State utility price cuts are undermining renewable energy efforts

Small investors welcomed the National Development Agency’s decision on providing 2.8 billion HUF non-repayable grant to PannErgy Plc’s subsidiary PannErgy Geothermal Power Plants Ltd, the news was announced on 2 April 2013. The grant covers half of the investment needed for the implementation of PannErgy’s project for the construction of a plant-farming  greenhouse complex in Miskolc city. In spite of the optimistic comments published on investor forums, expecting the news to boost the company’s stock performance, the share price didn’t rise to the last year’s 600 HUF peak; the highest price it reached was 400 HUF. The company has István Töröcskei sitting on its board, Mr. Töröcskei is the “oligarch official” who was featured in atlatszo.hu’s Oligarchopedia.

PannErgy Plc is one of Hungary’s major renewable energy companies which has already been running smaller investments, but the breakthrough is expected from their Miskolc project which aims to partly replace the city’s central heating system (MIHŐ Ltd) in the Avas district with the use of  the geothermal wells near Miskolc. A part of the project, which received the grant in April, is to construct a “plant-farming  greenhouse complex which utilizing the waste heat that comes from the heat supply system of Miskolc’s Avas and inner city districts” (pdf). At the moment the implementation of the system is delayed; it should have been in place by 2012. Meanwhile, the utility price cuts introduced by the government highly decreased the price advantage of geothermal energy. This in the long term may result to making PannErgy’s activities unprofitable, and this way to the nationalisation of PannErgy since the European Union regulation requires projects sponsored from EU grants to be sustained by the state.

Read the full article in Hungarian here.