THE ROLE OF BIOENERGY IN HUNGARY

Századvég Economic Research

Szabolcs Vágvölgyi

1

The agenda for today

1. Hungary’s historical energy production from bioenergy

2. Future trends in the production and consumption of energy from bioenergy sources

1. Heat

2. Electricity

3. The future of bioenergy usage in the district heating sector, some implications

4. Biogas usage potential in the transport sector

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0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

0

10

20

30

40

50

60

70

80

90

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

PJ

Production of primary energy from renewable sources and waste

Hydropower Wind power

Geothermal Solar power

Sewage gas, landfill gas and other biogas Biofuels

Biomass and renewable part of municipal waste Percentage of primary energy produced from renewable sources

The share of renewable and bioenergy in the Hungarian energy production sector

3

Sou

rce:

KSH

, 20

14

• Bioenergy sources dominate the Hungarian renewable energy landscape:• In 2015 63,7 PJ energy was produced from biomass and the renewable parts of municipal waste (incineration)• Energy produced from biomass accounted for three times the amount of the rest the of renewable energy sources,

combined• Biofuels came at second place in 2014, producing 10,9 PJ in 2014, while biogas sources reached 4,2 PJ (ranking 4th after

geothermal)

2015-2020 will see the largest increase in the amount of energy produced from biological sources

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2015 2020 2025 2030 2035 2040

PJ

Projection of renewable energy production, including bioenergy

Solar power Wind power Hydro Biomass Biofuels Other biogas Sewage gas Landfill gas Geothermal Waste incineration

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• Based on our projections, bioenergy has a large growth potential, that is particularly strong in the period of 2015-2020• In the aforementioned period biomass usage is projected to increase by 5,2 PJ• The growth in biofuels is also significant, reaching 16,8 PJ in 2020 as opposed to 7 PJ in 2015

• But as we will see, there are some limiting factors

Electricity production though will not be the primary destination for bioenergy feedstock

5

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726

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1000

2000

3000

4000

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2015 2020 2025 2030 2035 2040

GWh

Projection of electricity production from renewable sources, including bioenergy

Solar power Wind power Hydro Biomass Mixed biomass Other biogas Sewage gas Landfill gas Geothermal Waste incineration

• Based on our estimations, the bioenergy carriers will not be primarily used in electricity generation:• Biomass is projected to increase, but even in 2040 it is estimated that it will only produce ~ 5,07 PJ of electric power • But solar and wind power are projected to take up the majority of the renewable energy increase

• Having said that one also has to recognize that biomass mixing is quite popular in the second largest power plant in Hungary,a practice that is likely to increase if the EU ETS manages to prove to be more stringent

It is rather heat production that bioenergy sources will be used for

6

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70

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2015 2020 2025 2030 2035 2040

PJ

Heat production from renewable sources

Residential biomass District heating biomass Industrial biomassGeothermal Inudstrial waste incineration District heating waste incinerationBiogas sources Solar thermal

• Even nowadays, a considerable number of Hungarian households are using wood as their primary source of energy for heating

• We are expecting that year by year less and less residential biomass will be used• We project more than the doubling of biomass used in the district heating sector, and besides, industrial players are also

expected to start up more biomass based head production facilities

It is especially the poorest households that use wood as the (only) source of heating

52%

35%27%

22%18% 17% 15%

8% 6% 5%

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11%9%

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17% 17% 16% 19% 19%23% 27%

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1 2 3 4 5 6 7 8 9 10

Distribution of heating methods by income deciles

No district heating, natural gas not connected, other heating Natural gas available, but not primary source of heating

Natural gas available, secondary heating available Natural gas available, no secondary source

District heating

Source: KSH, 2013

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• A large share of the poorest Hungarian households do not have access to the natural gas network, and as such, use mainly solid fuels (wood) to heat their homes

• As mentioned before, we do expect that the share of wood in the residential heating sector will become less important• As such biomass will become of less significance to the households themselves, limiting the growth of the bioenergy industry

In 10 years biomass will already be the single most important source of energy for the district heating sector

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9.72

5.80 5.043.61 3.73

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10.63

6.35

4.14

2.97 3.07

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0.77

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0.46

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3.70

5.75

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0.50

0.90

2.502.50 2.95 2.95

0

5

10

15

20

25

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2015 2020 2025 2030 2035 2040

PJ

Projection of district heating energy production

Natural gas (CHP) Natural gas (non-CHP) Other non-renewable Geothermal Biomass Waste incineration

34,8

31,

28,827,3 27,5 28,1

11%

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31

51%

69

• At the moment natural gas supplies almost exclusively the district heating sector, with a large share of CHP plants• The share of natural gas is projected to decrease though to the advantage of the bioenergy sector• Biomass usage in the district heating sector will increase to the extent that by 2025 it will be the single most important

source of heat

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

Hő

telj

esí

tmé

ny

(M

W)

Nap/év

Szentendre

bio: 47 189 GJ, 57,0% CHP: 0 GJ, ,0% csúcs: 35 638 GJ, 43,0%

• Northern Buda district heating system• 74 MWth operational CHP capacity• Considering the average climatic conditions

and demand for heat, the system could be complemented by a 20 MW wood chips boiler

• Results: • 30,4% energy from biomass• 58% from CHP• 11,6 from natural gas boilers

Biomass burning fits well into the district heating systems

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

200,0

Hő

telj

esí

tmé

ny

(MW

)

Nap/év

Budapest Észak-Buda

bio: 544 901 GJ, 30,4% CHP: 1 040 020 GJ, 58,0% csúcs: 208 072 GJ, 11,6%

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Biomass

CHP

Peak, natural gas non-CHP

• Szentendre district heating system, much smaller unit

• Currently run exclusively on gas boilers• 2,5 MW biomass capacity could supply 57% of

the energy produced• Whilst the gas boilers could operate as the

peaking units

Hungary’s biogas potential and the transport sector

10

30.7

52.1

77.26

19%

33%

49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

10

20

30

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50

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80

90

Low Medium High

PJ/

year

Scenarios

Biogas production potentials in Hungary

Biogas production potential

Share of biogas in the primary energy consumption of transport

Fuels GHG emissions (g CO2e/MJ)

Diesel 89

Petrol 87

CNG/LNG 63-75

Biomethane from landfill gas 18

Biomethane from slurry -70

Biomethane from energy crops 40

Biomethane from second crops 30

• The 2014/94/EU Directive requires member states to roll-out the infrastructure for alternative fuels , such as:

• Electricity• Natural gas (CNG, LNG)• Hydrogen (optional)

• Gas based transport has advantages over other alternative fuels:

• Limited range anxiety• Wide range of perspective for applications• Lower carbon emissions• Lower PM, NOx, NO2, CO emissions

• 2014 Sweden: 57% of the biomethane produced was used in the transport sector

• The lower carbon intensity of natural gas as a fuel truly manifests itself when biomethane is used as the fuel - mixing

• It is estimated that Hungary has a large biogas potential, which after further treatment, can be used as biomethane in the transport sector

• Based on the most pessimistic projections, even the lowest biogas production potential may meet 19% of the energy consumption requirements of the entire transport sector (excluding other uses of biogas)

Thank you for your attention!

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