For east Europe, geothermal can replace some gas

MAKO, Hungary (Reuters) - Lajos Barath last year took an ancient route to energy for his hospital. Switching the heating and hot water entirely to geothermal energy, he was building on a Roman discovery continued by the Turks.

Besides saving energy costs, the two wells 2,150 meters (7,000 feet) deep from which hot water is pumped proved a good investment last month, when Russia cut off gas supplies through Ukraine in freezing midwinter.

“We set up an energy system in our hospital ... which is based on a national treasure,” said Barath, director of the Diosszilagyi Samuel Hospital in southeast Hungary where the reputedly therapeutic thermal waters have flowed for decades.

“We channeled the savings into treating patients.”

People worldwide have enjoyed hot springs at least since Roman times. Among scant potential alternatives to Russian gas in eastern Europe, experts say geothermal reserves could in the medium term be an option to reduce -- not end -- the dependence on natural gas.

Russia is the only source of gas imports for some eastern European countries including Serbia and Bulgaria. Of Hungary’s annual gas consumption of between 13 billion and 14 billion cubic meters, about 80 percent comes from Russia in pipelines that run through Ukraine.

After Italy and Iceland, Hungary is among the countries in Europe with the best geothermal potential since the earth’s crust is significantly thinner beneath Hungary than elsewhere.

“In terms of non-volcanic areas, Hungary is one of the best places (for geothermal energy) in Europe, and conditions are well above the average even in global terms,” said Attila Kujbus, chief executive of CEGE Zrt, a unit of oil and gas group MOL and Australia’s Green Rock Energy.

His company is testing some of Hungary’s 8,000 or so mostly abandoned oil and gas wells for water that could later be used for heating, or possibly generating electricity. Bulgaria and Poland are also among countries with good geothermal potential.

The highly capital-intensive nature of such projects may deter some from geothermal as a business proposition, but at a local level -- as in Barath’s hospital -- the earth’s power could help households get by with less gas.

It cost 175 million forints ($760,000) to change the hospital’s system fully to geothermal using two existing geothermal wells, and Barath expects to save between 18 million and 20 million forints annually in energy costs.

The investment should pay off in about eight years.


The United States and the Philippines are the world’s two biggest producers of geothermal energy, which is constrained by a lack of technology. Other big producers include Mexico and Indonesia.

Geothermal is mostly divided into two categories -- electricity production and direct use including heating and supplying baths with thermal water.

The world’s installed geothermal generation capacity in 24 countries was about 8.9 gigawatts, equivalent to about 0.3 percent of world electricity in 2004, according to a 2007 report by the U.N. Climate Panel.

With strong growth, that share could rise to 2 percent by 2030, it said. By contrast, a large nuclear reactor produces about 1 GW.

Bulgaria’s geothermal potential is mostly unused with at least 160 locations with geothermal springs, according to the Bulgarian Academy of Science.

Some villages and towns such as Sapareva Banya in southwest Bulgaria have been using geothermal water to heat administrative buildings and schools since the communist era.

In Poland, parts of the mountain resort Zakopane in southern Poland are heated using geothermal energy, but environmentalists say costs and red tape hinder broadening its use.

In Hungary, initiatives at a local level have already made a difference. Hodmezovasarhely, a sprawling agricultural town in the southeast, uses geothermal energy to heat apartments and community buildings.

“While 15 to 16 years ago we used 4.5 million cubic meters of natural gas to heat some 2,800 flats and public buildings, today we only need 600,000 cubic meters (per year),” said Pal Kovacs, an aide to the town’s mayor.

“The cost to produce the energy we need is one-third what it would be using gas,” said Kovacs at the city hall in Hodmezovasarhely, which plans to drill more wells this year and in 2010.

“We trust that the EU will support these (kinds of) investments,” he added.

Hungary’s cash-strapped state can provide little support for such projects at a time when the country had to resort to a $25.1 billion IMF-led rescue package last year to avert crisis.

From Budapest, where the Turks who occupied the country in the 16th century left beautiful still-functioning baths, to Europe’s largest thermal lake in Heviz, Hungarians find well-being in such projects.

Pensioner Julianna Hajdu, relaxing in the thermal bath in Mako, is convinced of the benefits:

“If I don’t come here for two days I don’t feel well, this water is so good for me,” she said.

Reporting by Krisztina Than, Additional reporting by Irina Ivanova in Sofia, Piotr Pilat in Warsaw and Alister Doyle in Oslo; Editing by Sara Ledwith