Top 50 Energy 2023 Sample

TOP 50 EXECUTIVES

• LISTS: BBJ Research (research@bbj.hu)

• CONTRIBUTORS: Annamária Bálint, Kester Eddy, Mihály Kovács, Robin Marshall, Bálint Szőnyi

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• LAYOUT: Zsolt Pataki

• COVER

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Foreword

Even in “normal” times (does anyone out there remember what that was like?), it is all but impossible to overstate the importance of energy. It gives us the warmth and light to transform brick and concrete shells into homes. More importantly, for a business publication, it is the lifeblood that powers our economy.

These, though, are not “normal” times. The drive toward a netzero future was already throwing up any number of challenges for business leaders. Should we switch to renewables today or wait until tomorrow, when the price point for the technology will be better? What form of renewable should we opt for? What happens if the wind doesn’t blow or the sun doesn’t shine? When will storage batteries be an achievable part of the renewables infrastructure? On top of all these open questions, came Russia’s war in Ukraine and the resulting energy crisis. If COVID had been a bad time to be in the energy industry (especially for the upstream producers of the raw material), the energy crisis has been outstandingly good.

The combined effect of these two events, of net-zero and the energy crisis, which have at least the appearance of simultaneously pulling us in diametrically opposed directions, is that everyone now thinks a heck of a lot more about their energy, where it comes from, and how much it costs. Energy security, a concept that American diplomats, in particular, have warned European leaders they must engage with, often with a palpable sense of frustration, is at last front and center. All of that cheap Russian gas and oil finally looks less attractive.

The Hungarian approach has been interesting. Those with long memories may recall a time when much of Russia’s

Europe-bound fossil fuels went via Ukraine. A payment and delivery dispute between these two could, and did, have repercussions for European supplies. The Hungarian response was to build interconnectors with as many of its neighbors as possible, so oil or gas could be rerouted if necessary. Government members have often touted that diversity of supply as a great success. More than one U.S. Ambassador has noted that how it gets into Hungary is not the real problem if it all comes from the same source.

Landlocked Hungary would rightly point to the fact that the realities on the ground do not always marry up with the grand ideals. Like America, Hungary has oil and gas beneath the ground, but nothing like enough to supply all its needs. Affordable alternatives to Russia simply have not existed. LNG shipped to Croatia is a start, but neither as efficient nor as cost-effective; facilities elsewhere in Europe will be the next big step. Azerbaijan may be a game-changer, and Romanian Black Sea supplies would undoubtedly help if and when they come online. But, Croatian LNG aside, none are available today. Be that as it may, the reality of energy security is now excepted by all. Finding a path (more likely paths) to a solution is the next stage.

The energy industry is a vitally important part of the Hungarian economy and fully deserves deeper attention. This publication seeks to give it just that. We trust you find it useful and useable.

Robin Marshall Editor-in-chief Budapest Business Journal

HUNGARIAN ENERGY INDUSTRY

Photo by Gorodenkoff / Shutterstock.com

Energy Extinction: Scenarios for Company Survival; Looking for Ways Out of the Energy Maze

Against the backdrop of an ever-likelier recession, Hungarian businesses are suffering from ballooning energy bills and are at the mercy of unpredictable market developments. At a time when improving energy efficiency seems the only way forward, companies are looking for all kinds of ways to keep themselves afloat. The government, too, has a role to play.

Energy costs for energy-intensive businesses like glassware factories make up a much higher proportion of total revenues.

Photo by Mirelle / Shutterstock.com.

Hungary’s Mission to Reshape the Energy Mix

According to Policy Solutions research, four out of five Hungarians believe the country should become energy-independent. The job is not that simple, though, given Hungary’s extreme dependence on Russian gas. On top of the natural choice of pushing the share of renewables up, nuclear power will be as important as diversification of energy sources, reimagining electricity storage, and cutting consumption through large-scale energy efficiency investments.

The Paks Nuclear Power Plant is undergoing a significant and expensive overhaul to add two more blocks. Photo by samatotoh / Shutterstock.com

Geothermal Resources Offer ‘Huge Potential’ for Heating, Electricity Production

The small town of Szentlőrinc, 250 km southwest of Budapest, on the road from the city of Pecs to the Croatian border, appears unremarkable

by the passing motorist. Yet, in one respect, this community of 7,000 souls is exceptional and effectively a modern-day pioneer.

By Kester Eddy

For some 900 of its homes, housing the majority of the town’s population, are heated by water sourced from a point 1,800 meters below ground. This reaches the surface just a dozen or so degrees below boiling point before entering a heat exchanger system that provides the settlement with heat and hot water. The thermal water is, meanwhile, returned via a second well to replenish the same geological layer from whence it originated.

With a heating capacity of four megawatts (MW), this project, begun in 2008 and completed in 2010, replaced a natural gas-fired district heating system and resulted in a reduction in annual greenhouse gas emissions of 26 tonnes, primarily carbon dioxide and nitrogen oxides, according to PannErgy Geothermal Power Plants, which partially owns and operates the facility.

Yet, perhaps surprisingly, Szentlőrinc is only one of 14 municipalities in Hungary utilizing geothermal energy to heat its homes and, frequently, business sites.

“We are in a basin, and the upper layer of the earth is very thin in Hungary, so we have very high heat flow, and we have

a lot of water stored in the rocks [below ground], and that can be harvested,” says Gábor Molnár, managing director of Mannvit Hungary, the local subsidiary of its Icelandic parent, and the project management company responsible for the design and delivery of the Szentlőrinc plant.

‘LOW-HANGING’ HEATING FRUIT

District heating systems are the “low-hanging fruits” most readily available for conversion to geothermal heating, according to Molnár, and, partly as a consequence of sizeable urban housing schemes built in the communist era, Hungary boasts some 220 heating companies supplying 680,000 consumers, or 16% of all homes, in nearly 100 municipalities across the country.

Geothermal water resources were first explored in Hungary in 1958, but with the availability of cheap Russian gas, these were not first tapped for district heating purposes until 1987 in the town of Szentes, 150 km southeast of Budapest.

And with the expansion of geothermal heating projects, most notably in the cities of Győr (121 km west of the capital) and Debrecen (232 km east) during the past decade, these renewable sources provided some 4.7 million gigajoules

“Ninety percent of this 70% [of gas demand for district heating] could be replaced by geothermal energy. The geothermal potential of Hungary is much higher than the total heating demand for all houses and all industries [together].”

and easily forgotten

Hungary’s ‘Largest Renewable Energy Producer’ Looking for a Business Case to Invest

Pannonia Bio is the largest grain biorefinery in Europe and is based in Dunaföldvár, 99 km south of Budapest by road. Although grain processing lies at the core of what the company does, there is no doubt that it is also a significant energy player.

Eric Sievers, investment director of ClonBio Group Ltd., Pannonia Bio’s parent holding company.

Taking a Transparent Approach to ESG

László Fazekas, CFO and deputy CEO of MVM Group, discusses the reasoning behind and aspirations for the Hungarian power company’s newly announced Green Financing Framework and how it intends to become carbon neutral by 2050.

By BBJ Staff

BBJ: MVM announced its Green Financing Framework on May 30 to help meet its Paris Agreement climate targets. Why publish the framework now, and what does it set out to achieve?

László Fazekas: In December 2022, MVM adopted its ESG strategy and accompanying KPI set to formalize the group’s ESG-based sustainability framework and ESG commitments. Right after that, MVM started working on a financing framework to support realizing its business plan with funding sources. MVM chose its Green Financing Framework following the International Capital Market

Association’s Green Bond Principles because it seemed the best fit for our green goals. We also hope that the special attention paid to our green efforts through the Green Financing Framework’s transparency and reporting obligations will help the market, including our customers, better understand our ESG strategy and objectives.

BBJ: Fitch has given your planned U.S. dollardenominated bonds a senior unsecured rating of “BBB.” MVM intends to use the net proceeds from the bonds to finance and/or refinance eligible green projects. How much are you expecting to raise through the issuance?

Hungary and Energy Price Caps: A Cure-All or A Toxic Addictive Drug?

It is a massive understatement to say that Hungary has been flirting with introducing price caps on different forms of energy. Her relationship with what purists might argue is one of the forbidden fruits of the market economy has been more of a steamy love story.

By Bálint Szőnyi

Domestic households have been enjoying centrally set price limits for electricity and natural gas since 2013, and vehicle fossil fuels were sold much below the market price for nearly a year. Advocates point to benefits, including reining in inflation; critics stress the painful long-term effects of market distortions. Practice shows that energy price caps exist for a reason but must be handled with the utmost care and are meant for a limited time.

Price caps are far from being a contemporary invention and have been employed as tools by economic policymakers throughout history. In fact, as early as in the 3rd century CE, the Roman Emperor Diocletian (ruled 284-305 CE) regulated the price of up to 800 products. His objective was to control inflation; however, tradespeople found a way around it by going off the books or switching to barter, so the measure didn’t achieve its goal.

Present-day decision-makers tend to be tempted by similar practices in desperate times. And now that two-digit inflation is ravaging the economies of more

ENERGY EXECUTIVE BIOGRAPHIES

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ENERGY INDUSTRY LISTINGS

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Energy Producers and Traders

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