Hungary should implement a programme to encourage the efficient green transition of the country's district heating sector, which still relies on gas, Hungarian district heating association Mataszsz president Tibor Orban told Argus.
Gas demand in the country's district heating sector could fall gradually to less than 500mn m³/yr by 2030-35 from around 1bn m³/yr at present, Orban said. This would reduce Hungary's dependence on gas — something that decision-makers may want to consider when planning gas imports, Orban said. District heating accounted for 12pc of Hungary's 8.5bn m³ of gas demand last year.
Gas has a 75pc share in the sector's fuel mix, but it would be possible to add 550MW of carbon-free heat capacity and 11 PJ/yr of carbon-free output by 2030-35, Orban said. Mataszsz previously projected that biomass and geothermal energy could more than double their shares in the fuel mix to 27pc and 26pc, respectively, by 2030.
A programme to encourage the green transition and cost-efficiency of the district heating sector should be based on integrated development plans to be drawn up for individual heating systems, Orban said. Projects leading to lower heat consumption should be standardised under existing rules on energy-efficiency obligations, and pricing regulations should be updated to create adequate investor security and predictability for heat producers replacing gas, he said.
Another key goal should be to boost the energy efficiency of residential buildings — around 400,000 households with district heating are in buildings that have not been modernised, Orban said. Making these buildings more energy efficient could cut district heating gas demand by an additional 100mn-150mn m³/yr, although this task would probably take well over a decade to complete, he said.
A comprehensive programme could decrease operational support for the district heating sector by at least a third from 250bn forint/yr ($690mn/yr) at present, Orban said. Heating tariffs for households and small enterprises, which make up 98pc of the country's 688,000 district heating customers, are capped by the government. The government finances the resulting revenue shortfalls of district heating companies from the central budget.
The government rolled out new rules to simplify geothermal permitting procedures in 2022. But projects to produce up to 1mn GJ of heat from geothermal energy in Budapest have been waiting for exploration permits since March last year, Orban said. Orban also serves as deputy chief executive for energy and district heating at city-owned public utility BKM. The firm plans to upgrade its waste-to-energy plant and is studying opportunities to use large-scale heat pumps in district heating.
Developers launched geothermal and biomass-fired district heating units with a combined capacity of 46MW in the countryside last year, and other projects — such as a 26.5MW geothermal development in Szeged — are also progressing, Orban said. The EU and the government generally provide sufficient support for developments, and planned new tenders are expected to offer almost €160mn ($171mn) and Ft300bn of financing for future projects fully or partially related to district heating, he said.
