RPT-FEATURE-For east Europe, geothermal can replace some gas

By Krisztina Than

July 15, 2010 Updated Feb 11, 2009 at 9:01 AM CDT

MAKO, Hungary, Feb 11 (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 metres
(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 channelled 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 metres, 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.

POTENTIAL

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 metres
of natural gas to heat some 2,800 flats and public buildings,
today we only need 600,000 cubic metres (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)

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