordinator

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Contact

Municipality of Kecskemét
Kecskemét
Hungary
Contact point: 
Name: 
Balogh Zoltán
Tel: 
+36 76 513-523

Budget

Key documents

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In brief

Duration:
21/03/2013 to 20/03/2016
Contract number: 
IEE/12/064

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