The power station belongs to Transgex company based in Oradea, western Romania. Transgex is part of the Dafora group, a EUR50 million business with activities in construction and drilling, controlled by businessman Gheorghe Calburean.
Transgex has been exploiting geothermal water reserves in western Romania since the ‘60s, but it has used this source of energy mainly to heat homes and to deliver hot water to a few towns in Bihor county, including capital Oradea.
At the beginning of 2013 the company connected its first geothermal power station to the grid, with the investment amounting to around one million lei (EUR220,000). The power station has an installed power of 50 kW and delivers continuous energy, similarly to a thermal power station. The facility is able to produce around 400 MWh of electricity over the course of a year, enough to power 200 homes. The 50 kW compare poorly with the installed power of wind farms and photovoltaic parks, which exceeded 2,500 MW on December 1 2013.
After this investment, Transgex was planning to extend the power station to a capacity of at least 1 MW or build new power stations in other areas with geothermal water.
But the plans were dropped because the investment needed is very high, with drilling alone costing several million euros, while the company’s revenues from selling electricity are low.
In addition, energy production from geothermal water is not subsidized through the green certificates system, as is the case of wind and photovoltaic energy producers.
The contract whereby Transgex is selling its green energy production to an energy supplier is set to expire at the end of this year and it is not known if a new contract will be signed, company representatives say.
“Now they are offering us RON150 per MWh, similarly to photovoltaic energy, but we deliver continuous power [unlike photovoltaic energy]. Since we don’t have the support of green certificates, this money does not cover the investment, we might as well donate it to a university or a lab,” says Ionel Mutiu, an engineer at Transgex.
Startup costs represent the bulk of the overall cost of a geothermal project, according to an investment guide put together by GeoElec investment guide, a project meant to promote geothermal energy co-financed by the European Union. Drilling expenditures alone account for 50-75% of the overall cost of the project, according to the guide which uses a 5-MW power station in Germany as a case study. In this case, spending on exploration of geothermal water is EUR1-EUR3 million, drilling costs between EUR10 and EUR30 million and the power station itself costs up to EUR20 million.
European Commission not notified because of low interest for geothermal energy
Although the law that supports green energy in Romania sys two certificates should be granted per MWh produced from geothermal water, the Transgex project has not been notified to the European Commission by energy market regulator ANRE, so the biothermal power station cannot receive state aid. ANRE cites low interest for this sector and says it does not have the arguments to persuade the European Commission to approve subsidies.
If it were eligible for subsidies, Transgex would receive around 600 certificates per year, worth a total of around EUR26,000 at the certificates’ current market prices.
But things could change if the Government approves a subsidizing system dedicated to producers of energy from renewable resources which hold plants with a capacity of less than 1 MW. If the system is approved, producers would receive a fixed price for every KWh delivered into the grid, as is the case in other European countries.
For instance in Germany, where the installed capacity of geothermal water power stations exceeds 200 MW, a fixed fee is offered – EUR0.25 per kWh produced from geothermal water and delivered into the grid, equivalent to EUR250 per MWh or around six Romanian green certificates per MWh.
Expansion on heating segment
Apart from the investment in generating electricity from geothermal water, the Transgex representative says there are development opportunities on the municipal heating segment. The company provides heating to a few districts in Oradea and towns nearby the border with Hungary, such as Beius and Bors. The weather has been warmer this year and the amount of hot water delivered by the company in November was half that delivered in the same period of last year, so Transgex expects a 3% lower turnover this year against the RON12 million (EUR270,000) turnover recorded last year.
“We deliver the equivalent of 130,000 gigacalories per year, the bulk of which is to Oradea. If there was more interest, we could get to 200-250,000 gigacalories per year in total,” Ionel Mutiu also said.
Oradea’s annual heating consumption is around 620,000 gigacalories.
“On the heating segment, Beius wants us to extend beyond 50% coverage of the town. Currently all blocks of apartments have joined the grid and houses are starting to join the grid as well. At Bors we plan to start to deliver heating and hot water to an Italian company. It has a 5,000 sq-m facility and we would be delivering 1.5 MWh of heating during wintertime and only hot water for consumption during the summertime,“ adds the Transgex representative.
(English version by Daniela Stoican)