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Geothermal energy strengthens Hungary’s energy security – Q&A with Marcell Biro, President of the Hungarian Supervisory Authority for Regulatory Affairs

Dr Marcell Biro, President of the Supervisory Authority for Regulatory Affairs of Hungary will be one of the speakers of the Budapest Geothermal Energy Summit to be held on 5 June.

Ahead of the Budapest Geothermal Energy Summit, we spoke with Marcell Biro, President of the Supervisory Authority for Regulatory Affairs of Hungary (SZTFH/SARA) about the geothermal energy landscape in the country, the newly-approved regulatory framework and the obstacles still to overcome.

Q: In March, Hungary amended its law to create a predictable and flexible regulatory framework for geothermal research projects. What is the background of this decision?

A: Europe is facing an energy shortage that is not only affecting citizens but also spilling over into industries, slowing down and making supply chains more expensive. Harnessing the development potential of clean energy production, including geothermal energy, can help to deliver more efficient, greener and more secure supplies of some public services in the medium term. Nevertheless, this effort also requires the relevant authorities to create a legal environment that encourages investment in green energy. To achieve the objectives mentioned above, Supervisory Authority for Regulatory Affairs has set a target for 2022 to further deregulate the administration related to geothermal energy while tackling possible bottlenecks when it comes to geothermal project management.

Q: What are the main benefits of geothermal energy in Hungary? How it can help the country to strengthen energy security and how it fits into the country’s long-term energy strategy?
 
A: The Carpathian Basin is a unique geological and hydrological formation, with a crustal thickness of 25-30 km, which is less than one-third of the average crustal thickness of the European continent. Because of this absolute proximity, the heat flow from the internal magmatic environment is very strong, for example, upwards. A fortunate local feature could be identified as well: the former Pannonian Sea’s remnant seawater has been trapped between rock layers, so not only heat but also heat-carrying medium (water) is available in Hungary.

Geothermal energy contributes to strengthening the pillars of Hungary’s energy security. By radically increasing the production of thermal energy in Hungary, approximately 1 to 1.5 billion cubic metres (bcm) of natural gas per year could be replaced at the national level by implementing the following development targets:

  • full or partial conversion from natural gas district heating in case of domestic heating, and the development of local thermal water heating systems for municipalities;
  • meeting the heating needs of green and brownfield industrial investments;
  • further expansion of agricultural use.

Q: Can you explain the new regulatory framework? How the regulations related to geothermal energy projects have changed from the beginning of March?

A: From 1 March 2023, the regulatory environment for domestic geothermal energy was simplified in the following elements:

  • simplifying and standardising the procedures for geothermal energy exploitation, both in terms of exploration, licensing and regulatory supervision;
  • speeding up the preparation and implementation of geothermal energy projects by reforming the rules and institutions governing geothermal energy exploitation.

Under the new rules, geothermal energy can only be extracted and used on the basis of a fixed-term contract with the mining authority. The contract is conditional on the existence of an agreement on the use of the geothermal energy extracted so that unnecessary projects cannot be carried out. The mining company must undertake to extract the annual amount of geothermal energy it intends to use. It is also essential that the extracted water is reinjected to the maximum extent technically and geologically feasible.

Q: What is the role of SZTFH in the process?
 
A: The one-stop shop system aims to create an efficient and fast administration by transferring the previously dispersed responsibilities uniformly to the Mining Inspectorate, which is headed by the Supervisory Authority for Regulatory Affairs. SARA’s Mining Authority keeps a public register of geothermal exploration areas, which is essential for the promotion of geothermal projects.

SARA explores the development of a range of possible incentive instruments to increase geothermal energy use. By strengthening a data-driven approach, a new complex research programme is able to serve the market and public data needs and is able to answer questions of preparation, exploration, drilling and technical feasibility for potential investors.

Q: Speaking about numbers, do you already see an effect of the regulations in practice? How many applications for research permits have you received are currently under consideration?
 
A:
As a testament to the success of the new system, the Authority received more than 50 applications for research authorisations in one day. With 70 applications currently pending, a number of successful geothermal projects could soon be launched across the country.

Q: The government recently established the Geothermal Energy Committee as a new actor and professional advisory board for geothermal projects. What’s the role of this body and how it will be involved in the decision-making?
 
A: The Geothermal Energy Committee aims to enhance the exploitation of the exceptional geothermal potential of the Carpathian Basin by all possible means to support the energy sovereignty of Hungary. To this end, the members of the committee will cooperate in the following key tasks:

  • the national evaluation of the research work programme accompanying the application of geothermal energy policy objectives;
  • the development of the heat market and the relevant R&D capacities;
  • the impact assessment (be it environmental, natural or urban planning) of planned geothermal investments.

The Commission delivers its reasoned opinion within 45 working days at the request of the Mining Authority.

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