IEE/12/064/SI /02/2015

Municipality of Kecskemét - General economic data  Capital of Bács-Kiskun county  Economic, administrative, educational, and cultural centre  Population: (2011), number of households:  Important investors (e.g., Mercedes-Benz factor opened in 2012)  Economic structure:  48.3% service  % industry  10.31% agriculture  Perfect location  M5 Motorway  85 km from Budapest  70 km from the airport  NATO airbase to be transformed for civil use

Scheme of the Existing district heating system Heat provider: Termostar Kft. Owners: 69.5% - Municipality 30.5% - EDF DÉMÁSZ Zrt. Heating Company Proprieraty Two independent distribution system Total heated space: m 3 No. of heated flats: Supplied heat amount: GJ No. of heat transfer stations: 309 Distribution System Capacity requirement: 38 MW Hot water requirement: 3 MW Covers hot water heat requirements Capacity: 6,6 MW thermal capacity 6,2 MW electric capacity Capacity requirement: 19 MW Hot water requirement: 1,5 MW Széchenyiváros System Árpádváros SystemGas Engines

District heating system – Future plans  Connection of the two separate networks financed by the Environment and Energy Operational Programme (Structural Funds) - executed  Use of geothermal energy in the district heating system  Installation of efficient gas boilers replacing the old ones  Further extension of the district heating system with residential and industrial consumers is possible and considered

Future demand for the district heating network

Project plan

Layout of the geothermal system

Installed Geothermal Capacity Length of the heating season: 182 days Peak time capacity is required in very few days a year Produced heat amount is not linear in function of the installed capacity Optimal capacity Temperature distribution chart Produced geothermal heat Optimal capacity

Phase 1: 3,5 MW capacity; GJ heat Phase 1+2: 18,3MW capacity; GJ heat Phase 1+2+3: 28,2 MW capacity; GJ heat Execution Phases (1) Install geothermal heat plant in heat transfer station no Drill 1+1 wells Pre-heat secondary loop return water Phase 1 Connect Széchenyiváros system into geothermal heat plant Drill 3+3 wells (total 4+4 operates) Pre-heat primary loop return water Phase 2 Connect Árpádváros system into geothermal heat plant Drill 2+2 wells (total 6+6 operates) Pre-heat primary loop return water Phase 3 Safety – Reduce drilling risk Adapted milestones Earlier operation Income Subsidy Advantages 3 parallel pipeline is installed (2 small + 1 large) Large pipeline is unused in phase 1 2 small pipelines reinject in phase 3 Supply and Reinjection Pipeline Energy produced

Kecskeméti Termálrendszer Beruházó Ltd. (project company) 7% Municipality of Kecskemét 93% EU-FIRE Ltd. Municipality of Kecskemét Termostar ( district heating company) 69% municipality of Kecskemét 31% EDF Additional professional investors Contractors Financial investors EU-FIRE Ltd. Contractual relation Ownership relation End users (present and future consumers of the heat) Actors involved

Discount rate is less than 15% The project is feasible, if the following criteria can be fulfilled Sale Price: greater than 2500 HUF OR Phase 1Phase 1+2Phase Drilling € € € Execution € € € Total Investment Cost € € € Phase 1Phase 1+2Phase Heat Amount GJ GJ GJ Revenues Sale price: 2500 HUF/GJ €/year €/year €/year Expenditures €/year €/year €/year Operating income € € € SubsidySale price:2500 HUF/GJ 20% NPV € IRR20,8 % Financing of the proposed investments (1) Investment Cost Yearly Net Income Financial Results with 15% discount rate

What has already been done? Task carried outDate (year/month)  Heat market evaluation  Existing system study 2011/2-2012/2 2011/3-2011/8  Preliminary geological data gathering  Preliminary Well Site Report  Reservoir modelling for the Pre-feasibility study 2011/7-2012/7  Pre-Financial modelling2011/11  Pre-feasibility study2011/3-2011/12  Project company founded with private investor2011/8  Preliminary negotiations with possible investors 2011/ /8

Overview of the workplan  1: Management  2: Preliminary studies  3: Licensing and permitting  4: Technical and financial engineering of the geothermal plant and system  5: Procurement  6: Financing  7: Communication  8: EACI Dissemination Activities

Partners & Contacts Name of the beneficiaryContact person Municipality of Kecskemét Kecskemét Megyei Jogú Város Önkormányzata Dr. Lívia EU-FIRE Ltd. EU-FIRE Kft. Péter Project Company (KTRB) Kecskeméti Termálrendszer Beruházó Kft. Imre