Észak-Alföld Final Report

Peer Review, November 5 th – 9th 2012 Észak-Alföld Final report

The peer review and this report were carried out by the peer review team below. Contact details can be found in Appendix VII.

From left to right: Jonty Holden(trainee at ÉARDA, GB), Orry Barnard (trainee at ÉARDA, GB), Pieter de Haes (Flevoland, Netherlands), Gyula Oláh (ÉszakAlföld, Hungary), Gábor Vámosi (ÉszakAlföld, Hungary, host), Satu Norsten Manninen (Norrbotten, Sweden), Fred Nordström (Norrbotten, Sweden), Mia Eliasson (Norrbotten, Sweden), Melinda Matrai (ÉszakAlföld, Hungary, host), Plamen Venkov (Sofia, Bulgaria), Diny Weener (Flevoland, Netherlands), Noemi Ganea (Flevoland, Netherlands), Adina Dumitru (Maramures, Romania), Winnie Prins (Flevoland, Netherlands), Rali Manolova (Sofia, Bulgaria), Manol Manolov (Sofia, Bulgaria), András Ibrányi (ÉszakAlföld, Hungary, host), Mary Basheva (Sofia, Bulgaria). On the small pictures are Gerasimos Mentzelopoulos (peer review member from Patras Science Park, Greece), Kenneth Backgård (peer review member from Norrbotten, Sweden) and Kjell Skogsberg (report coordinator and cowriter from Norrbotten, Sweden).

Summary in Hungarian

Az északalföldi tanulmányút („peer review”) 2012 novemberében került megrendezésre, ahol a megújuló energiaforrásokkal kapcsolatos befektetések országos, regionális és helyi szereplıi tartottak bemutatókat, illetve velük készültek interjúk, valamint különbözı üzem és helyszíni látogatásokra is sor került. A peer review csoport megállapításait az 5. fejezet tartalmazza. A 6. fejezetben a fı erısségek, gyengeségek, lehetıségek és veszélyek (SWOT analízis) kerülnek bemutatásra, a peer review csoport javaslatai az Északalföldi régió számára pedig a 7. fejezetben találhatók. A peer review szakértıi csoportja által vizsgált kérdések – melyek részletesen a 4. fejezetben kerülnek bemutatásra – a következık voltak: a nyilvánosság figyelmének felhívására alkalmas kommunikációs eszközök, megújuló energiaforrások használatára és energiahatékonyságra irányuló projektfejlesztés, valamint az elızıekkel kapcsolatos regionális és helyi szervezetek közötti együttmőködés javítása. A régió megújuló energiaforrásokban igen gazdag, ám ezeket a lehetıségeket közel sem aknázták még ki és – mint növekedési lehetıségek – nincsenek kellıen hangsúlyozva a különbözı regionális fejlesztési dokumentumokban, pedig a megújuló energiaforrások fejlesztésének fontos szerepe lehet a gazdasági növekedésben. Ezért javasolt a megújuló energiaforrások és az energiahatékonyság növekedési és profit lehetıségeinek összegyőjtése helyi és regionális szinten. A régióban továbbá számos magasan képzett szakértı és tapasztalt szervezet van, aki érintett a megújuló energiaforrások és az energiahatékonysági fejlesztések regionális elırehaladásában. Ennek ellenére a peer review csapat úgy véli, hogy a megújuló energiaforrások és az energiahatékonysági kérdésekben érintett különbözı szervezetek közötti együttmőködés és koordináció javításra szorul. A szerepek, felelısségek, célok és kötelezettségek részleteit tisztázni kell az emberi és pénzügyi erıforrások hatékony felhasználása érdekében. A régió már meglévı energia stratégiája általános és inkább leíró jellegő, valamint jobbára országos szintő. A regionális energia helyzet vizsgálatára fektetett nagyobb hangsúllyal – beleértve az energiahatékonysági, illetve megújuló energiaforrásokban rejlı lehetıséget, erısségeket és potenciált a regionális növekedéshez kapcsolódóan – ez javítható. Az energia stratégiának továbbá proaktív megközelítést kell megfogalmaznia a nyilvánosság figyelmének felhívásával kapcsolatosan. Általában az Északalföldi régióban a regionális fejlesztéseket és beruházásokat hosszú ideje a kormány felügyeli. A fosszilis tüzelıanyagokon és nukleáris energián alapuló régi struktúrák még mindig dominálnak, még akkor is, ha vannak megújuló energiaforrásokra és energiahatékonyságra koncentráló projektekre vonatkozó jó példák. Ezek a beruházások azonban alacsony prioritást élveznek és többnyire a helyi és regionális önkormányzatok valósítják meg az EU Strukturális Alapok támogatásaival. Magyarországon általánosságban sok lehetıség van a projektek állami támogatására és a bemutatott projektek nagy részét

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közintézmények kezdeményezték és finanszírozták. A régióban kevés a magánkezdeményezés a vállalkozói kapcsolatokat, projektfejlesztéseket és beruházásokat illetıen. Fontos, hogy a régió elsı és országosan ez idáig egyetlen regionális energia ügynöksége az ENEREA. Azonban úgy látjuk, hogy nemzeti szinten az ENEREA nem igazán ismert. Az Északalföldi régiónak nagyobb hangsúlyt kellene fektetnie arra a tényre, hogy itt alakult az elsı és egyetlen magyar regionális energia ügynökség, hiszen más európai régióknál látva a regionális energia ügynökségek nagy elınyt jelentenek egy régió számára.

Summary in English

The peer review of ÉszakAlföld took place in November 2012 and consisted of presentations and interviews with national, regional and local actors and stakeholders as well as study visits to relevant sites. The observations of the peer review team are described in chapter 5. In chapter 6 the key strengths, weaknesses, opportunities and threats (SWOT) are presented and in chapter 7 recommendations of the peer review team to the region of ÉszakAlföld is found. The scope for the peer review, presented in chapter 4, for the ÉszakAlföld peer review team was about measures for awareness raising communication, enhanced RES /renewable energy sources) and EE (energy efficiency) project development, as well as improving the cooperation in regional and local RES and EE development. The region holds a favourable potential for RES production. It is however underutilised and not emphasized as a growth mechanism in the regional development documents, even though RES development could play an important role for economic growth. The region is therefore suggested to compile the growth and profit potentials of EE and RES on local and regional level. The region has a number of highly skilled actors involved in the regional development of RES and EE development. The peer review team however found that cooperation and coordination between the different institutions involved in EE and RES questions need improvement. The areas of roles, responsibility, objectives and duties need to be clarified, in order to achieve an efficient use of human and financial resources. The existing energy strategy of the region is general and more of a descriptive document, and mostly on national level. It can be improved by emphasising on the regional energy situation, including possibilities and strengths and the potentials of EE and RES in the regional growth. The energy strategy also needs to promote a proactive approach to awarenessraising. Historically, regional development and investments in general in ÉszakAlföld has been controlled by the national government for a long time. Old structures with big scale solutions for energy conversion based on fossil fuels and nuclear power is still dominating, even if there are also good examples on local projects in RES and EE. Investments in RES and EE have low priority and are more or less made by regional and local governments with funding from EU structural funds. In Hungary in general there are a lot of possibilities for public project funding and most of the projects presented were initiated and financed by public bodies. There is a lack of private initiative in entrepreneurship, project development and investments in the region. Worth noting is that the region holds the very first, and so far the only regional energy agency of Hungary, ENEREA. However, ENEREA is rather unknown on national level. ÉszakAlföld should raise the fact that they have the first regional energy agency in Hungary, as experience from other regions in Europe show that regional energy agencies can be a great asset for a region.

Table of contents

Summary in Hungarian ...... iii Summary in English ...... v Table of contents ...... 1 1 Introduction to Regions4GreenGrowth ...... 3 1.1 Introduction ...... 3 1.2 The project Regions4GreenGrowth ...... 3 1.3 Peer review methodology ...... 4 2 Background on the ÉszakAlföld region ...... 7 2.1 Introduction ...... 7 2.2 Energy situation and targets ...... 12 2.3 Organisations and organisational aspects ...... 17 3 Focus of the ÉszakAlföld peer review ...... 25 3.1 Hypothesis ...... 25 3.2 Focus of peer review...... 25 3.3 Questions ...... 25 4 Peer review activities ...... 27 4.1 Preparations ...... 27 4.2 Peer review week ...... 27 4.3 Post peer review work ...... 29 5 Observations and key findings ...... 31 5.1 Ambitions, goals and policy ...... 31 5.2 Organisations and organisational aspects ...... 37 5.3 Project development conditions ...... 39 5.4 Financing ...... 44 5.5 Communication ...... 47 6 SWOT analysis of the ÉszakAlföld region ...... 49 7 Recommendations ...... 51 7.1 Ambitions, goals and policy ...... 51 7.2 Organisational aspects ...... 55 7.3 Project development improvements ...... 57 7.4 Financing ...... 63 7.5 Communication ...... 65 Appendix I How to make a Communication Strategy ...... 69 Appendix II – Good practices relevant for ÉszakAlföld ...... 73 Appendix III – Field visits ...... 81 Appendix IV – Recommended literature and websites ...... 91 Appendix V – Peer Review Questionnaire ...... 97 Appendix VI – Program of the ÉszakAlföld peer review ...... 113 Appendix VII – The Peer Review Team ...... 117

1 Introduction to Regions4GreenGrowth

1.1 Introduction Stemming from the EU Climate and Energy Package, the EU together with its Member States and regions have defined ambitious energy strategies, setting firm targets for an increased share of renewable energy sources (RES), more energy efficiency (EE) and lower carbon emissions in order to make Europe’s energy supply sustainable and future proof. However, a major obstacle for widespread introduction of renewable energy production capacity and EE measures is the fact that actors (public and private) willing to invest in sustainable energy installations and infrastructure often have difficulties to attract financial means to support their investments. The private financial sector (banks, investors) is often hesitant to invest in sustainable energy. Public funding is an alternative or complementary source for these investments. But the financial volume of national financial support schemes in most EU countries is limited and they often lack continuity or are difficult to acquire. Regions4GreenGrowth (R4GG) is an initiative of EU regions, such as ÉszakAlföld, that have defined high sustainable energy ambitions and now encounter this obstacle. Through the exchange of good practices and by means of peer reviews, the partner regions aim to identify concrete steps to boost investment in sustainable energy. The present report outlines the findings of the peer review held in the region of ÉszakAlföld between November 5 th and 9 th 2012, which was attended by a panel of experts from the County of Norrbotten (SE), the Province of Flevoland (NL), the County of Maramures (RO), Western Greece Region (GR) and the Sofia Region (BG). The observations developed herein are recommendations and conclusions aimed at assisting regional political actors and stakeholders in Észak Alföld with the development of stronger policy instruments and measures to spark off the investments needed to deliver sustainable energy projects, and more specifically to increase financial confidence in the region, to enhance its attractiveness for foreign investment and to facilitate access to European funding.

1.2 The project Regions4GreenGrowth Regions4GreenGrowth is a consortium of 13 partners from across Europe, who endeavour to equip themselves with stronger regional policy instruments, mechanisms and approaches to improve access to finance and speed up investments in sustainable energy projects (e.g. renewable energy generation capacity, EE measures). Project activities include the collection and documenting of effective policy instruments in this field from partners and other actors. Through the exchange of good practices and by participating in peer reviews, the partners will tackle the specific challenges of each partner region and draft tailor made packages of

policies and instruments to speed up sustainable energy investments. These recommendations will then serve as the basis for the development of regional Action and Implementation Plans. Project achievements will also be documented in a Guide on methods and implemented Good Practice, which will be widely disseminated. Moreover, a specific method for creating a publicprivate cooperation structure for investments in sustainable energy, developed by Flevoland and Greater Manchester, will be passed on to the partners via Master Classes, as well as implemented in three partner regions. Overall, R4GG provides an opportunity for regional representatives to exchange their experience and learn from one another, while delivering concrete recommendations, which in turn will produce tangible results in the improvement of regional policies.

1.3 Peer review methodology The approach and methodology of R4GG are geared towards identifying, exchanging and transferring effective regional policy instruments and mechanisms to improve access to finance for sustainable energy projects. R4GG applies the peer review methodology, which involves a one week mentoring visit, or ‘peer review’, undertaken in each partner region by a group of international experts in order to assess the regional strategy, policy and actions with regards to investments in sustainable energy. Peer reviews are held to help local authorities understand how well their current policies work and support them in making tangible improvements.

A tailor-made approach While all the project partners have a common aim – that of improving access to finance for sustainable energy projects – it is essential to understand that not all regions encounter the same challenges. Consequently, the peer reviews tackle the issue from different angles, in accordance with the host region’s focus. When selecting the most appropriate focus, the region takes into account its specific energy/investment needs, current policies and its own strengths and weaknesses. The focus should clearly define what is to be evaluated, thus ensuring that the peers can come up with tailormade conclusions and recommendations.

An overall performance assessment According to the peer review methodology, prior to the visit, the peer review team receives the most relevant information on the regional energy conditions. Regions across Europe have different competences and approaches to energy; there is no ‘onesizefitsall’ model. Thus, the peer review team must be careful to understand where the region has executive authority to act in an area, and where it shares this with other levels of government, or has no competence. In order to ensure that this information is well known, the host region is required to fill in a questionnaire that is distributed in advance to the peers. Its aim is to provide

experts with comprehensive background information on current and planned energyrelated policies, as well as on any issues linked to the financing of sustainable energy projects. During the peer review visit, the peers hold meetings with local energy/investment stakeholders, as well as field visits, in order to ascertain the strengths and weaknesses of the host region’s policies. The questionnaire can also be used in this context to shape interviews, ensuring all relevant issues are addressed and peers have a comprehensive understanding of the region. Based on their experience, the peers will then issue a series of recommendations on how to improve policies about investments in energy.

Outputs of the peer review visit After the visit, the peer review team prepares a report compiling their recommendations on how to spark investments in the sustainable energy sector and answering the specific needs and questions of the host region. The region then considers the conclusions and prepares an action plan, setting out how it intends to implement the expert team recommendations. Before the end of the project, the region will also develop an implementation plan, outlining the longerterm objectives and actions to boost investments in sustainable energy. These steps ensure the outputs of the project go beyond the exchange of good practice, and translate into concrete actions, thus making a tangible positive impact in getting finance flowing to sustainable energy projects.

2 Background on the Észak-Alföld region

The Vision of the Észak-Alföld Region “An economy that is competitive both on Hungarian and European level, based on the geographical position and the existent and potential resources of the ÉszakAlföld Region, and provides conditions for a higher quality of life for the inhabitants by preserving and using the traditional values in a sustainable way.” The development focuses on creating conditions for selfsustaining social economic development. This means that the region wants to use significant part of the structural supports to create a competitive economy that is able to provide the conditions for a good quality of life in the long run, without remarkable outer financial support.

2.1 Introduction Hungary is a landlocked country in Central Europe, situated in the Carpathian Basin. It is bordered by Slovakia to the north, Ukraine, and Romania to the east, Serbia, and Croatia to the south, Slovenia to the southwest and Austria to the west. The country's capital, and largest city, is Budapest, Figure 1. Hungary is a member of the European Union, NATO, the OECD, the Visegrád Group, and is a Schengen state. The official language is Hungarian.

Figure 1. Map over Hungary (www.daytranslations.com).

The foundation of Hungary was laid in the late 9 th century. The Kingdom of Hungary existed for 946 years, and at various points was regarded as one of the cultural centres of the Western world. At the end of World War I Hungary lost about 70 percent of its territory, along with one third of its ethnically Hungarian population. The kingdom was succeeded by an authoritarian regime, and then a

communist era that ended in 1989 and the seminal opening of its border with Austria in 1989, thus accelerating the collapse of the Eastern Bloc. The present form of government is a parliamentary republic, which was established in 1989. Today, Hungary is a highincome economy. Hungary is one of the thirty most popular tourist destinations in the world, attracting 10.2 million tourists a year (2011). The country is home of the largest thermal water cave system and the second largest thermal lake in the world (Lake Hévíz), the largest lake in Central Europe (Lake Balaton), and the largest natural grasslands in Europe (Hortobágy). Hungary has about 10 million inhabitants, and the total area of Hungary is approximately 93 000 km 2, corresponding to approximately 108 inh./km 2.

The Észak-Alföld Region The ÉszakAlföld Region, or the Northern Great Plain region, is situated in the North Eastern part of Hungary, and is one of seven regions in Hungary, Figure 2. It has borders with Slovakia, Ukraine and Romania and is the second largest region in Hungary with an area of 17 729 km 2 (19.1 % of Hungary). 45 % of the region is agricultural land, 35 % arable, 11 % uncultivated, 8 % forests and 1 % is orchards.

Figure 2. Map over the regions in Hungary (en.wikipedia.org).

The region consists of three counties: the JaszNagykunSzolnok County (JNSZ), the HajdúBihar County (HB), and the SzabolcsSzatmarBereg County (SZSZB), Figure 3. The ÉszakAlföld region is characterized by a tradition of micro region identity developed from economic, social and cultural issues. It is therefore a very heterogeneous character of the region. The 389 municipalities in the region are grouped into 28 micro regions. Most of the municipalities are small.

Figure 3. Map over Hungarian counties (www.ezilon.com).

The region had 9 985 722 inhabitants in 2011 which corresponds to ~563 inhabitants/km 2. Almost 15 % of Hungary’s population lives in ÉszakAlföld which makes it the second biggest region in Hungary, after the Central Hungarian Region. The population of the region decreased about ten thousand persons from 2010, corresponding to 0.6 ‰. The climate is characterized by many solar hours (2000 h/a), an annual average temperature of about 9 – 10 oC and annual precipitation of 550 – 600 mm/a. In winter the temperature is 4 7oC and in summer it is 25 – 30 oC. The main part of the precipitation comes in early summer and during the autumn and falls mainly as water. The two most significant natural resources of the region are the arable lands of excellent quality and the thermal water.

Debrecen Debrecen is the second largest city in Hungary and the largest in the Great Plain. It comprises 13.3 % of the population and more than 20 % of all businesses in the region. Debrecen is the economic and trade centre of northeastern Hungary. It has been a centre of trade and business for centuries and the prospering and dynamic cooperation of the city and economy is established in a number of different fields.

Figure 4. A wonderful park of Debrecen.

The city was previously famous for its handicraft and food industry. Nowadays it is the home of a number of internationally renowned companies. The University of Debrecen is the second most important research centre in Hungary and also one of the biggest universities in Hungary with 30 000 students, researchers and professors, Figure 5. More than half of the registered university students of the region study at the University of Debrecen.

Figure 5. The University of Debrecen.

2.1.1 The regional governmental structure The region used to have a decision making body, the ÉszakAlföld Regional Development Council, but it ceased on January 1 st 2012. The decision making was taken over by three county governments with county development councils. Their most important duty is to pass the county development plans and to dispose of the development sources allocated to the county. The members of the county development councils are the chairman of the county assembly, the mayors of the towns of county rank, the representatives of the microregional associations (limited number), delegates of the chambers and labour councils as well as the representative of the minister responsible for regional development.

2.1.2 General economic indicators The total GDP of the ÉszakAlföld regions was 99.8 billion € in 2011 (5 930 €/person). This is the lowest in Hungary and about two thirds of the national GDP and 37.5 % of the EU25 average. The GDP per capita of Hungary as PPS (a relative comparison) was 65 % of the EU27, in 2011 (Eurostat). The unemployment rate of the region is high, 14.5 %. The economic crisis of 2008/2009 increased the unemployment rate radically, from 10.8 % in 2007 to 12.0 % in 2008, 14.2 % in 2009 and 14.5 % in 2010 and 2011. The unemployment rate of Hungary was 10.9 % in 2011, compared to 9.7 % at the EU27 level (Eurostat). In the region the service sector is the largest with 61.4 % of the turnover. Then comes industry with 31.1 % and agriculture with 7.5 %. The importance of the agricultural sector has decreased in the last years. The largest industry sectors are food industry, machine industry, chemical industry, processing industry, pharmaceutical industry and IT industry. The main part of the companies are small (39 %), micro and medium sized companies are about 25 % and about 11 % are large companies in the region. Tourism is built on the natural and cultural resources of the region. The region is rich in curative thermal water that enables products of (thermal) tourism of international importance to be created with developing the existent thermal water bodies and expanding the services built upon it. The investments of the ÉszakAlföld region is 7 % of the national investment. This contain investments in buildings and other structure, machines, equipments etc.

Industrial parks Industrial parks play an important role in industrial development both on national and regional level. Out of the around 206 operating sites, 31 industrial parks are located in ÉszakAlföld. Debrecen houses four industrial parks and a fifth is under construction. Two are owned by the local government, one belongs to the University of Debrecen and one is supervised by an association of private enterprises. The most prestigious one is The Regional and Innovative Industrial Park which was established in 1997. The export ratio of the companies located at industrial parks is about 64 %. Of the 50 largest multinational companies present in Hungary, more than half have operations in industrial parks.

Transports The ÉszakAlföld region is often referred to as a gateway of the European Union to the East. There are important international main roads and railways through the region and significant amounts of transit transports can be observed in the east west and the northsouth directions. Due to its geographical location, the Észak Alföld Region could play a key role in freight transport logistics. The advantageous position from logistic aspect is further strengthened by its location near borders to Romania, Bulgaria, Ukraine and Asia. There is a network of logistics districts and 13 national logistics centres in Hungary. Of the latter, three are in the region. Despite the new motorway sections and otherwise improved accessibility a significant part of the region, particularly along the western, southern and eastern borders, still has no connection with the Hungarian and international motor roads. Debrecen lies on the line of Budapest – Szolnok – Debrecen – Nyíregyháza – Záhony direction, which is one of the most developed railway junctions of the country. This provides a systematic and effective national and international railway transportation, as not only the major cities and towns are connected, put practically all inhabitations are integrated in the railway network.

2.2 Energy situation and targets

2.2.1 National level energy situation The total Hungarian gross inland energy consumption was 302 TWh (~1087 PJ) in 2010 which was the same level as in 2001 and 2002. However, in 2005 it was 322 TWh (~1159 PJ) but it has decreased the last years. The gross inland energy consumption is the total energy demand of a country or region. It represents the quantity of energy necessary to satisfy inland consumption of the geographical entity under consideration ( Eurostat ). The national gross energy consumption in 2010 was about 194 TWh per year (699 PJ), which corresponds to about 19.4 MWh (~70 GJ) per person. The national gross energy consumption has followed the same trends as the gross inland energy consumption, i.e. a slight decrease since the middle of the first decade of the present century. In gross energy consumption the transformation output (electricity or heat produced from other energy sources) is included. The largest energy consumption source is natural gas with 51 % (in 2007). Then comes electricity with 24 %, district heating with 10 %, coal with 6 %, oil with 4 %, firewood with 2 %, and Pbgas (fossil propane butane) with 1 %. There is also a 2 % other post. Divided by sector the household sector is the largest energy user with 42 %. Then come industry with 30 %, the public sector with 24 % and last agriculture with 4 %. In 2009 the transport energy consumption was 54.4 TWh (196 PJ). In 2005 0.22 % was renewable energy and the goal for 2020 is 10 % renewable share. Fossil fuels cover 62 % of the Hungarian energy need. 82 % of the fossil fuels is natural gas, all imported from Russia. The renewable share in total national gross

energy consumption was 8.7 % in 2010. The main part of the renewable energy was solid biomass, followed by bio fuels, geothermal energy, windpower, biogas, hydropower and solar energy, Figure 6.

Figure 6. Renewable energy mix in Hungary 2010. (Hungarian Energy Office)

Approximately two thirds of the electricity production in Hungary comes from fossil fuels. There is one nuclear energy plant in Hungary that produces about one quarter of the electricity production, but none in the ÉszakAlföld region. 7.1 % of the electricity production in Hungary was from RES in 2010. The main part was from biomass (68 %) and wind power (18 %) with minor production from hydro, waste, biogas, landfill gas and sewage sludge gas.

National targets on RES and EE The new Hungarian energy strategy from 2010 has the motto “independence from energy dependence” and indicates that the energy supply must be based on the requirements of the market. It has however been criticized for being rather a description of the situation rather than a strategy. The strategy has several action plans connected to it, which define the paths, measures, schedules and funding needs required to meet the targets. There are action plans for district heating, power plants, control and utilisation of natural resources, energy industry, R&D (research and development) and behaviour change. The European Parliament and the Council specified a legally binding obligation for Hungary to ensure a 13 % minimum share of renewable energy in gross final energy consumption by 2020. According to the National Renewable Energy Action Plan (NREAP), the national renewable share target for final energy consumption was decided to 14.65 % in 2020. This means a large relative increase from 8.7 % renewable energy in 2010. By 2030 the Hungarian goal is to increase the share of renewable energy to 20 %, i.e. in line with the Europe 2020 strategy. To achieve the goals the government will

provide subsidies for utilization of renewable energy in different ways, e.g. green electricity support, support for renewable heat production, direct uploading of purified biogas into the natural gas grid and simplification of administration and regulations. According to the expected increase of RES, priority is given to biomass and geothermal energy. The partition of RES in 2020 is expected to be about 51 % solid biomass, 19 % bio fuels, 14 % geothermal energy, 5 % heat pumps, 5 % wind power, 4 % biogas, 3 % solar energy and 0.7 % hydropower in 2020. In the Heating and cooling sector the renewable share in 2010 was 11.1 %, and the target for 2020 is 18.9 %. Concerning final electricity consumption the target is 10.9 % for 2020 and 15 % by 2030. Within the transport sector the RES share was 4.7 % in 2010 and the 2020 target is 10.0 %, Figure 7.

Figure 7. Renewable energy development in different sectors. (Energy Centre)

According to the national energy strategy the increase of renewable resources in heat energy production shall increase from 12 % in 2010 to 24 % in 2020 and 32 % by 2030. It also says that the utilization of geothermal energy will increase threefold in the residential heating sector to 2020. The typical energy demand for a single family house is 120 – 160 kWh per m 2 and year, but there are also examples of 400 kWh per m 2 and year. Hungary has a National Energy Efficiency Action Plan. It states that energy savings should be 70 – 90 PJ (19.4 – 25 TWh) per year until 2020 in sectors determined by the EU Energy Services Directive. In the national energy strategy it says that the targets on total primary energy savings are 52.5 TWh (189 PJ) until 2020, corresponding to almost 36 % of the 2010 energy use. The savings are divided according to Figure 8.

Figure 8. Prioritized measures to achieve energy efficiency targets. (National Renewable Energy Strategy)

Concerning green house gas emissions the EU target of 20 % reduction covers all emissions sources and use 1990 as reference year. The national target on greenhouse gas emissions covers emission sources not already included in the European exchange system of emission quotas. Hungary has committed to reduce green house gas emissions by 6 % in the 2008 2012 period compared to their base period, which is average of 19851987. The emissions have decreased 30 % from 1990 to 2010, Figure 9, why Hungary likely did achieve this target.

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60 EU (27 countries) Hungary 40

Relative emissions Relative 20

Figure 9. Evolution of total greenhouse gas emissions since 1990. (Eurostat)

2.2.2 Regional level energy situation The national gross energy consumption in the ÉszakAlföld region was about 18 TWh per year (~65 PJ) in 2007. The energy consumption is slowly increasing.

The largest energy consumption source is natural (fossil) gas with 55 % (in 2007). Then come electricity with 23 %, district heating with 7 %, firewood with 5 %, oil with 4 %, coal with 2 %, and Pbgas (fossil propane butane) with 1 %. There is also a 3 % other post. Divided by sector the household sector is the largest energy user with 42 %. Then come industry with 30 %, the public sector with 24 % and last agriculture with 4 %. Fuels for transport are not included nor known. In the ÉszakAlföld region the households consume the largest share of the energy, 49 %. The public service sector use 25 %, the industry 19 % and the agricultural sector consume the remaining 8 %. The industry, the public sector and the households consumes mainly gas and electricity, while agriculture uses liquids and gas in considerable amount. In the villages households consumes considerable amount of firewood. In the Észak Alföld region electricity is produced mainly by natural gas. There is one large CHP plant (95 MW) and a number of smaller RES plants (12 biogas, 3 hydro, 2 biomass and 2 windpower) with a total installed capacity of 25 MW. The annual total electricity production in the region is about 1 TWh. In the countryside firewood is the dominating heat source for heating. Firewood corresponds to about 50 % of the regional heat demand. In the cities natural (fossil) gas produces the main part of the heating, corresponding to about 50 % of the energy used for heating. Domestic hot water is produced by gas heaters and electric boilers. Heat for cooking is most commonly produced with gas or electrical stoves. There are some district heating plants in the region but it is not very common. Their heat sources are mainly heat from natural gas CHP, waste heat and biogas. According to the presentations there are also some more plants being planned. The relevant information on transports that the team found concerned a project that the city of Debrecen joined. The CIVITAS MOBILIS project lasted from 2005 to 2009. It included setting up a programme for creation of a sustainable mobility framework for all transport modes. Within the project seven public transport conventional diesel buses were converted into CNG (compressed natural gas) ones and biofuel vehicles, running in the inner city centre of Debrecen. A strong cooperation was established between the city mayor and the transport stakeholders in order to reach the project objectives. There is a well meshed and extended power grid and natural gas network in the region. This fact facilitates the access to different fuels throughout the region, covering the whole demand and providing a choice of the used energy source. The Hungarian State owns the electricity grid and the distribution of electricity oil and gas. The power plants are owned by both public and private companies.

Regional targets on RES and EE According to the regional energy strategy the targets on regional level are aimed at “making a sustainable and liveable environment”. In specific terms this means to: - Decrease the energy dependency, which means to import less energy and instead generate heat, electricity and fuel from locally owned RES

- Accomplish energy safety, which means diversification of energy resources and energy savings

- Increase the proportion of renewable energy use and to decrease the CO 2 emissions - Develop the settlements’ environmental quality and the inhabitants’ quality of live - Contribute to development of local economy in the microregions - Achieve EE in buildings. - Establishing the system of local energy production and consumption in the regional settlements for the sake of using local energy resources in bigger proportion. The specific targets of the region are to: - Decrease the energy use of the settlements with 1 % per year compared to 2009, and altogether with 10 % in 2020. - Increase the proportion of renewable energy of the total energy use to 13 % in 2020.

The comprehensive targets of ÉszakAlföld were decided by ENEREA and energy experts, based on national targets.

2.3 Organisations and organisational aspects

2.3.1 Organisations

Hungarian Energy Office The Hungarian Energy Office (HEO) is the energy office at national level and was established in 1994. The office is owned by the National Ministry of Development and is mainly financed from fees and charges related to licensing process. HEO is a key player in the Hungarian energy market. The role of the office has been continuously changing with the development of the market structures, operating models and European legislation. The main responsibilities of the office is consumer protection, providing regulated access to networks and systems, and carrying out regulatory competencies in order to maintain security of supply, and fostering competition. Within the complex field of consumer protection the key task is – besides regulating the quality of supply – to keep enduser prices on an affordable level, particularly under the circumstances of economic and financial crisis. The scope of the infrastructure, which has to be overseen by HEO, has been extended with a complete regulation of district heating in 2011 and with water public utilities in 2012. As market progresses are becoming more widespread, emphasis is put on market monitoring task and specific attention is paid to regional market integration both in electricity and natural gas.

Energy Centre The Energy Centre is a nonprofit company owned by the National Ministry of Development and is publicly funded. Its new full name is the National Environmental Protection and Energy Centre NonProfit Limited Liability Company. It is the national energy agency responsible for the adoption of energy efficiency and renewable energy utilization. The Centre manages subsidies and loans for EE and RES. The Energy Centre also prepares the strategy of the government concerning energy efficiency and renewable energy sources, and carries out the energy agency activities. The main responsibilities of the Energy Centre are management of national tenders, EU funded tenders, such as KEOP (Operational Programme for Environment and Energy EEOP, KEOP in Hungarian) and KIOP, and management of the Energy Saving Credit Fund. They carry out National Energy Agency activities such as; promotions, campaigns, knowhow transfers, technical assistance, and policy development for the Ministry of Transport, Telecommunication and Energy. The Energy Centre manages programmes in the field of energy, environment and innovation for the national government, the European Union, the International Energy Agency (IEA) and the United Nations.

Energy Club The Energy club was founded as a nonprofit organisation on national level in 1990. It has a staff of around 20 people which is primarily composed of economists, engineers, lawyers and teachers working in cooperation with Hungarian and international partners, experts, advisors and institutions. Since 2005 it has prepared more than 100 reports, close to 40 publications and has launched 8 project websites. The organisation is dedicated to rational, clean production and use of energy and operates to find practical answers to the pressing issues posed by climate change. There are two divisions in the Energy club; The Climate Policy Institute and Applied Communications. These two focus on energy policy, climate change, energy efficiency, renewable energy, traditional energy resources and the field of transportation. The work of the club involves preparing policy recommendations for decision makers, undertaking research, communication and awarenessraising campaigns, and organising trainings and conferences. The organisation works independently from political parties and business interests and has a direct and active relationship with energy users through its programs.

EARDA Regional development is undertaken by the public benefit organisation EARDA, the ÉszakAlföld Regional Development Agency. It was founded by the no longer existing ÉszakAlföld Regional Development Council in 2000, with the aim to coordinate the elaboration and implementation of the regional development program. The agency has more than 100 employees and is a young organisation where 80% of employees are under 35. Most are graduates and 60% speaks English. EARDA is owned by the ministry of National development and is financed

by various service and project contracts, mostly through EU funds aimed at the implementation of the ÉszakAlföld Regional Operational Programme. From among the priorities of the ÉszakAlföld Regional Operative programme (ÉAOP), the agency is responsible for the management of EU funds related economic development, development of tourism, development of transport, and urban and regional development. It also deals with responsibilities connected to the management of decentralized national resources available to local governments, businesses and nongovernmental organisations of the region. The priorities of the EAOP are, in order, economic development, tourism development, urban and rural development, transport development, and environmental protection. The programme is financed through the structural funds ERDF (the European Regional Development Fund) and ESF (the European Social Fund). The agency also takes part in planning, analysing and project generation in line with regional and national, county and microregional development concepts. The agency aims to become a professional centre of regional development and to create partnerships between the public and private sphere. Further aims are to establish, develop and maintain international partnership, not least with its partner regions; Valencia, ChampagneArdenne, Flevoland, SaxonyAnhalt and Northwest Romania, as well as several other regions of the European Union via its representation in Brussels. EARDA also takes part in several international projects such as ERASMUS, LEONARDO, R4GG, and SMART Europe INTERREG IVC. EARDA has different target groups in terms of different strategic objectives and initiatives. Generally it targets the university and the colleges of the region, regional enterprises and startups, research and development institutions, non profit organisations, and local governments.

INNOVA The ÉszakAlföld Development and Innovation Agency (INNOVA) is a nonprofit organisation which was set up in its current form in 2008. It has however been operating as a department of EARDA since 2005. The agency was established by the following six actors in the field of Research, Development and Innovation; ÉszakAlföld Regional Development Council, University of Debrecen, College of Nyíregyháza, College of Szolnok, NortheastHungary Regional Development Plc, and the Hungarian Association for Innovation. The agency aims to become an innovation centre that manages innovative ideas to market success by creating networks between national and international actors in line with the regional innovation strategy. INNOVA has expressed several objectives to be realised in the region; to enhance the innovation ability, spur marketoriented RDI (research, development and innovation) cooperation and to develop an environment which supports innovations. Beyond that, INNOVA has an essential role in the implementation of the innovation strategy of ÉszakAlföld. With cooperation of regional experts the agency is working on the renewal of the regional innovation strategy, the first result of this work is a refreshed analysis of the region.

The mission of the agency, besides the implementation of the Regional Innovation Strategy, is to become the sole innovation centre in ÉszakAlföld region operating in a networking model and to achieve acknowledgement at national and international level. To achieve its mission and objectives the agency provides the following services: innovation, management, marketing consultancy and trainings, strategic planning, resource coordination and management of decentralised funds. It also carries out its work through awareness raising, innovation surveys, foresights and analysis, coordination of international projects, project generation and partner search.

ENEREA The ÉszakAlföld Regional Energy Agency (ENEREA) is the only regional energy agency in the country, and it operates mainly in the ÉszakAlföld region. The agency has eleven coowners; County Government of HajdúBihar INNOVA Innovation Agency, Local Government of Nyíregyháza, County Government of SzabolcsSzatmár Bereg, County Government of JászNagykunSzolnok, University of Debrecen, College of Nyíregyháza, District Heating Company of Debrecen, District Heating Company of Nyíregyháza, BioGenezis Ltd and Emisszio Environmental Association. ENEREA was established in 2009 and is financed by its owners and the Intelligent Energy Europe Program. The agency aims to support and promote EE, and to encourage the use of RES. The main target groups of ENEREA are enterprises of various scale, governments at local and county level, professional associations, schools, inhabitants and energy consumers in the region. ENEREA is involved in activities such as energy planning (for example a regional energy strategy was developed in 2010), promotions and conferences, energy marketing, the writing of applications and proposals, and project management. The agency also distributes a newsletter, Energlobe News, in which they together with other European energy agencies promote Good Practices in EE and the use of RES from around the world. In order to improve regional policies, ENEREA has created a committee, gathering elected members and the project team, who will meet once a year to validate political endorsement. Furthermore ENEREA carries out regional projects and are also involved in European projects, for example within FP7 (the 7th Framework Program), the Intelligent EnergyEurope Program (IEE), and the INTERREG IVC Program.

Széchenyi Program Office The Széchenyi Program Office is a National network with offices around Hungary. It is financed by EU and Hungarian funds an owned by the National Development Agency. A total of 152 advisors contribute to the work of the Széchenyi programme offices, and 29 consultants operate in the ÉszakAlföld region. The office provides personal consultancy, free of charge and aims to make the domestic and EU development resources available to more potential applicants. The office provides professional assistance at the preparation phase of projects and supports project implementation. Direct support is offered for projects having difficulties at the implementation stage and for projects with problems or risks in

critical phases. The organisation has intermediate relations with other national and regional organisations. General objects of priority for the office are: renewable energy from combined heat and/or electricity generation, ethanol production, and the use of energy sources combined with energy performance improvements. The office aims to improve energy efficiency investments to promote and support the buildings and district heating providers and producers.

2.3.2 Education and research In ÉszakAlföld there are several education and research organisations. The two main bodies are the University of Debrecen, which is the second largest university in Hungary, and the College of Nyíregyzháza. Over 40 000 students attend the two facilities. Both institutions have programmes, projects or research related to energy and environmental protection.

University of Debrecen The University of Debrecen, with 30 000 students, was founded when the colleges and universities of the HajdúBihar County were united in the year 2000. 15 faculties and 20 PhD programmes exist at the University. The Centre for Agricultural and Applied Economic Sciences has two faculties: the Faculty of Agricultural and Food Sciences and Environmental Management and the Faculty of Applied Economics and Rural Development. It also manages three research institutes and study farms: Debrecen Farm and Regional Research Institute, the Research Institute of Karcag and the Research Centre of Nyíregyháza. Further it includes four innovation organisations: The Institute for Research and Development, the Institute of Plant Molecular Genetics, the Logistical Coordination Centre and the University Knowledge Centre of Regional Development. The Centre also takes part in various joint scientific and production projects, including those towards environmental protection. The Centre has strong ties with the industry, and cooperates with companies of the region. Cooperation agreements have been established with universities in Central and Western Europe, the USA, China, Japan and Mongolia. Presently, this centre has more than 70 partner universities and is a member of several mobility programs, such as ERASMUS, CEEPUS and Leonardo. At the University of Debrecen Energy Education is taught, and research is carried out regarding Energy Performance in Buildings and Bioenergy. The University of Debrecen holds a postgraduate programme for Renewable energy experts. It includes professional training in Hungary and in Austria. The main objectives of this programme is to provide stateof –theart information on developments of RES in the eastern region, to show off renewable energy as a typical interdisciplinary area of sciences, to present best practises in the RES area, and to focus on project development in the RES area based on technology and resource potential.

The College of Nyíregyzháza The College of Nyíregyzháza is the largest in SzabolcsSzatmárBereg County and has around 10 000 students. There are five faculties at the College: the Faculty of Arts, Science and IT, Economics and social studies, Agriculture and Engineering, and Teacher training. Within the Agriculture and Engineering faculty there are four specializations; general engineering, engineering for agriculture, agronomy and transport engineering. The transport engineering specialization is the only one in Hungary that provides training for pilots and flight engineers. When the regional energy agency ENEREA was created, the college of Nyíregyzháza became a coowner of the agency. The College and ENEREA have a close cooperation on several projects ever since. The College of Nyíregyzháza has extensive international relations with institutions of higher education in Europe, Asia and America. The aim of the College is to become a centre of knowledge, covering the entire system of higher education from undergraduate through postgraduate to doctoral and postdoctoral courses with a powerful R&D potential and a considerable regional effect. There is a ”Green Region” research and development program, which highlights development of natural and technical scientific research and development potential of the college. This adds new priorities to the R&D portfolio of the College.

2.3.1 Companies

Bio-Genezis Ltd BioGenezis is a private, family owned company which was established in 1996 in the city of Nyíregyháza. The main activity of the company is environmental engineering. It operates in the field of water management, waste management, utilization of renewable energy sources, and preparation related to national and international tenders. The work of the BioGenezis Company consists mainly of designing and planning public utility infrastructure and providing consultancy for local governments. Bio Genezis has also been involved in supplying SzabolcsSzatmárBereg and Hajdú Bihar counties with safe drinking water through facilities designed and built by the company. The company prepares sewer systems and sewage treatment plants and the first regional landfill site of SzabolcsSzatmárBereg County was designed by the company. The company’s’ involvement in renewable energy sources concerns mainly energy recovery from biomass where biogas and biomass production plants have been designed.

HAJDÚ Hajdúsági Ipari Zrt. Manufacture The company was established in 1952 and started out as a munitions factory. Household goods have been produced since 1957 with a gradually expanding range of types and with increasing export. The main products of the company are the thermotechnical household goods (hot water tanks, water heaters), solar heating systems and household appliances (washing machines, spin dryers).

The solar energy products are collectors of both flat plate and evacuated tube type. The company also supplies other components necessary for the installation and operation of a complete system, such as storage tank, solar regulator, expansion tank, etc.

2.3.2 Financial bodies

The European Bank of Reconstruction and Development The European Bank of Reconstruction and Development (EBRD) works well in Hungary. In Hungary EBRD focuses on strengthening the financial, energy, municipal and environmental sectors. It also aims to promote competitiveness in the corporate sector by financing longterm investments, financial restructuring, improving energy efficiency and the promotion of value added by IT, technology in general or knowledge activities. Despite a particularly challenging environment in Hungary in 2011, the EBRD supported eight projects with totally 127 million € in the country. The total project value was 10.6 billion €. To support the commercialisation in the infrastructure sector (transport and municipal environmental infrastructure) the EBRD invested in a regional fund which targets a number of eastern European countries. The EBRD also signed a credit line with a local bank to finance municipal energy efficiency projects.

Sberbank Sberbank is the largest bank in Russia and in the CIS (Commonwealth of Independent States) countries and the second among European banks in market capitalisation. It was established in 1841 and now has 240 000 employees. The bank operates in 21 countries, among others; Germany, Switzerland, Turkey and Hungary. Sberbank has indicated the energy field as a strategic sector. The bank operates in the energy field by screening the energy market, measuring potential and operational characteristics, and expresses suggestions for directions and actions of the energy market. The bank aims to implement action plans concerning certain target areas of the energy market, to implement pilot projects, and set up requirements for entry of the energy market. The bank has defined Russian gas, power plants, utility and energy companies, and finally RES as the targets in Hungary.

Észak-Alföld Regional Developmental Joint Stock Company The ÉszakAlföld Regional Developmental Joint Stock Company (EARDJSC) was founded in 1994 by the Hungarian Investment Bank Plc, the National Property Service, and three county and 26 local governments. The company is owned mainly by Regional Development Holding Plc. The Hungarian state, 19 municipalities and three enterprises all own smaller shares. The aim of the company is to increase economic and social development in the region, assist in the development of companies and municipalities, increase the sources of funds for SMEs (small and medium size enterprises), manage and co

finance regional development projects of municipalities, and work with complex project development. The company provides services such as project planning, project management consultancy, tender preparation, application and documentation, and setting up arrangement of funds. Additional external resources such as; capital investment, loans from members, subsidies, facilitating credits from the Hungarian Development Bank, and credits for SMEs, are also available. EARDJSC also carries out advisory activities, wholesale machine and assets sales.

2.3.3 Clusters

Thermal Energy Utilization and Innovation Cluster The cluster was originally formed in 2011 as a regional cluster, but was later developed into a nationwide cluster. It consists of six municipalities in HajdúBihar County and ten companies. Nine of these companies are private, one is public. The cluster also cooperates with the University of Debrecen and the College of Károly Róbert. The cluster mainly focuses on geothermal energy resources. The ambition is to move from fossil energy sources to renewable thermalenergy based sources, to promote energy efficiency among SMEs and the public and institutional sector. The cluster works to disseminate efficient, environmentally friendly energy management possibilities and to raise awareness among the public. Further the cluster wishes to use thermal energy to start up agricultural investments, create green workplaces, strengthen the economy of the region, support and stimulates intentions of climate protection, and to develop and support thermal energy based research and development programs.

3 Focus of the Észak-Alföld peer review

3.1 Hypothesis Historically, regional development and investments in general in ÉszakAlföld has been controlled by the national government for a long time. Old structures with big scale solutions for energy conversion based on fossil fuels and nuclear power is still dominating, even if there are also some good examples on local projects in renewable energy (RES) and energy efficiency (EE). Investments in RES and EE have low priority and are more or less made by regional and local governments with founding from EU structural funds. There is a lack of private initiative in project development and investments. 80 % of micro regions have a negative economic development and most of the local governments are facing problems with financing investments in RES and EE projects. The scope for the peer review for the ÉszakAlföld team will be about measures for attracting private investments.

3.2 Focus of peer review Before the peer review the ÉszakAlföld region formulated the desired focus of the peer review. It said that there is a significant lag on the field of renewable energy usage and EE. According to their analysis this depends on, - Usage of RES is not a priority at municipality investments, - Usage of RES is not compulsory at infrastructural investments, - There is a complicated licensing process for developing own solar PV plants and sell electricity to the energy company, - The intensity of participation in direct international calls for proposals is low, - The introduction of good practices is not efficient, and - A lack of energy investment instruments not financed from different funds (i.e. private capital, bank sources etc.).

3.3 Questions The questions formulated by the region before the peer review was, - How can the population be involved and how their opposition could be reduced against the usage of RES? - How can the planning of efficient energetic tools be fostered already at project preparation? - How can it be applied at building authorities to prescribe the usage of RES to certain extent?

- How can the licensing process of electricity production from RES be more efficient? - What kind of informal channel could be applied between municipalities that would help the dissemination of good practices and results of implemented projects? - How and with what kind of tools can the role and effect of municipalities be increased in regional development focusing on energy?

Before, during and after the peer review the team has found also other relevant aspects in the region. This is seen in the key observations and the SWOT analysis. The work was therefore not limited to the questions formulated by the region before the review.

4 Peer review activities

4.1 Preparations Before the actual peer review, the ÉszakAlföld region formulated their focus (Chapter 3) and filled out a questionnaire covering various aspects relevant to investment and financing of RES and EE projects (Appendix V). The visiting peer partners identified external experts (the team) in their own regions to assist in the peer review. The peer review team consisted of partners from the regions Norrbotten in Sweden, Flevoland in the Netherlands, Sofia in Bulgaria, Western Greece and Maramures in Romania. The questionnaire, the regional energy strategy and a general overview of the region was studied in order to come well prepared. A draft program was composed by the hosts. After approval from the team, in order to make sure that the program corresponded to the focus of the review, it was turned into a definitive programme (Appendix VI).

4.2 Peer review week The ÉszakAlföld peer review started November 5 th 2012 with a preparatory meeting of the coordinating peer team during the evening. Tuesday 6 th of November was the first official day of the peer review. The day consisted of presentations of the ÉszakAlföld region, Figure 10. Its possibilities and issues adhering to RES and EE were examined, and interviews were conducted with the presenters. In the afternoon the peer review team gathered at the hotel and discussed the findings of the first day.

Figure 10. Presentation and discussions during the first day of the peer review.

Wednesday the 7 th of November consisted of a study visit to the University of Debrecen. More presentations and interviews were held and the focus of the day was the role of municipalities and good practices on RES and EE in the region. In the afternoon the peer review team visited the Hungaro Spa, Figure 11, and the municipality of Újszentmargita to look at different energy projects. A meeting was held in the evening were the observations of day two were discussed and a few recommendations were made.

Figure 11. Study visit at Hungaro Spa 121107.

Thursday 8 th of November was the third day of the peer review. On this day the focus was the financing of renewable energy investments. The team met with several financial actors, listened to presentations and conducted interviews. The afternoon was spent at HAJDÚ factory, and at the College of Nyíregyháza. In the evening the team gathered for a final meeting. At this meeting the preliminary observations, key findings and recommendations for ÉszakAlföld were established. These preliminaries made the foundation for the official, and more extensive, peer review report of ÉszakAlföld. Friday 9 th of November was the final day of the peer review. On this day, the team presented their preliminary key findings, observations and recommendations to the host region and other present stakeholders, Figure 12.

Figure 12. Presentation of the preliminary findings, 121109.

4.3 Post peer review work After the peer review week the peer review team prepared this report, coordinated by the team of Norrbotten, Sweden. It contains observations, a SWOT analysis and a series of recommendations on how to improve the development of EE and RES for the use of business opportunities. The report will give the host region tools to assist actors in contributing to their regional sustainable energy targets.

5 Observations and key findings

5.1 Ambitions, goals and policy

5.1.1 National level In 2012 the old national energy strategy from 1993 was replaced and the Parliament adopted the National Energy Strategy 2030 with the motto: “Independence from energy dependence”. The national energy strategy includes energy efficiency, renewable energy as well as sustainable transport modes. It has longterm goals in line with EU directives. Furthermore, it also emphasizes on social and economic objectives. The strategy has several action plans connected to it, which define the paths, measures, schedules and funding needs required to meet the targets (see also section 2.2.1). Hungary is vulnerable in terms of energy since fossil fuels cover 62 % of their energy needs. The government has stated the following main tools to achieve independence: - Energy efficiency - Domestic renewable energy at the highest possible rate - Safe nuclear energy and electrification of transport - Connection to the European energy infrastructure (electricity and gas) - Utilizing domestic coal, lignite and certain types of waste

82 % of the natural gas is imported from Russia. As a part of the former communist regime in the eastern part of Europe, Hungary still receives Russian gas for a low price, but the price of natural gas is expected to increase. Another problem connected to this dependency is the old gas pipe system. There are however no plans in the governmental policy for subventions on replacing it. The government has stated the following possibilities to substitute natural gas consumption: - Energy efficiency with total primary savings of 52.5 TWh (189 PJ) - Nuclear – important energy source for crisis situation - Coal and lignite – green coal technologies - Renewable energy – increasing the share of RES up to 20 % by 2030

National support policy instruments The Hungarian support policy instruments for renewable energy are investment aid and operating aid. The investment aid consists of: Green Investment Scheme, funds from CO 2 quota selling, energy efficiency and renewable energy in buildings. There is also the EU funded Environment and Energy Operational

Program (KEOP) and The Széchenyi plan program for Green Development. Energy sustainable policy focuses on EE in buildings and RESH based on biomass. RES production in Hungary is mainly supported in two ways: All types of RES (heat, electricity, transport/bio fuels) can apply for investment support, whereas RES electricity also receives operation support via a feed in tariff system.

Investment aid Public bodies, companies and nonprofit organisations can apply for a grant supporting the planning and realisation of pilot projects on the use of RES in the electricity and heating sector. There were a number of policies intending to promote the development, installation and use of RES installations: - RESH building obligations - Training programmes for installers - Certification Programmes for RES installations - Exemplary role of public authorities - Support of RESH infrastructure However, of these above, the policies on certification programmes for RES installation, on the exemplary role of public authorities, and on the support of RES H infrastructure are not in place anymore, due to exhausted funds of these subsidy programmes. According to the Energy Office there is no specified level for RESH building obligations defined so far. However, for new building projects with a surface of more than 1000 m², there is a decree that recommends the consideration of using RES for decentralised energy supply in the planning process. The main support scheme for the use of RES in the transport sector is a quota system, which obliges fuel retailers to ensure that bio fuels and hydrogen make up a certain percentage of their monthly sales. Furthermore, the quota system is supplemented by a tax reimbursement that applies to certain bio fuels, as for E85, bio ethanol and biodiesel in the case of engine development projects and vehicles used in the mining industry and in water management.

Operating aid

Feed-in-tariff system In Hungary, in general, all renewable energy sources are eligible for feedin tariffs (FIT) and subsidies. Renewable energy plants shall also be given priority for grid connection and grid access. The costs for the connection of renewable energy plants to and the expansion of the grid are borne either by the plant operator or by the grid operator, depending on certain criteria. Electricity from renewable energy sources is supported mainly by a feedintariff, meaning that grid operators are legally obliged to purchase electricity from renewable sources and pay a guaranteed price. The feedin tariff system for renewable electricity, which was implemented in 2003, was revised in January 2013.

The policy intention of this revised feedin tariff system METÁR is that technologies which are suitable for combined heat and power production (mainly biomass) will only receive support on the basis of RES heat rather than RES electricity, so as to motivate investors to seek heat markets and thereby increase efficiency. Compared to the previous system, METÁR has better differentiated feedin tariffs based on renewable technology, size categories (installed capacity) and benchmark costs. Tariffs will be revised every two years (yearly in the case of PV) and annual quotas will be introduced in order to limit the costs for consumers. For the purpose of improving investment stability, the METÁR system has a standard 15year feedin period regarding all renewable technologies, instead of projectbyproject determination of feedin quantities and feedin period by Hungarian Energy Office. Bonus payments can also be granted if some conditions are fulfilled, like deployment in least developed areas, combined heat and power production, selfbalancing, etc. METÁR also has special conditions for biomass:

- Support limit: 10 MW e (20 MW e in case of connection to district heating) - “Brown” feedin tariff for biomass and biogas: after the expiry of the feedin period to insure the recovery of operating costs - Stricter sustainability criteria for wood biomass - Stricter efficiency criteria (to promote cogeneration)

Within the new applications of KEOP funding, 94 billion HUF will be available for renewable energy and energy efficiency of public buildings, to a 10 – 85 % support rate.

5.1.2 Regional level The dependency of the national government seems quite high in the region. Many of the members of the county development councils are operating in strong central dependence, which makes it difficult to create an independent regional policy reflecting the territorial characteristics. On a decentralised level, due to thousandyear traditions of the county scheme, both the identity awareness of people and the institutions are linked to the county level instead of regions. Each county consists of a number of microregions. Half of the microregions are in the category of “the most disadvantageous” and “the most disadvantageous with complex program”. This means, among other difficulties, that these micro regions do not have sources to improve their energy situation. There is no compulsory public green procurement in Hungary yet. An action plan is under development, but unfortunately this work is delayed. However, during their public procurements, local and regional authorities prefer sustainability principles, e.g. requiring sustainable paper handling from applicants/contractors

(two sided printing, rechargeable cartridges, recycled paper). They might also specify the existence of environment management systems (ISO 14001, EMAS).

The regional development concept and the regional innovation strategy The region holds a regional development concept developed by the regional development agency, EARDA and a regional innovation strategy, developed by the regional innovation agency, INNOVA. These strategies have been created through engaging working groups including experts, different sectors, knowledge centres and different social and economic partners. When it comes to growth areas of focus for the region, the regional development concept states that the region’s agriculture is of national importance. It states furthermore, that the exploitation of the logistic role by infrastructural development and improvement of interregional and international connections are of priority for the regional development, as it can play a significant role in the economic development of the region. However, suburban public transport is not though satisfactory in the region. In the settlements of the region there are problems with the quality of the public roads, as the surface, paving and the load bearing hardness of the roads are very low. The communal traffic of the region cannot efficiently fulfil the need of those commuting, as the public traffic systems are not harmonised. Furthermore the vehicle fleets of public transport are old and physically worn. Due to these problems, there is a tendency of reduction in the number of people using public transport. Given the fact that agriculture and transit and logistical factors play an important role for the regional development, and given the challenges within public transport, there is very little focus on the potentials on sustainable growth within these sectors. When it comes to sustainability, the regional development concept contains sustainable development in environmental terms, as in the preservation and development of the environmental status and the protection of ecological systems. However there are no essential focus on the energy, environmental and climate sector out of an economic growth and business perspective, Figure 13Figure 13. National and regional objectives for the Észak-Alföld Region. (Source: )

. The innovation strategy does not either focus on the energy sector as a growth area, but states that the North Great Plain region is the innovative region of the health, agricultural and IT industry. Geothermal is briefly mentioned in the strategy. As these regional strategies do not emphasize on the energy sector for growth, neither do the regional operational programme, and therefore this nor a focus area for allocation of resources within the operational programme.

Figure 13. National and regional objectives for the Észak-Alföld Region. (Source: )

The regional energy strategy ENEREA has developed the regional energy strategy, adopted in 2010. The strategy is a general description of the energy situation. It gives an overview on five energy areas of interest: hydropower, windpower, solar energy, biomass and geothermal, but mainly on national level. Furthermore, the goals of the strategy are rather vague and general, and stated to be in line with the national energy strategy, besides on the target for the proportion of the use of RES of the total energy, which on national level is 14.65 % and on micro regional level 13%. Very little focus is though put on the economic growth potential of EE and RES in the region. Business objectives are described for using RES for the generation of heat and electric power for buildings (apartments and public buildings) and also for the production of goods using RES. Waste to energy, RDI and transport issues are not emphasized in the regional energy strategy. In order to improve regional policies ENEREA has decided to create a committee. This committee shall gather elected members and the project team, and will meet once a year to validate political endorsement. The private company BioGenezis had elaborated regional development policies for several micro regions and counties, and a national program proposal on the integrated utilisation of biodegradable wastes. It is of course beneficial that private companies are involved in this work, but it also raises the question of why this is not done by the energy agency, ENEREA.

Potentials for increasing RES The region has good potential for increasing the proportion of renewable energy production (see further information in Section 5.3.1). ENEREA views the renewable energy possibilities in the region to be mainly solar heat and photovoltaic systems, biomass plants and geothermal energy. The agency considers these opportunities to be currently underutilized in regard of the existing possibilities and circumstances. According to the agency, some of the reasons why the use of RES remains low are: - Lack of information for decision makers, - A funding system that is complicated, - The use of RES is not a priority, - Insufficient information on the latest technologies, - The existing good practices are not well presented and used.

The potential of these sources are though not yet fully investigated and documented, so there is lack of data concerning the amount of RES in the region. In order to make use of the potentials of the region for reaching RES and EE objectives, the region has access to the national policy instruments that have been set up to support the achievement of its RES goals. Regional actors as ENEREA, EARDA, INNOVA and the ÉszakAlföld Regional Developmental Joint Stock Company also assist to boost investments. However, enterprises and local governments experience mistrust and lack of information related to the application of renewable energy. Private funding is though not frequent in the region.

5.1.3 Local level Two SEAPs (Sustainable Energy Action Plan) at local level were completed in the region rather recently. These were mainly written by ENEREA and then adopted by the municipalities, but were not yet executed. The SEAPs were made as a compulsory part of the Covenant of Mayors (CoM). CoM is the EU main instrument for implementation of energy efficiency and investment in renewable energy at the local level. CoM is a European movement involving local and regional authorities, who voluntarily undertakes to increase energy efficiency and use of renewable energy sources in their respective geographic areas. Through this commitment the contractors aim to meet and exceed the European Union's objective of reducing CO 2 emissions by 20 %. The energy situation of local governments is often problematic. There is a large number of old and obsolete buildings, inefficient energy technologies and the financial support from national level is decreasing. Furthermore, the rural areas have underdeveloped sewage disposal and handling infrastructure, this fact together with sewage from industry and agriculture causes further environmental burden for the region. It is extremely important for the region to provide healthy drinking water and to dispose and recultivate the obsolete landfills. This could be

a very effective driving force for the development of wastetoenergy in the municipalities. On local level, successful projects are being developed rather due to other interests than transforming policy into projects. For example, the raise of the expenses on the energy bills of a municipality, led to a renewable energy project using straw in heat production. This municipality got excess straw from farmers for free and used it for heating the public buildings. The savings, the difference in price of the energy bills, was then used by the municipality to develop English and information technology classes, and to maintain a school for that same municipality of only 1000 inhabitants. Later on, other small municipalities also participated in the heating project, so that their children also could keep attending a school in the neighbourhood. This project had not been granted by the regional or national government. So, in order to motivate local governments and actors to change their habits and start using renewable energy, you will have to find their main incentive for why they would be willing to change. Geothermal water holds a very large potential of the RES. Although nearly all settlements with thermal wells have, at one point, considered the idea of utilising geothermic energy, today it is still massively underutilised. Most municipalities still choose to use the geothermal water for establishing spas. In most cases these spas are not even profitable, but still it is a popular decision and the mind set is that a spa is a visible investment, by which revenues could be gained.

5.1.4 In short Central planning has deep tradition in Hungary and regional planning is still developing. The Hungarian regional development system and majority of the development sources are basically centralised. The region holds though knowledge and resources for boosting regional development. The region’s great potential for RES production is underutilised, and at local level the adequate capacities are lacking. RES development could, however, play an important role for economic growth on regional and local level. Energy is not emphasized as a growth mechanism in either the regional development strategy or the regional innovation strategy nor in the North Great Plain Operational program. The regional energy strategy is very general and more of a descriptive document, mostly on national level rather than describing solutions and tools for the regional challenges. Furthermore the strategy lacks an action plan.

5.2 Organisations and organisational aspects The region holds a number of very active institutions, mainly public ones, dealing with regional development issues, all the way from research and innovation to financing and commercialisation. However their role is still under development and therefore there seems to be unclearness around the leadership and the roles and duties between regional and county level as well as between the different actors, which can lead to an inefficient use of resources as well as overlap in

activities. Furthermore, it can be difficult for municipalities and SMEs, wanting to involve in RES projects, to address the right organisation with their questions and for assistance. It is a great advantage for the regional development of RES and EE, that the one and only regional energy agency of the country is located in ÈszakAlföld. Worth noting is however that ENEREA, surprisingly, was rather unknown on the national level. For example, the national energy office stated they did not know that it existed. ENEREA has though good connections with the regional development actors, counties and municipalities, and it has a close cooperation on several projects with the academia in the region. ENEREA is financed by its owners and the Intelligent Energy Europe program. These financial solutions are only a short term solution. The agency is also involved in commercial projects to finance their services. The peer review team raised the question on whether ENEREA becomes a competition instead of a cooperator to other actors in the energy field.

5.2.1 Cooperation International programmes enable close crossborder cooperation and some of these are used for projects in the region, for example HUROSKUA tenders, South East Europe Programme, INTERREG IVC. In these projects focus has been on the exchange of good practices and knowledge. In the ÉszakAlföld region there seems to be a lack of partnership between public and private organisations in the energy field. There are a lot of public actors, such as local municipalities, governments and mayors that are in the midst of implementing local programs or projects adhering to renewable energy and EE. There are also some public / private cooperation projects in the region, related to utilisation of biomass and energy efficiency, e.g. the refurbishment of block of flats or local waste water projects (with the creation of water utility associations). However we did see a tendency that these public actors were not cooperating with private organisations or entrepreneurs. Despite the fact that the municipalities are experiencing financial problems, which could be improved for example by joint local energy solutions, there seemed to be lack of municipal cooperation, due to the fact that it is not a tradition to cooperate between each other. However, there are some good examples of collaboration between local municipalities and one is the Ujszentmargita municipality that is involved in a RES oriented European project with five surrounding municipalities which are all in the same microregion. Another example is collaboration between municipalities and stakeholders in areas of common interest, in which they work together in networks or organisations in order to achieve common objectives. For example the Thermal Energy Utilization and Innovation Cluster consists of six municipalities and ten companies for requesting free ownership of the thermal wells for using thermal water in heating up public buildings, for electricity or for green house production.

5.2.2 In short The region holds a number of regional development actors, but the division of labour among these actors seems unclear, as well as their functions and the instruments available for each organisation. There is also a question about whether these actors are cooperating as partners or if they experience each other as competitors. There also seems to be a lack of cooperation between public and private organisations, but there are however also good examples of cooperation at different levels. Worth noting is also the fact that ENEREA, being the first and the only regional energy agency in Hungary, is rather unknown on national level.

5.3 Project development conditions The production costs of renewable energy sources are, under the present economic conditions, higher than those of conventional fossil and nuclear energies. Energy supply based on conventional energy sources is unsustainable and transition to renewable energy will sooner or later be unavoidable. The innovation activity of the North Great Plain region is currently rather modest. ÉszakAlföld has though research and development capacity that promotes development of innovationoriented technologies in the region. The R&D base of the region, concentrated in Debrecen and in the other two county seats, Szolnok and Nyíregyháza, could be attractive to companies with high quality requirements. The region holds the second position on national level regarding R&D expenditure. The team found that institutions and SME’s were openminded to R&D. There was an awareness that innovation is important to remain competitive in the international market. Companies were willing to invest in innovation and to participate in international exchange programs. There are educations relevant to EE and RES development in the region. At the University of Debrecen Energy Education is taught, and the university holds a postgraduate programme for Renewable energy experts. The College of Nyíregyzháza has a ”Green Region” research and development program, which highlights development of natural and technical scientific research and development potential of the college. Industrial parks play an important role for the regional industrial development, however the utilisation of them is rather low in the region. These parks pay more and more attention to R&D in collaboration with the regional universities and academic institutions. There is a lack of energy experts which slows the energy investments. Two aims of ENEREA are to prepare a single training material for e.g. NGOs, decisionmakers, entrepreneurs, and establishment of the Advisory Body for Regional Energy Education. The administration procedure for realizing RES projects is experienced to be rather complicated by municipalities and SMEs. Many permissions were needed,

especially regarding environmental aspects and spatial planning. The region has though a number of public organisations that aid in project development, e.g. EARDA, ENEREA, the ÉszakAlföld Regional Developmental Joint Stock Company and the Széchenyi Program Office. There was no inventory of concrete market initiatives, project ideas or potentials found. This means that project ideas that wasn’t realised were not known, which makes it difficult for the supporting organisations to help project initiatives or bring parties together to make the project development phase more efficient and successful.

5.3.1 Project potentials There were several promising RES projects, such as geothermal, solar energy and biomass in the region presented to the peer review team, but there seems to be missing an extensive investigation and compilation on EE and RES projects. There are however large potentials on EE and RES in the region, with good conditions for hydropower, bio energy, heat and methane from geothermal wells, ground and air coupled heat pumps, solar energy, energy from waste, waste heat and natural cooling from e.g. ground, water and stored from winter. Windpower is another possibility and so is district heating, with some examples in the region, but both lack a comprehensive potential study. The development of EE in buildings is a large possibility for decreased energy use, due to the fact that 42 % of the total energy consumption in the region derives from households. Despite the good RES potentials the utilisation is still low in the region.

District heating There are a few district heating systems in the region, despite the fact that there are many communities with enough heat demand. Two examples studied where the systems in Debrecen and in Nyíregyháza. They use different heat sources and also have developed their plants in different ways. There are a lot of experiences learnt during these processes, but we could however not find that these experiences where observed in the energy strategy. Except different fuels there are other interesting alternative heat sources for district heating. There is always waste heat where there are human activities, but quality (temperature level) and quantity are not always enough. Another interesting heat source is the thermal wells that seem to be present at many places. As pointed out below there is a large potential from this resource but it was a bit difficult to understand how feasible it is. With low temperature heating systems the utilisation possibilities increases, but anyhow geothermal heat can often be used for preheating of hot water. The Debrecen District Heating Company is in a process of investing in a bio energy plant. The strategy to be implemented in the town of Debrecen will impact the entire County of HajdúBihar. According to the town’s energy expert, the establishment of the biomassbased energy production is important.

Energy efficiency Energy efficiency is mentioned in many places, and in the national energy strategy there are potentials mentioned. In the regional energy strategy is says that “the energy use of the institutions in settlements” shall decrease 1 % per year, from 2009. There were no targets found for overall consumption or households. As mentioned in the background the potential of EE is discussed at many places and in many documents, but there was no regional potential or feasibility study found. Energy efficiency should however be the first stage in transforming the energy situation of a building, an industry, a region or a country. Energy efficiency measures is the only way to ensure permanent savings.

Hydropower ÉszakAlföld is not an ideal region for hydropower as it is rather flat. There is however a substantial amount of annual precipitation and a number of larger watercourses. A preliminary survey estimates the potential to about 0.6 TWh (2.2 PJ) hydropower per year, which corresponds to about 3.3 % of the total energy use in the region.

Bio energy The use of bio energy is favourable everywhere in the region but especially in areas with less developed gas and electricity infrastructure, where the storing of biomass can be solved and where its utilisation does not cause trouble for others. 20 % of the arable land of Hungary is located in the region and at the same time this land cost is low, especially of the SZSZB county. There are also two energy crops research centres in the region, in Nyíregyháza and Szolnok, which can contribute to use this RES. There is obviously a large potential in bio energy, but there are also conflicts between the biomass alternatives due to limitations of the use of arable and arboreal biomass. For arable land there is a conflict between food and energy production. The spreading of shortrotation plantations is impeded by the lack of available arable lands and the increase of the price and expenses of lands. Concerning a larger amount of bio energy taken from the existing forested areas, it will be at the costs of the household consumption of firewood. There is also the woodchip based power plant at Szakoly which can be a competitor in the region. Biomassbased energy production is a possibility for the region to get cheaper heating, less susceptibility to increasing gas prices, to improve regional development by stimulating local economy, and to increase delivery security.

Geothermal The geothermal energy potential in the region is excellent, and it is predicted that the utilization of geothermal energy will increase threefold in the residential heating sector by 2020. According to a preliminary survey the additional potential is about 0.8 TWh (2.9 PJ) geothermal energy per year (~4.4 % of the total energy use). This corresponds to about 4.4 % of the total energy use in the region.

Depending on temperature the energy could either be used for different heating purposes or for both electricity production and heat. In the region however, geothermal energy is used only for heating and not for electricity production at present. There is however enough capacity to also produce electricity and there are plans for this in the future. This would make most sense in the form of cogeneration where heat and electricity is utilised at the same time. In some cases there is also methane in the water. Where the wells have an appropriate gas content, gas burners or engines can be installed. This creates an opportunity to provide electricity and/or increasing the temperature of the heat. There is a general lack of projects where the sometimes present methane gas is used. Another possibility to increase the temperature of the heat is by heat pumps. Geothermal water holds a very large potential of RES in the region. Although nearly all settlements with thermal wells have, at one point, considered the idea of utilising geothermal energy, today it is still massively underutilised. There are some projects on geothermal heat, but from what the team found this resource does not attain enough focus according to the potential. There were some industrial utilization of the thermal water, mainly in agricultural processing industry, but the volume is decreasing due to the economical regression. Geothermal heat is also used for district heating at some places. The Thermal Energy Utilization and Innovation Cluster is making plans for the use of thermal water. The idea is to extract the groundwater at a specified temperature level, in order to heat institutes controlled by the local government. This cluster is likely a way to further utilise geothermal energy.

Heat pumps Heat pumps can take energy from any heat source, but a higher temperature source is favourable. Ground coupled heat pumps can utilise both geothermal and naturally stored solar heat, depending on location. Heat pumps taking energy from the air can be used everywhere, but it is important to understand that they are the least beneficial when the need is largest. This usually results in the need of a complementary heat source. There are favourable conditions for heat pumps in the region with high temperature level of the heat sources, but the environmental status of heat pumps largely depends on how the electricity they use is produced. Heat pumps might deteriorate the conditions for district heating, why it is good to keep track on where and what type of heat pumps are installed in the region. There was no information on heat pump locations, sizes and types found.

Solar energy Utilization of solar energy for heating and electricity is possible everywhere in the region. With about 2000 sun hours per year and 1250 kWh solar radiation per optimally inclined square meter, there are good conditions for solar energy. At present solar energy and especially solar electricity, also called PV (photo voltaic), is most economically favourable in small scale and in autonomous systems, in Hungary.

With increased environmental concern and more connected electricity grids it is likely that electricity costs will increase. At the same time the cost of solar panels has rapidly decreased and is expected to continue in that direction. It is therefore likely that PV plants connected to the electricity network will become more and more interesting. Solar heat is a very suitable complement to bio energy since bio burners have the lowest efficiency during the summer, due to low load, and also can be serviced then. Both solar heat and electricity are ways to reduce the energy import, which is in line with the targets of Hungary. There was however no regional potential or feasibility study on solar energy found.

Waste to energy Energy from waste can be utilised either by burning the waste or by extracting biogas when the organic waste (from households, agriculture, forest and sewage) is decomposed in oxygen free environment. One alternative is to separate the organic and the burnable waste and treat the fractions differently. There were at least one deposit for biogas, in Debrecen, but there are probably more possibilities. There are plans to produce methanol by gasification of organic waste. Possibilities with energy from waste was mentioned and discussed at different occasions during the peer review week. There was however no potential or feasibility study for waste energy.

Waste heat All activities generate heat, and it is always possible to reuse a portion of this heat, however not always in a cost efficient way. The best options are usually to start with the large energy users like industries and commercial buildings, but also heat recovery from single family houses is possible. By using wasteheat, increased greenhouse production can become available. Low temperature heat can also be used for all year around soccer fields, keeping streets and airports free from ice etc. One nice example of waste heat utilisation was found in the Debrecen district heating system, where heat from an industry was recovered. There might be more examples but without a compilation it is not possible to see how well this source is used. For all buildings with fan controlled ventilation there is a possibility to regain heat, either by heat exchangers or a heat pump. For industries and larger energy users there are often also possibilities to extract heat from water flows. There was no potential or feasibility study found on this energy source.

Natural cooling Natural cooling means free cooling from air, ground and water, and to store low temperatures from winter to summer. Cold storage can be done in different ways, e.g. by storing snow or by cooling a large rock volume during the winter. Free cooling from air is probably common in the region, although no figures were presented. The presence of cooling from ground and water is most likely less

common and were neither heard of. This also goes for cold storage, despite good circumstances with cold winters and warm summers. There was no estimation of the potential found.

Wind power The installed windpower capacity in Hungary was about 330 MW in 2011 and the annual electricity production was about 625 GWh (2.25 PJ). There were a number of windpower parks planned in Hungary in 2010 by which three are in Észak Alföld. No estimated potential on windpower was found during the peer review. It is however known that the annual mean wind speed at 10 m height is 23 m/s in all Hungary. According to one presentation the estimated wind speed at 50 m is 4.5 – 5 m/s in almost all ÉszakAlföld. There were different opinions expressed about the possibilities of wind energy, but it seems to be clear that there are no estimations on the potential at the height where modern wind turbines most commonly work today, i.e. around 100 m above the ground.

5.3.2 In short Despite a number of positive conditions the innovation activities and investments in EE and RES are still quite low. Some identified reasons to this were few regional experts in the field and a complicated and extensive administration procedure to receive permissions for RES projects. Another problem found was that there is no inventory of projects, neither a complete and compiled investigation of the potentials in EE and RES. However there seems to be large potentials in the field, and therefore the team believes that the region has good conditions to improve its situation in this area.

5.4 Financing

5.4.1 Public funding Hungarian financial support instruments in relation to the use and application of RES are much similar to those applied in other European Countries. They can be divided to those destined for covering investments in infrastructure (plants, technologies, etc.) and those derived from the operation of installations. Examples include the revised feedin tariff system “METÁR” (Section 5.1.1), the “Green Investment Scheme”, funds from CO 2 quota selling (including energy efficiency and renewable in buildings), and the new Széchenyi plan. Most of these funds are coming from the EU Regional Structural Funds incorporated in the Regional Operational Programs such as KEOP. The Széchenyi Plan is a national level programme to facilitate economic development, where one of seven takeoff points is the Green economic development. The size of the available national funds is not clear. However, taking into account the discussions in the peer review between the various stakeholders, it is evident that they are limited.

There are possibilities for public funding, often cofinanced with EU regional structural funds. European funds are though not well known and not used on a larger scale yet, mostly due to a complicated application process and language barriers. Although the procedures for getting EU subsidies are not simple, they are mostly used by public bodies (regions, counties, municipalities and public organisations) to finance their projects. The Regional Development Joint Stock Company provides several financial solutions for municipalities, especially in the field of infrastructure development, in cooperation with Hungarian Investment Bank Plc. and Hungarian Development Bank. Depending on the Regional Financial Performance, different subsidy rates exist that could reach almost 60 % of the grant approved. For example, private companies can normally receive up to 50 % grant, but if they are located in a disadvantaged region the grant could be up to 60 %. KEOP is one of the 15 Operative Programs of the 20072013 New Hungarian Development Plan related to the EU National Strategic Reference Framework. Within the KEOP, 94 billion HUF are available. Renewable energy projects and energy efficiency in buildings are the major targets to be financed with rates varied from up to 50 % (SMEs) to 85 % (nonprofit organisation and local governments). More and improved supporting mechanisms are needed for RES based electricity production, since it is currently only financially viable with support. When it comes to heat based on RES, projects have been financially viable without support, however these are seen as exceptions. Most project applications are postfinanced, which means municipalities need to finance the projects until they are completed. However, most municipalities are unable to prefinance the developments that they wish to implement. Észak Alföld Regional Developmental Joint Stock Company provides financial assistance for projects by facilitating prefinancing loans. The company can also assist in applying for additional external resources available, such as; capital investment, loans from members, subsidies, facilitating credits from the Hungarian Development Bank, and credits for SMEs. Amongst other actors, ENEREA can assist in the application process for funding. The ÉszakAlföld Regional Developmental Joint Stock Company also provides services such as; project planning, project management consultancy, preparing tender/application documentation and setting up arrangement of funds.

5.4.2 Private financing In most of the projects there is a lack of private foreign or domestic investments. Private investments in solar energy and biomass installations for heating in private houses are quite common. However, additional supporting instruments for households are still needed in order to increase the use of RES in heating. There are several investment possibilities for financial actors concerning RES and EE. To achieve the national target of 14.65 % RES share in 2020, there is a long way to go from the existing level of 8,7 %. National and EU funds cover about 20 % of the amount (about 1500 billion HUF – 5.2 billion €) necessary to reach these

objectives. This means that the remaining 80 % of the funding has to be provided by sources from the free capital market. Building renovation and central heating are the most promising areas of interest since 40 % of the total energy consumption in Hungary derives from them. In Hungary, laws and regulations regarding RES and EE change often, thus further hindering private involvement. In addition, entrepreneurship is not yet developed in Hungary at a stage that could initiate larger investments. Coupled with weak banking system, the public sector seems to be the sole initiator and developer in the field. According to information the team got, ESCO projects (see Appendix IV) are very successful in Hungary. ESCO projects serve as good and successful examples for public private partnerships in the field of energy related investments. The energy service companies active in Hungary are owned by foreign companies.

Banking The European Bank of Reconstruction and Development (EBRD) operates in Hungary with positive results with focus on strengthening the financial, energy, municipal and environmental sectors. It also aims to promote competitiveness in the corporate sector by financing longterm investments, financial restructuring, improving energy efficiency and the promotion of value added by IT, technology in general or knowledge activities. Despite a particularly challenging environment in 2011, the EBRD supported eight projects with 127 million € in total. Sberbank has listed the energy sector as a strategic area for investments, however RES is not among top priorities. For the banking system as a whole, low returns on investments and long payback periods increase interest rates making investments in RES not a priority field. For this reason, additional complementary actions and supportive creative mechanisms are necessary to develop RES applications.

5.4.3 In short In general the peer review team’s impression on financing could be summarized as follows: - There are good prospects for raising public or European funds - There is a weak private sector especially when this comes to fund availability and entrepreneurship vision - Unstable investment framework as regulations and rules change very often - The Region holds good potential for investments in biomass, districtheating, and geothermal exploitation.

5.5 Communication Renewable energy and energy efficiency is not a priority in the public opinion. Due to the crisis, people and companies have more urgent issues to deal with than investing in renewable energy or energy efficiency measures. In general decisions are based on short term investments and the possibility of getting grants, rather than long term benefits. Renewable energy – and to a lesser extent energy efficiency – have the image of being expensive and only good for the environment. There have been some bad examples and the public remember them and talk about it. Despite recent IT developments, the North Great Plain Region is still in a disadvantageous position as regards the spread of information communication technologies. The region has good internet coverage and municipalities have website pages. Some municipalities use internet as a voting tool in promoting new initiatives/ projects in the area (the case of Martfu municipality).

5.5.1 Communication strategy and activities Communication should be part of a vision, an energy strategy, and an action plan. Communication activities should follow on substantive activities which aim at reaching the set goals. This refer to the method for creation of an integrated communication strategy (Appendix IV) in conjunction with substantive policy measures, created according the recommendations in Section 7.1. The energy strategy of ÉszakAlföld is insufficiently specific as a basis for an effective communication strategy and a communication plan.

5.5.2 ENEREA ENEREA has a Communication Strategy 20122015 with welldeveloped channels of communication, communication activities targets, internal and external communications. The strategy includes information for marketing materials, brochures, conferences and exhibitions, customer service, electronic and broadcast channels – Website, Facebook, domestic and international newsletters, press conferences, radio and TV interviews. Target groups of their activities are enterprises, governments at local and county level, professional associations, NGOs, schools, colleges, universities, inhabitants, energy costumers. The communication strategy is not available in English. The communication strategy 2012 – 2015 of ENEREA aims in particular on profiling and image of their own organisation, rather than on substantive activities, arising from concrete policy. Nevertheless it appeared during our visit that the role of the energy agency is not clear to everyone. Several energy actors on national level were not aware of the existence of the agency, or its purpose. The activities (promotion, conferences, trainings, energy marketing, organising events, workshops) resulting from the communication strategy are also aimed at providing information to stakeholders about developments in the field of renewable energy with the general goal to promote energy efficiency and the production and use of renewable energy. It appears that, despite the activities, the decision makers are not sufficiently informed.

The next findings substantiate this proposition. - The funding system is too difficult - Using RES is not the first priority at this time, for example for the mayors - There are no programs for the whole region - There is a lack of information from the latest technologies - The good practices are not well presented The peer review team observed that ENEREA has several good communication ideas in the pipeline. One idea was to create a regional energy magazine, through which they hope to disseminate efficient and substantial information on energy. They also intend to establish energy awards for the SMEs in the region, to set up a regional/international Energy Cluster, and to form energy offices in all of the larger cities in the region. Two existing activities are the Energy Information Days, where all stakeholders of the county can have the most current information related to the energy field, and the ÉszakAlföld Municipal Energy Day, which is an information source that gives solutions and ideas to energy problems specifically for municipalities.

5.5.3 Communication and collaboration between organisations There is a lack of communication/information between organisations, university and business. The University of Debrecen has successful initiatives in the field of R&D and Debrecen is well known for its potential in this field. Unfortunately, there isn’t a clear communication path or collaboration with the direct beneficiaries: municipalities and investors. The Energy Club presented many valuable awareness raising activities, which could be used to a higher extent in the region by enhancing the cooperation between ENEREA and The Energy Club.

5.5.4 In short In ÉszakAlföld there are a lot of intents and actions, aimed at communication. Nevertheless there is still little knowledge about the benefits and possibilities of energy efficiency and renewable energy among relevant target groups. The communication activities are not based on a specific project plan for attracting financing for RES and EE, or a specific communication strategy. Neither are the actions of various relevant stakeholders, as central government, municipalities, universities and ENEREA, aligned and shared with each other.

6 SWOT analysis of the Észak-Alföld region

The key findings of the peer review in ÉszakAlföld are summarized below in an analysis of strengths, weaknesses, opportunities and threats, i.e. a SWOT analysis.

Helpful Harmful Strengths Weaknesses

• Growing interest and demand for RES • Low awareness of EE and RES • The use of public funding possibilities in the society • • Increased awareness of possibilities for Financial problems in municipalities EU funding of energy management • Costly and complicated permit and • Aim to decrease energy dependency application processes related to RES • • Necessary human resources (labour Mistrust and lack of information and knowledge) are available concerning RES application process • • A regional energy agency, ENEREA Lack of communication between organisations and universities • Access to application support • The role of ENEREA is unclear to several • Tax reductions for businesses using actors minimum 10 % RES • Shortterm financial solution for ENEREA • High geothermal energy potential in • the whole area Lack of a network of energy advisors Internal origin origin Internal • • Large solar energy potential in the Lack of public and private partnership whole area • Lack of private investments in EE and • High potential for bio energy and bio RES, both foreign and Hungarian fuels • Limited private entrepreneurship • Favourable hydropower in certain • RES is not viewed as a potential for areas profit/business • Energy potential in waste materials • Low focus on research and development on EE and RES • Lack of regional EE and RES potential data Helpful Harmful Opportunities Threats

• EU targets on EE and RES • Continuance of economic crisis can • EU and national public funding for EE slow investments in EE and RES and RES projects • No government support for heat • Green electricity support promotes the production based on RES spreading of RES power plants • Tension between agricultural energy • The movement Covenant of Mayors production and food production offers assistance on SEAPs and • Long drought period in the region influence decision making in EE and • Banking climate does not promote EE RES and RES projects External origin origin External • Local governments can buy gas and • Insecurity for private investors due to electricity at the open market to changing regulations and laws reduce energy costs and increase RES • Investments in EE and RES are • Increasing prices on fossil fuels create expensive and the return rate is slow more favourable conditions for EE and RES

7 Recommendations

Based on the pre peer review information, the peer review presentations, the interviews, the field visits, the discussions amongst the peer review team, and the knowledge of the peer review team members, the following recommendations are given. They are divided in the same categories as used in Chapter 5.

7.1 Ambitions, goals and policy

7.1.1 Regional level The region holds a number of actors involved in the regional development in general, as well as more specifically within in the RES and EE development. The peer review team found that cooperation and coordination between the different institutions involved in EE and RES questions need improvement. The areas of roles, responsibility, objectives and duties need to be clarified, in order to achieve an efficient use of human and financial resources. The cooperation between different stakeholders could also be improved.

Regional development concept and innovation strategy The region already holds a regional development concept. The next suggested step is to create a regional development strategy and an action plan, with objectives, priorities and suggested measures. The strategy should of course be in line with EU and national strategies and reflect the territorial characteristics. The regional development strategy should also be related to a regional innovation strategy. Also in this strategy, the environmental and energy concerns, together with business development, commercialization and financing of ideas in the field, should be included. EARDA and INNOVA should be the responsible coordinators for the development of a regional development and innovation strategy and action plan. These shall be made in cooperation with other relevant public institutions, business and industry actors, academia as well as relevant nonprofit organisations. ENEREA should be very much involved, from the very beginning, with the planning and working process for both the regional development and the innovation strategies and action plan. It is essential that these regional strategies include the development of both use and supply of EE and RES as a growth mechanism for regional development, in order to highlight the importance and to be able to use structural supports for this issue. By including that the vulnerability due to a high dependency on imported natural gas could be decreased by both EE and a diversified supply of RES, this factor increases the benefits. The importance of RDI, business development, commercialization and financing within RES and EE needs also to be emphasized. On the basis of the regional development strategy, the Regional Development

Operative Programme for the North Great Plain 20142020 should be formed as soon possible. To meet the objectives in these regional strategies, it is necessary to create a stable political framework. To do this the region should focus on education and information to politicians on the economic importance of RES and EE. This way the potential of these can be realized.

Energy and climate strategy and action plan The above proposed regional development strategy should then lead to a regional energy and climate strategy and action plan. It is important to make sure that the regional energy and climate strategy is aligned with the development, innovation and environmental strategies, and take into account the criteria of economic and social development and environmental sustainability. The energy and climate strategy should of course also meet the most important local, regional, national and global energy related challenges of the future. The energy sector is complex and has links to several other policy areas (transport, environmental protection, agriculture, water management, education and employment). Therefore the energy and climate strategy also has to adopt a proactive, openminded approach extending to these areas. However the energy sector is foremost connected to the international climate objectives. Greenhouse gas emissions and global warming are subjects dependable on the use of energy therefore a climate strategy has to be included with the energy and climate strategy. The regional energy and climate strategy shall describe the regional energy situation, including possibilities and strengths and the potentials of EE and RES in the region. It should focus on sustainable growth, sustainable transports and sustainable community planning to achieve energy efficiency and a higher proportion of RES. The existing energy strategy can be further improved by giving priority to regional sustainable development and growth through EE and RES. It should highlight the goals and means within RDI, business development, commercialization and financing in the cleantech sector. The energy and climate strategy also needs to promote a proactive approach to awarenessraising. When it comes to the environment and energy issues, the transportation matter tends to have a very strong impact due to the high portion of fossil fuels within this sector. The transport sector is however not included in the present energy strategy for the ÉszakAlföld region. In the coming updated regional energy and climate strategy, transportation should therefore be included. The strategy should then emphasize the development of sustainable transport solutions and “alternative” fuels. This is in accordance to the prioritized area in the regional development concept concerning the use of the favourable logistic position for regional economic development and would contribute to the reduction of both oil dependency and CO 2 intensity.

The strategy should also stress the importance of a general travel behaviour change by promoting increased use of public transport and video meetings and introduce mobility management activities, trying to influence the travelling before the journey has started. The public sector can work as a role model here promoting video and telephone meetings as well as by having an energy efficient vehicle fleet that goes on green fuels (e.g. biogas, hydrogen and electricity). The region’s agriculture is of national importance and the indirect impacts of the sector point far beyond its role in the region’s economy. The energy and climate strategy should therefore also emphasize the potential to develop bio energy production from the utilization of byproducts of agriculture. The regional energy and climate strategy should encourage and facilitate the establishment of decentralized plants supplying local needs. The strategy should define a longterm vision with objectives to achieve it. Objectives need to be specific, measurable, acceptable, relevant and time framed (SMART). Objectives need to be clearly communicated documented. Clear accountability is important to improve the implementation and the achievement of objectives, meaning that the strategy should state which stakeholders are to be involved in the implementation of the strategy and how the work will be done. In order to increase the credibility of the objectives, it should be ensured that they are supported by resources and enabling frameworks.

Regional energy action plan The energy and climate strategy should then be elaborated into a concrete energy action plan, determining clear actions and responsibilities for all stakeholders. It should state which actions that need to be undertaken to reach the goals, when will they take place, how they will be handled and who will be responsible for performing the actions. A welldeveloped action plan will also make it possible to increase actions in areas where targets are at risk of not being achieved. When developing the regional energy and climate strategy and the action plan it should be a systematic work and based on a broad cooperation – using the opinions, experience and the competence of working groups comprising of experts in the region. The experts should represent the regional and local government, the public, the academic, the R&D institutes, the financing sector, the main business/industry sectors in the region and the relevant civil sector. This way of cooperation is of course timeconsuming as it involves many consultations and workshops, but it is necessary in order to increase the confidence of the society and of investors and thus ultimately to succeed. Strategy development and action planning process are important means to engage stakeholders, to build knowledge and consensus and to boost action. To increase confidence in the work and to prevent opposition during the realisation phase, it is therefore necessary to keep all these stakeholders involved both during the whole process.

The regional energy and climate strategy and action plan should be formally endorsed by regional politicians. Regional energy strategies play an important role as they provide a highlevel view of how a region can meet economy related EE and RES goals. Furthermore, continuous evaluation of the work is a critical part of the regional governance, in order to adapt the implementation to changes in the society. The energy and climate strategy and action plan should be an ongoing process where objectives have to be updated and actions have to be evaluated and renewed annually or every second or third year.

7.1.2 Local level One could say that all action is at a local level, and it is therefore important that also the regional energy and climate strategy leads to strategies action plans on county and municipality level. These local strategies and plans should of course connect to the regional strategies and plans but also incorporate the local conditions. For developing local energy strategies municipalities could join the Covenant of Mayors (CoM) and thereby get support with developing their SEAPs. This might be especially valuable when doing the inventory of green house gas emissions that should be made within the CoM. In order to promote local sustainable development it is important to include the interest groups of the local stakeholders from the beginning of planning. ENEREA could be of help with the assessment and awakening of consciousness of local potentials and visualizing the local business possibilities. Thereby you can get political decisions supporting local sustainability development, which can also be strengthening the local identity. Establishment of decentralized plants supplying local needs with RES of agricultural and forestry origin, as well as organic and sewage waste, can play a significant role in the development of the municipalities. This is beneficial both in addressing the environmental problems and in the creation of local economic growth, especially job opportunities. RES in common and biomass as an example can play an important role on the local level by making the most of local conditions (natural and social resources) and creating local value by retaining profits locally. As far as the utilization of bio energy is concerned, there is a possibility with local energyproducing units (e.g. biogas plants) using materials originating from agricultural, municipal and industrial byproducts (e.g. food industry) and waste. Since municipal organic waste qualifies as biomass, its energy utilization is added to the share of RES. The peer review team learnt that geothermal energy in the region is mainly used in spas but not for production of electricity or heating of homes, public institutions etc., though this is possible. This possibility should of course be included in the suggested potential and feasibility studies.

7.1.3 The public as a role model and driving force The public sector should function as a role model for the use of RES and EE and it should raise awareness of behavioural change through education and

information. The public sector can integrate a sustainable development approach into the daily routine and in the consumption patterns, in order to achieve behavioural change. To boost the local and regional market for RES and EE, it is advised that public bodies introduce green public procurement, on the basis of life cost analysis, and thereby showing that it can be possible and profitable to invest in RES and EE measures. This can be done for example when buying products and services, building materials and vehicles. This way, the government gives an impulse to the (local) sustainable market. As a regional centre, Debrecen has a great power and impact on the region and thereby the public authorities of the city should be in the forefront when it comes to the use of EE and RES, in order to work as both a role model and a driving force for the entire region.

7.2 Organisational aspects There seems to be several good initiatives in terms of RES and EE at local and regional level. There are ongoing programs and projects being prepared and implemented by local and regional actors in the energy field. However, it seems that many of the organisations and companies are doing similar things, such as project planning, project management, etc. without effective communication between the various organisations. We believe that these organisations would benefit from coordinating themselves, and communicating regularly with each other. Perhaps they could even work together and assist in different matters and projects, depending on their different knowledge and experiences. Furthermore, it is essential that the awareness and role of ENEREA is strengthened, so that it is wellknow all the way from national to local level. With a view to inform and motivate consumers to increase energy efficiency, an energy consultancy system (network of energy engineers), reaching a large proportion of the population, could be established on local government level. This network would be able to help individuals and businesses to answer questions concerning the development of pilot projects, the forms of support and the selection of technologies. The energy engineer network could be responsible for the direct information and providing professional advice to the persons interested in energy tenders and support and development opportunities, which could accelerate and facilitate the progress of projects. Also, they could be involved in activities (including, for example, the organisation of trainings and conducting campaigns) to further the increase of knowledge and environmental awareness of energy consumers and the dissemination of energy saving initiatives. Increasing consumer awareness and the persuasion of consumers are indispensable in order to achieve the objectives.

7.2.1 ENEREA as a role model and driving force Experience from other regions in Europe show that regional energy agencies can be a great asset for a region, if they have the right working conditions. An energy agency like ENEREA has the possibility to contribute to the achievement of national objectives. ENEREA could make itself indispensable for national as well as

regional governments by facilitating the achievement of their goals. ENEREA could be used by the region to improve and process the regional energy and climate strategy and create an action plan. An efficient method for the creation of action plan could be “back casting” as it is described by “The natural step” (www.thenaturalstep.org ). The regional energy and climate strategy could be processed by breaking down the national policy into county and local policies in order to connect one another and to increase the possibilities for national investments for the region. ÉszakAlföld should raise the fact that they have the first regional energy agency in Hungary. It is important that ENEREA is given mandate by the region to be the obvious and appointed organisation, responsible for regional development in sustainable energy issues. By inspiring and helping other regions to start similar agencies the influence and attention of the region could increase, and at the same time enhance the role of RES and EE for all stakeholders. An energy advisory service at local or micro regional level coordinated by ENEREA would be a help for households and SME. Coordination activities could be network activities with information and communication strategies and in service training, common campaigns etc. The first three years of full financed operation with EU financing from IEE program and regional co financing is important for building up regional backing and legitimacy. After the first three years It is even more important to secure long term financing solutions for the regional energy agency. A common financing model is some regional financing (from owners and stakeholders) as base founding or service fee combined with project founding. A 50 percent base founding would be an ideal situation for an energy agency according to a European study from 2007 (ECUBA Report). With proper financing situation ENEREA would be a valuable asset for the region with their expertise in sustainable energy. It would also increase the possibilities for ENEREA to stay as a completing organisation to already existing actors like consultant companies and others.

7.2.2 Coordination and cooperation between municipalities The region holds a number of successful cooperation within projects of RES and EE. These projects were in most cases concentrated to only one municipality or micro region. It is our opinion that a closer cooperation between municipalities is needed in this field to successfully distribute and implement good practices, to work together towards regional targets, and to further spread information and knowledge on the use of RES and EE. This is also necessary since many municipalities are small settlements with a low number of inhabitants and a lack of financial possibilities. A closer coordination and cooperation between small municipalities would create stronger, more influential regions with a larger potential to affect decisionmaking and attract funding. Local governments could organize cooperation in the form of an association to represent common interests, to manage common developments and to get the necessary sources for it.

7.2.3 Public-private partnerships The publicprivate cooperation is lacking in the region and furthermore, the entrepreneurial activity in the region is well below the national average. Energy efficiency and energy independency could be a way for the region to increase the number of SMEs and to strengthen their economic performance and sustainability in order to increase the region’s competitiveness and economic stability. Projects can gain competitiveness by working on the basis of publicprivate cooperation for developing a business case of the project. Some actors can provide assistance to the project from the original idea to the end of the innovation chain, while others assist in the realization of the research and development project, and business partners can help in entering the markets. Increased publicprivate cooperation could also be achieved by enhancing the processes and cooperation within the innovation work of RES and EE through regional “clusterlike” relationships. By this, the cooperation between the individual enterprises and R&D actors could be improved and the enterprises could earlier and to a greater extent, take part in the innovation processes. This could improve the utilization of research results, increase the proportion of marketoriented applied research and thus increase the realization of sample projects. This in turn could result in new, innovative products, services, technologies and knowhow, thereby contributing to the competitiveness of SMEs, to their ability to stay on the market and to gain strength. Another idea could be to set up business incubators within the energy sector, close to universities, to enhance the use of research for innovations. Furthermore, the enterprises could make use of the competence within the University of Debrecen in a higher degree. The University of Debrecen has a postgraduate education for renewable energy experts. This education includes one week vocational training in Hungary and in Austria. The one week vocational training should be used more by both municipalities and SMEs in the region. The students could contribute by developing projects in the RES area and to enhance EE for the companies and municipalities. In order to enhance publicprivate sector cooperation, the public should identify “winwin” situations where sector benefits overlap. The public should take the lead with an open minded approach towards the industry. It is also essential for the public to provide the private sector with an clear incentive to cooperate, as it is very likely that the public sector needs private sector cooperation more than the reverse.

7.3 Project development improvements Project development and realisation in EE and RES are closely but not exclusively connected to economical issues and financial support in different ways. Questions mainly related to project financing are treated in Section 7.4 while other possibilities are treated in this section.

To reduce the problems related to conventional energy sources and to advance the preparations for the new era of energy supply, the use of renewable energy has to be intensified. Pioneer projects will have a key role and may take advantage of the business possibilities provided by the altered economic environment. Here it is important to view EE and RES as a potential for profit and export possibilities – through projects. Therefore it is of highest importance that projects do support entrepreneurship and not only focus on realizing good examples for the municipalities. Companies have to be involved in the projects from the start. Two important factors for potential investors are efficient permitting processes and predictable regulations. Predictable regulations are necessary to allow potential investors making prognosis they can trust. It is also important that permitting processes are efficient, simple and predictable, to facilitate for investments. This way the confidence of investors will increase and with that comes an increase in the amount of investments. An important part of the systematic, longterm plan of economic development, are the industrial parks of the city. Besides using the existing industrial parks as a motor the region could strive to promote the establishment of scientific parks in the vicinity of the universities internationally recognized and scientific laboratories. This is customary in countries with highly developed industries and could be done in a similar way. If there is lack of knowledge and experts in various energy issues it can be handled in shortterm and longterm ways. The fast solution is to rent professors or advanced students (Section 7.3.3) or engage experts from outside the region. The more longterm and possibly risky solution is to educate employees and unemployed persons. The risk is connected to the fact that educated people tend to be more mobile and might move out of the region or the country if the conditions are more favourable there.

7.3.1 An overview of project possibilities At the moment there is no overview of realized projects and initiatives that haven’t been realized yet. By setting up a database with realized projects (both successful and unsuccessful), concrete project ideas and initiatives and then analyzing them, different kinds of decision makers can see what initiatives are most interesting to support. The overview can also be used to form coalitions of different project actors like SME’s, research institutes and public bodies. By working together the probability to realise projects increases. The database can also be used to cluster analogous and/or complementing project ideas and create synergies, and similar projects can be offered in a package to investors. It is of course important that the database is set up in a way that confidentially is assured on business sensitive information, but at the same time gives enough insight to create the synergies and cluster projects.

Potential study The peer review team received information about the potentials in EE and all RES during the peer review week, but didn’t find an extensive and covering potential

study at one site or in a compiled document. From what the team learnt, there was also some information missing, especially on the EE potential. We therefore recommend the region to compile the existing information on the potentials of EE and the different RES. When this is done it should be investigated what information is missing and finally the compilation is complemented with this data. The potential study should also include the user potential, both on local/regional but also on larger level. There might be technologies/solutions that are extremely interesting to citizens, municipalities or companies in a geographic area (smaller or larger), but not outside this. One example could be I few houses in a region that has special conditions where it is possible to reduce the energy use 70 %, but on the other hand there are 10 000 “normal” houses where you can save 5 %. Another example is if there is a large wind power potential but on the other hand there are no cables in the interesting areas. The study should in other words also analyse the realisation potential.

Feasibility study As mentioned above there were partly good analyses and mapping on some RES. After creating a project overview and doing an adequate potential study the next suggested step is to add an economical analyse of the different possibilities. The study shall include suggestions what alternatives are most interesting to continue with. The results from the potential and feasibility studies can also serve as important input for an energy and climate strategy. This study could also include suggestions on clusters and projects, and all kind of information that might be relevant to potential investors. If ideas how to attract investors are included it is even better. As a conclusion – It’s important for the region to think about EE and RES as serious potentials for both development and profit. Once a successful project is demonstrated, it is a risk that many municipalities or companies go for the same solution. This might be a risk when resources are limited like e.g. waste and biomass. It might therefore be beneficial to cooperate to avoid this “internal” competition, which actually can destroy the conditions of a project. If this aspect is included in the feasibility study it is very beneficial.

7.3.2 Project development

Pilot and demonstration plants In order to make use of the regional innovation potential and to exploit research findings, the development and implementation of demonstration projects should be promoted and increased. It is in most cases necessary with pilot and demonstration plants to show the solution to the world. A pilot plant shows that the technology works in large scale and a demonstration plant shows that it works commercially, i.e. the first real plant. There are a number of researchers, inventors, entrepreneurs and companies in different countries that has promising technologies but has problems with a

breakthrough because they do not get a first customer. Here municipalities and possibly also regions can act as a first customer. One way to increase the knowledge and break down the resistance of the multitude is to focus on projects and initiatives with positive shortterm economical results, and spread information about the good examples. This can best be done by starting to realise small projects, with small investments and a short payback time. This way the stakeholders will gain confidence in EE and RES projects. If projects can be realized without subsidies it is always beneficial, but also try to realize funded projects that can be duplicated. There are always large improvement possibilities with new technology, and even if a pilot project is not fully commercial the technology might become so with the experiences gained. A business plan should be included in all projects to show if the project is a sound business case. A promising business plan could be one reason for an investor to invest in a project. Another way for municipalities to help realising new solutions is both by allowing a longer payoff but also to consider the benefits that a new or increased local company would mean, i.e. potential job creation and tax incomes. Municipalities can also make solution oriented procurements rather than product oriented dittos. This way, existing industries can be inspired to develop new solutions. It is important to have a commercial and entrepreneurial focus in the work of creating demonstration and pilot plants. Otherwise there is a risk that good projects are carried out by municipalities but then nothing more happens, i.e. there are no companies to multiply the experiences. The implementation of new EE and RES technology in the form of pilot and demonstration projects, based on local RDI should be promoted through an investor friendly regulatory environment.

7.3.3 Take advantage of the academic competence There are different ways to use the intellectual resources at universities and other educational institutions. One method used in parts of Sweden is to couple a professor to a company for a shorter period, e.g. a week. This can be done also with an advanced university student. Depending on the project and the situation of the company this person can help either with a specific problem or come in with a more general approach with the aim of finding specific objects or projects to help the company with. Depending on the agreement with the university, this can be a paid or a subsidized construction. For the institution and the expert, it gives insight in the challenges companies are facing, why they better can direct their research and education towards the actual topics. Another alternative is to have student projects in some courses, where companies are welcome to offer specific tasks. Here either the same task can be chosen for a number of student groups, or they can work with different tasks and present their ideas and solutions to the other student groups. For the student it offers a possibility to do a real project and an opportunity to be introduced to different companies.

7.3.4 Energy Service Companies ESCO One way to realise energy efficiency measures is by so called ESCO (Energy Service Company) projects, Appendix IV. This method probably can be used more, as this is a way to enable efficient measures without having the actual investment resources, and the benefits are immediate. Such projects could and should be done in a way that the competence level of the receiver increases.

7.3.5 Projects should add value to the community When designing a project that is supported by the government, a good way is to start with the perspective of ‘adding value’ to the community. Instead of looking at energy efficiency and/or renewable energy production as the primary goal, adding economy, environmental and/or social value should be the main objective. This way it is necessary to take another, broader approach in the project development. It also means that more parties can be involved in the financing of the project, as more stakeholders will have a benefit from the project. An example is to include job creation in the business case. Every extra job created means less social payments need to be paid by the government. This means a reduction of cost, which can be used to invest in the business case. One way to find out possibilities for how the local society can benefit from a RES and EE project is by using value chain analysis in a feasibility study. All stages in a project should be analysed with respect to benefits to the society, Figure 14.

7.3.1 Higher value products In project development it is favourable to think in value chains. By going “higher”, towards more value, it is possible to create higher values from a source. This way you earn more and spill less. Of course also the most efficient way to achieve this needs to be explored. For every source (wood, vegetation, geothermal heat, etc.) there are different products, but the idea remains the same. One example, taken from the Valencia peer review report, mentions bioenergy. It is recommended to produce high value products first (e.g. medicines, chemicals and food), instead of focusing on producing power and heat. The latter is easier to create and can be made of the waste products. Another similar approach is refining. Instead of selling timber it is often economically beneficial to refine the products as much as possible before selling them. It is in other words more profitable to sell pellets than wood chips, plank than timber, furniture than plank, etc. This however demands larger investments and is therefore a larger risk.

Possible Example for value chain for a wind power project measures for Regional and local deliveries

T o t Design and Construction Deliveries of development, Infrastructure and operation liquidation a wind turbines 100% l studies stc. installation A Tranforming stations c Harbor Service buildings Service Project management Roads t Domestic och Foundations Maintenance international Dismantling Invesigations Bridges Education i Grids Restoring Local deliveries Boats Regional Sub Research & deliveries Transports environment v Choppper development 20% Food supply entrepreneurs i Hotels t y R & D in the region

L How can the local society work for delivery of goods and sevices in to the value chain in a o construction period and an operation period? c a 10% l What are the regional specially competitive advances (climate, knowledge, work labour etc.)?

Figure 14. Example of a value chain analysis.

7.4 Financing The National Government has an important role in EE and RES development, especially when it comes to demo and pilot projects, even more in this time of economic crisis. The national support system is important for the development of RES and EE projects, since there are certain enterprises in the region whose financing cannot be solved by investors of risk capital or banks. It is important that the relevant regional financing programmes emphasis on cleantech issues and the regional sources necessary for project development should be made available to enterprises efficiently and simply. There should be encouragement of the involvement of financing possibilities outside of the nonrefundable grant sources and also improvement of the involvement of domestic and international capital, by ensuring an attractive investor environment through longterm, stable and efficient regulation and administration. A steady and reliable source of funding is essential for energy projects. If energy funding depends on annual budget allocation then implementation may be compromised. Funding should be steady and predictable over a longer period. All RES projects should be built on defined business plans and should also support entrepreneurship. Private financing should be encouraged.

7.4.1 Public funding To increase the conditions for private investment in EE and RES it is important to use public funds like the EU structural funds and national and regional development funds for demonstration and infrastructure projects to overcome barriers for development of private initiatives. It is recommended to team up with other regions/countries to be eligible for larger scale EU funded projects. Even soft measures like awareness campaigns are valuable for the investment environment. In early stage development of business with new technologies it is important that regional and local authorities have the possibilities to invest in demonstration projects. European Investment Bank (EIB) provides a lot of possibilities for financing and loans to EE and RES projects. Two examples are ELENA and JESSICA. ELENA (The European Local ENergy Assistance) is the initiative for facilitating the mobilization of funds for investments in sustainable energy at local level. The European Commission and the European Investment Bank have established the ELENA technical assistance facility financed through the Intelligent EnergyEurope program. ELENA support covers a share of the cost for technical support that is necessary to prepare, implement and finance the investment program, such as feasibility and market studies, structuring of programs, business plans, energy audits, preparation for tendering procedures in short, everything necessary to make cities' and regions' sustainable energy projects ready for EIB funding. JESSICA (Joint European Support for Sustainable Investment in City Areas) is an initiative of the European Commission developed in cooperation with the

European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). It supports sustainable urban development and regeneration through financial engineering mechanisms.

7.4.2 Private financial possibilities The main issue in ÉszakAlföld concerning RES and EE seems to be the lack of finances/investments in the energy field. A lot of RES projects that were recently realised were based on grants. This is not a sustainable way of project development. In the ideal situation, a project (business case) can be developed without public money. However, when there is need for public money to realise a project, a construction with loans (instead of grants) is better, as this forces the project developer to really make a healthy business case as the public money put into the project has to be paid back. The construction with loans (revolving funds) also makes it possible for government to contribute to projects in the future, as the money will revolve. Even in the case where subsidies and grants are used, the money is often paid out after the project is finished. The ÉszakAlföld Regional Developmental Joint Stock Company offers prefinancing in adhering to RES and EE. The services of this company could be used more frequently to assist in the initial process of RES and EE projects. Most of the projects have been initiated by public bodies. At initial stage, governmental or municipal companies and organisations could generate the critical mass to start RES applications, engaging also private funds, even from abroad, and public private cooperative schemes. The public stakeholders of the region should join forces with substantial technologyoriented companies and use this as a driving force to interest private investors for RES and EE projects.

7.4.3 Establish an investment community and regional energy fund A region with ambitions to increase the percentage of renewable energy cannot only rely on market forces. The market participants want to make profits with the lowest possible risk. Projects with high profit possibilities will therefore be realized by enterprising business persons. Good examples can then be created this way even if they are not a part of an integrated sustainable energy system. Other barriers beside financial for realization of renewable energy projects, like permissions, environmental, resource availability, public opinion and opposition etc. can be solved on regional and local level. It is known from wind power projects that local ownership also mean a higher grade of acceptance, and the creation of a regional organisation for project development and financing would have possibilities to allocate regional financing instruments By creating a regional investment organisation with the ambition to realize projects and actions in line with the regional energy plan also projects with low profit forecast can be realized. With regional ownership possibilities for regional reinvestments of the profits also will increase and profits in terms of creation of new jobs also can be considered.

One recommendation would be to use the DEon concept developed in Flevoland and see how it would serve the conditions in ÉszakAlföld.

7.5 Communication To improve the competitiveness and attractiveness of the region in developing the EE and RES sector, the creation of a positive regional image and the communication of this image, both outside the region and inside, to the population of the region itself, is a very important task. One way to do this could be to establish cooperative links, among for example the business development and innovation stakeholders, local governments, academia, and small and medium enterprises, in order to attract both domestic and international investors as well as innovative cleantech enterprises to establish in the region by offering joint arguments for investing in ÉszakAlföld. As mentioned earlier the attitude of the population towards sustainability, EE and RES is not so positive. However, with good examples (foreign and domestic, well spread around the region), media exposure and education, the attitude can become more environmentalfriendly. Implementation of good examples will help a lot for increased awareness of possibilities. There is a high correlation between the notoriety and the acceptance of EE and RES. This means that the more people know about the RES the more they accept them. The shaping of environmental consciousness and energy saving behaviour should be started, in a playful way, at the nursery school and integrated into the curricula of all primary, secondary and postsecondary schools. There is a guideline included as Appendix III on how to design a communication strategy. This chapter regularly refer to this guideline.

The first step you are advised to take is:

Intensify the role of ENEREA as a stimulator and promoter of RES at regional level ENEREA has a huge potential in promoting the usage of EE and RES in the region. ENEREA must work to obtain a solid position within the context of organisations in ÉszakAlföld regarding stimulating (financing of ) EE and the use of RES . ENEREA will therefore have to define which means they have available, in order to take this position. For instance knowledge about subsidy schemes, a relevant network, positioned between national and local level, lobbying possibilities, knowledge about relevant projects, knowledge about national, regional and local policies, etc. Based on this means they can have added value for relevant stakeholders as a central information point. The information they provide should be persistent, consistent, reliable and target oriented. Although the energy agency ENEREA appears to be a very strong actor in the region and is involved in several projects on various levels, their role is not clear to

everyone. The peer review team found that energy actors on national level were not aware of the existence of the agency, or their purpose. It is important to realize that the chosen position only works when stakeholders know about ENEREA, when they can find them and allow them to have this position. ENEREA should ensure that stakeholders experience their added value and use it. From this position ENEREA should be able to provide expertise on investments in sustainable energy (regulations, laws, subsidy, options) etc.

A communication plan should always be connected with substantive goals In Section 7.3.1 it is advised that you take care of a sound economic, technical and spatial study of the potentials of EE and RES. These results can serve as a basis for an energy strategy, but also as a source of information for potential private investors. Furthermore you are advised that your strategy should be in line with the EU and National policies (section 7.1.1) and to elaborate this strategy into a concrete action plan. The communication plan should be compiled as an integrated part of the policy and action plan. Communication should contribute to substantive goals. A strategy and action plan in EE and RES should always include a clear chapter dedicated to communication and promoting of EE and RES investments, e.g. like in the text frame. One of the questions formulated by the region before the peer review was: How can the population be involved and how could their opposition against the usage of RES be reduced? The question that should be answered first is: What is the goal? Who are your stakeholders? Which part of population you want to reach specifically? The goal can be: Stimulate people to take part in an association, with the aim of collectively insulating their homes in order to save a specified amount of energy. This asks for another approach than a more general goal: To increase the awareness of people of their responsibility towards the careful preservation of our planet, so they judge environment changes as a result of specific renewable energy projects to be acceptable (in order to avoid objections). In all cases you should involve stakeholders (inhabitants) at an early stage. If appropriate, inhabitants may be offered the opportunity to participate in the project. This participation could be limited to the planning and performing of the project, but also financial participation might be considered as a possibility. In order to increase the role, effect and engagement of municipalities and other relevant stakeholders, they should be involved in the development of the EE and RES strategy, action plan and communication strategy in an early stage, so they have the opportunity to have influence on the strategies and goals. They also should be involved from the beginning in projects and investments.

Identify relevant stakeholders and the best way to approach them (step 1 of the guideline) As a part of the communication strategy, there should be made a comprehensive definition of relevant stakeholders who are reliable and can work

with the region and think with the region on the best ways to reach the set goals. Think of regional coordinators like ENEREA, EARDA, University, etc. and local coordinators like mayors, local stakeholders, inhabitants, SMEs, private investors in EE and RES projects and investments. Correct and useful information for all target groups should be available. As important stakeholders should also be considered: potential (private) investors in EE and RES to stimulate financing of such projects. You should build a relevant network, which can start with your R4GG partners. Further possibilities are the list of potential stakeholders which we added as an appendix, LinkedIn, and providing a website which matches potential investors with EE and RES projects. More cooperation between public and private bodies active in the field of EE and RES will result in a more effective support for companies to realize EE and RES projects. The relation between ENEREA and the national energy agency and also with the Energy Club must become stronger. The gap in the collaboration between ENEREA and the local municipalities should be bridged. The mayors are important as the communities’ looks up to them, they have local power and influence in promoting the use and the investments in EE and RES at local level. The regional coordinators mentioned above have the necessary influence on stimulating mentality changes and sensitizing local politicians towards the importance of using RES.

Follow the guideline in Appendix I Take the steps of the guidelines to analyze the stakeholders, determine the aim you have with the stakeholders and design your communication strategy.

Strategies for approach (based on the EE and RES strategy) Bridge the gap between ENEREA, municipalities and other relevant stakeholders, by rethinking the approach towards these stakeholders; start to view them as clients and anticipate on their needs. Municipalities need to have a clear image about their EE and RES potential and the benefits resulting from it, and ENEREA can work on a strong marketing campaign to showcase best practices. They could offer free consultancy sessions (maybe one or two meetings) to a municipality (or several municipalities coorganised according to their EE and RES potential and profile) in which the opportunities in investing in EE and RES are clearly highlighted. These meetings can also be beneficial for ENEREA as after these meetings, municipalities can contract the services of the agency for further projects in the RES area. The key points are to inform and exchange knowledge. The lack of communication between the different operators, a general scepticism and negative attitudes are often converted into active protest against some EE and RES projects. Involve inhabitants, SMEs and private investors in EE and RES projects and investments: all the potential stakeholders for EE and RES investments and projects dedicated to these issues. A very strong and oriented communication campaign by voice of reliable communication channels (partners) can stimulate them to step in.

Formulate the core messages (step 7 of the guideline) In communication and awareness campaigns, the message should be stressed, that renewable energy and especially investing in energy efficiency is first of all wise from a financial and economical point of view. For each project and stakeholder, there should be formulated a matching core message.

Relevant means, instruments and tools (step 8 of the guideline) Below some examples that could be considered in a communication strategy: Information campaigns for increasing passive support presentations of general and specific benefits for the region, citizens and businesses in order to increase acceptance and to build a positive image for RES usage in the region. A well targeted, rather than general campaign can bring progress. It is important to communicate direct benefits as well as indirect benefits that renewables provide. Awards can trigger interest in a REStopic. This can motivates those who are being honoured. Awards can be the result of a competition or can also be recognizing individual or group success. Competitions can be created between companies, local authorities, schools, or citizens and households. They can cover an array of topics related to renewable, from drawing, photo competitions, to competitions on the percentage of energy demand covered by RES in companies. Competitions and awards engage, inform and build a local base of good practice and lessons learned. A good example is Energiocchi from Abruzzo, which was a best practice in the project More4NRG. Be a role model for ‘green’ purchasing to increase the awareness of companies and public of the importance of working and living in a green and sustainable way. Another advantage of this approach is: when public authorities take the degree of sustainability of a company or product into account in their decisions to buy it, this can leads to a selling point for businesses. A tour for children and adults to visit relevant RES and EE projects and installations in the region, as one of the most visual and impacting way to raise awareness of potential uses of these solutions. “Sustainable Energy Tour” must be dedicated to give information and raise awareness. Important condition is that installations are accessible for visits without any risks. А high degree of education, information and transparency is always recommended. The objective is to inform everybody about the good practices on energy efficiency and saving and the economic advantages. The starting point is to involve students from lower to higher schools. One of the components can be to show good examples which are fairly easy to realize and make profit to turn the public opinion towards ‘sustainable thinking’. An access point for external requests. This can be for example a central website explaining the region’s goals and objectives, providing an overview of RES in the region, of technology, as well as of processes and support for investments in RES. A very strong slogan : A communicational campaign should be visible and easy to be fixed in the mind of the target groups. A slogan should be associated with a strong communication campaign and promoted by a regional communication channel like ENEREA, or EARDA.

Appendix I - How to make a Communication Strategy

Communication should be included in the regional energy and climate strategy and action plan. Take the next steps for each phase in your policy, strategy, action plan and execution. Communication is always following the content and it should focus on what the other part needs to know, and not about what you want to tell.

Step 1 – Identify stakeholders Identify all the stakeholders who (you want) will be effected by your policy and plans. Do it together with partners who are involved in your policy.

Step 2 – Categorize stakeholders Set up a matrix. Influence/ Much Any Little Non interests Very big Big Moderate Non

Add the stakeholders into the matrix in the right position. Give at least attention to all the stakeholders with (very) big interest. Beware especially of the stakeholders with very big interest and little or none influence. If that situation continues, they will be your enemies.

Step 3 – Analyze stakeholders Analyze: What is the position of the important stakeholders by answering questions like: - What is their interest: for, against, no matter - What are the underlying interests - What do they have to loose or to win. - What are their problems - Which options do they see.

Step 4 – Divide stakeholders Divide the stakeholders in Influencers, Deciders, Executers and Users

Step 5 – Determine the aim of the communication Determine the aim of the communication per group of stakeholders from step 4. Are they / do you want them to: - Be decision makers in your process? - Work with you in your process? - Think with you in your process? - Just know what is going on?

Step 6 - Create key messages Create a key message for the groups of stakeholders in step 4/5. You do that by pretending you’re in their shoes. Think of questions they would ask (execute this step with a group of people). Think of who would be the owner of the questions. Who can give the proper answers? Be sure the answers are given by the right owner (issue holder). From this information you make the key message. Than you can be reasonably sure that you give information, the stakeholders wants to know.

Step 7 – How to make a key message How to make a key message? - Look.... (What is going on?, The situation is...) - Because.... (It is a result of... it is because of.... ) - Thus.... (and that is why...... there has been proved that....)

Everyone involved in the policy has to use the information of the key message in moment of communication. The questions and answers can also be used. For each group of stakeholders you have the right message. Everyone tell the same!

Step 8 – Choose appropriate instruments Now you know what your stakeholders want to know, what kind of role/position they have (or you want them to have), what their position is etc. At this point you can decide which instruments are appropriate to achieve your communication goals with the groups of stakeholders. This can be: press releases, events, websites, newsletters, workshops, meetings, and social media (Linked In, Twitter etc.)

Combine all the information from previous steps into a communication strategy!

Step 9 – Make a communication action plan The communication activities are following the policy/strategy execution of your content plans. A communication action plan contents the important activities of your plans. It can be the official establishment of your policy, an important agreement between partners etc. Then you add the stakeholders you want to reach and what instrument you will use for that special occasion. You will take the strategy you developed into account. You fill in all the important moments and events into the plan and take care of meeting the needs of all your stakeholders.

Appendix II – Good practices relevant for Észak-Alföld

The green investment bank Public Private Corporation is the Dutch approach to attracting Institutional Funds

Holland Financial Centre One of the objectives of Holland Financial Centre for Finance & Sustainability is to help eliminate financial hurdles in order to accelerate the transition towards a sustainable economy. While the advantages are numerous (fewer greenhouse gas emissions, more green growth, less dependent on fossil fuel), the necessary investments towards the transition remain at a low level. That is why Holland Financial Centre (HFC) started with the Green Investment Corporation (GIC) initiative, supported by a number of HFC members representing all the relevant actors: banks, institutional investors and the government. The support has been broadened with the involvement of MKB Nederland, the organisation representing small and mediumsized companies in the Netherlands, VNONCW, the employers’ organisation, and an environmental organisation. Although the initiative has focused on the Dutch market, the proposed solution may be applicable around the world. Right now all the involved private parties agree on the proposed structure. After the recent elections (September 2012), the expectation is that the new Dutch government will find a way to take up the GIC in its policy. The exact form will depend on the political negotiations taking place at this very moment. GIC is about mobilising institutional funds by using a funding guarantee. This enables banks to use those funds to finance sustainable investments with lower long term interest rates. Essential is the use of new standards which should be agreed within a public private context including the central government.

Hurdles The GIC initiative first investigated what (financial and regulatory) hurdles kept down the growth in sustainable investments. Based on discussions with banks, investors, sustainable project developers and local initiatives, the GIC initiative found many, including: - Regulatory risks are seen as high, because of ever changing legislation and subsidies - Banks cannot fund all the necessary supply: institutional investors are needed - Institutional investors’ mandates do not sufficiently support financing sustainability - A lot of projects are too small for institutional investors - As a result processing costs are seen as too high - Construction risks are too high for individual parties

- Long term interest rates are too high. With these hurdles already identified, future developments will make it even harder to get long term finance: - New regulatory agreements like Basel III and Solvency II will make long term financing more expensive and/or more difficult to find - At the same time, sustainable projects are characterized by relatively high capital costs compared to fossil fuel projects The above has resulted in the following proposal:

The Proposal The proposal put forward has different roles in mind for the GIC. It is not only about financing, but also about overcoming hurdles on legislation, scale and structuring. The GIC cannot do that alone and the involvement and support of the government and stakeholders like citizens, companies and NGOs is crucial. Especially the involvement of the central government by way of ministries who will actively participate in overcoming legislative hurdles is seen by investors as the key to success. In a way, investors see this as a natural hedge for regulatory risks.

Institutional investors, banks and funding guarantee The investments should have a funding guarantee from the GIC. This will leverage the potential without taking the risks away from the market: the banks. The banks will remain the natural gateway for financing projects, and will still be bearing the credit risk. But if both the project and the bank default, the funding guarantee would guarantee the investment of the institutional investor. Therefore, the funding guarantee will lower the risk and interest rate, allowing more investments to be feasible and more institutional funds will flow into sustainable investments.

In the end In the end, the crux is the public private corporation. All parties need each other to be there and be part of the structure. In that way, the acceleration of the needed sustainable investments can be realised.

Good practices from the County Council of Norrbotten In order for environmental work to be successful it requires environmental matters to become a part of everyday work. All county operations shall be conducted with minimal environmental impact and the least possible consumption of resources. The County Council of Norrbotten has an environmental policy, based on a vision which states: “We will give the next generation an environment that is as good, and preferably even better, than the one we had on loan”. The County Council is committed to the work towards a sustainable environment by adopting the Environmental Policy, Environmental Code and Agenda 21, namely the UN Global Programme of Action for Sustainable Development. The environmental work of the county council focuses on sustainable efforts in three main areas: energy, transport and products.

- Energy: The County Council of Norrbotten will, in all its activities and as a regional player help to minimize emissions affecting the environment. This will be achieved through energy conservation combined with advanced control and regulation technology. - Transportation: When the council procures transportation, the environmental requirements are high. Low impact on the environment and the coordination of transport should be prioritized. Due to a vast region with great distances transport costs are high for the county council. Therefore new information and communication technologies are used to reduce physical transport. - Products: The County Councils work should have a clear environmental and health link and the products used must be recyclable, and based on the principle use, not abuse. All consumption should be environmentally conscious, energyefficient and enable reuse . LCC calculations will be used when purchasing equipment for buildings or for medical purposes.

The county council work towards sustainable development through the introduction of several green actions: - Environment coordinator: Every division has an environmental coordinator whose main task is to organize, manage and synchronize the environmental activities of each division. - Heavy environmental areas such as; Energy, procurement and transport all have personnel in close connection with environmental work who provide expertise. - Environmental attorneys: An environmentally interested and motivated person is appointed by the manager to operate as a representative contact for the workplace on environmental issues. - Environment day: Recently, an annual environmental day, which turns to environmental agents and managers, has been organized. Internal speakers and external lecturers participate. By participating in the Environment Day one can gain insight to the county's internal and external environmental efforts. - Environment prizes: To encourage good environmental efforts in the county, the County Council organizes an external environmental award called; "Norrbotten Miljöpris" (the Environmental award of Norrbotten) which is aimed at organisations, companies and individuals who have made commendable contributions in environmental work. - There is also a prize for internal environmental efforts, “Landstingets miljöpris”, (the county council environment prize). - Visualization: A system is used which measures and displays the current energy usage in all departments of the county council building on a monitor. By making energy consumption visible unnecessary usage can be minimized. - A video system has been developed and can be used for meetings instead of physical transport. This saves time, money, and the environment. - General information on energy efficiency and environmentally friendly behaviour are given to the personnel by internal experts.

NV Eko – Norrbotten Västerbotten Energy and Climate Offensive The County of Norrbotten and the County of Västerbotten represent 37.5 % of the area of Sweden. Both Norr and Västerbotten have a high part of renewable energy production due to the water power plants and also a lot of forestry. The region also has high competence in effective use of energy and stateofart knowledge due to two universities in the region. The project Norrbotten and Västerbotten Energy and Climate offensive (NV Eko) was a businessoriented collaborative project based on cooperation between society, industry and research. Its objectives were creation of new business and jobs in environmental business and energy efficiency, increased activity in environmental business development in participant companies, energy mapping and visits in small and medium size enterprises, and to strengthen the businesses in Norrbotten and Västerbotten. NV Eko did improve the industrial and commercial activity in Norrbotten and Västerbotten and enhanced the companies’ contribution to the international and national work to decrease adverse climate change impacts. The project created possibilities for an environmentally driven and sustainable company development that contributes to a safe and cost effective energy supply for the region. NV Eko did also develop new, overall forms of cooperation for company development, and it did rely on close and trustful cooperation between municipalities and businesses. The key achievements were, - energy and climate seminars was carried out in 21 municipalities in the region. For these municipalities the energy use and production was monitored and two different scenarios (a business as usual and a green scenario) was constructed based on the statistics gathered, - support of the strategic work on energy and climate in eight municipalities, - energy mapping in ten companies in Västerbotten, - three reports on ecological footprints (three different municipalities) have been produced, - fourteen new companies have joined the network for energy efficient enterprising.

Futurize – Energy for the future The project “Futurize – energy for the future” open doors to a sustainable future for those who are gaining most benefits from doing “the right things” already today. The project intends to give students aged 1216 in Northern Sweden skills and knowledge to create their future in Northern Europe following their own visions. The main project issues are climate change, RES, EE and sustainable development. It is about e.g. sustainable economic development, green jobs and how to use the existing resources in a more sustainable way.

New thinking and different thinking are some of the key words that form the project design. But: most important and highest priority is to motivate the young ones to participate in the regional political decision processes. A key instrument of the project is a so called “Future Contract” that is signed by both the regional political leaders (Mayor, City Council) and youth representatives. The contract includes that politicians are obliged to listen to proposals, ideas, concepts and visions students develop in order to build a sustainable regional future. In addition the project developed and spread best practice examples how to work with energy and climate related issues on the regional and local scale. Even governance is one of the key words for the project. The project started in November 2011 and is planned to be finished in August 2013. At the moment 4 pilot schools in Norrbotten County participate in the program. The project is a cooperation between Nenet, Norrbottens Energy Agency, Teknikens hus in Luleå (Luleå Science Centre), the Association of municipalities in Norrbotten County and the regional municipal association “Lapplands Kommunalförbund”.

Test pilots in practical energy efficiency Experience from previous projects in the counties of Norrbotten and Västerbotten have shown that the simplest and often most profitable energy efficiency savings are based on changes in behaviour or made in the socalled support processes, i.e. functions required for an activity to be conducted in premises that is not business related. This means for example energy for pumps, fans, and lighting. Companies can often by relatively simple means decrease the energy use in support processes by 1530 per cent. Even though companies map and analyze the energy use it is not enough to implement measures. There is a clear need for more knowledge, practical guidance and experiencesharing with others before companies are prepared to go from words to action and implement possible efficiency measures. "Test pilots in practical energy efficiency" runs until June 30th 2014. The project is offered to property managers/owners, small and medium enterprises as well as tenants and operators of buildings/premises with help and support to implement energy efficiency measures. The project aims to achieve reduced energy use in facilities and areas in both counties by contributing to increased knowledge and practical efforts in energy efficiency. Ten test pilots have been created by the projects overall goals and participants needs and interests. The test pilots will work in many different fields, ranging from the training/education of operators to how to calculate and verify actions in the field of energy efficiency.

Each test pilot consists of one or more participants with similar problems. Exchange of knowledge and experience between the participants will be an important part of the process towards energy efficiency. For each test pilot specific expertise will serve as inspiration and expertise to support the project. A development council comprising representatives of relevant industries with energy services and energy products will also be tied. The project will provide inspiration, knowledge and practices, as well as networking and clustering for energy efficiency in facilities in both counties.

NEFCO NEFCO is an international financial institution established by the five Nordic countries. NEFCO finances investments and projects primarily in Russia, Ukraine, Estonia, Latvia, Lithuania, Moldova and Belarus, in order to generate positive environmental effects of interest to the Nordic region. To date, NEFCO has financed a wide range of environmental projects in Central and Eastern European countries, including Russia, Belarus and Ukraine. NEFCO's activities are focused on projects that achieve costeffective environmental benefits across the region. NEFCO prioritizes projects that reduce releases of climate gases, improve the ecological status of the Baltic Sea or mitigate release of toxic pollutants. NEFCO's portfolio currently comprises nearly 400 small and mediumsized projects spread across different sectors. Hungary is an eligible bidder for contracts of goods, works and services to projects under NEFCO financing, but in this case NEFCO mainly can be seen as a method to realise environmentally beneficial projects.

Energy City - Reducing energy use and CO2 emissions in Central Europe cities As the era of affordable and abundant energy has come to an end, saving energy and reducing waste has become one of the top priorities of the European Union. There are several possible areas of intervention, with building energy management having one of the greatest potential in terms of costeffectiveness and overall emission reduction potential. A key part of the solution for better building energy management is a better understanding of current practices and the status quo, and that includes getting an accurate picture of where heat escapes from buildings. To contribute to these goals, the EnergyCity project is gathering aerial thermography data on seven cities in Central Europe (Budapest, Prague, Munich, Bologna, Treviso, Ludwigsburg and Velenje), which are then processed and refined into an online Spatial Decision Support System (SDSS) to visualize and compare the costeffectiveness and potential of different renewable energy solutions in the project cities. A series of pilot actions in the seven cities will deliver pilot training for carbon mapping, implement awareness raising campaigns and fuel poverty reduction plans.

Energy Efficiency at buildings Buildings and transportation are the most energyconsuming sectors in Greece. Buildings in Greece account for approximately 36 % of the total energy consumption, while, during the years 20002005, relevant energy consumption increased by approximately 24 %, one of the highest increases in Europe. One of the main reasons why Greek buildings consume so much energy is that they are old and have no builtin stateofthe art technology, due to the lack of relevant legislation over the last 30 years. Most of these buildings have problems relating to: - partial or total lack of heat insulation; - outdated technology windows/doors (frames/single glazing); - lack of sun protection on southern and western sides; - inadequate use of Greece’s high solar potential; - inadequate maintenance of heating / air conditioning systems, resulting in poor performance.

Another important factor affecting building’s energy performance is tenant behavior. Userstenants, who lack information about the rational use and management of energy, often tend to waste energy, e.g. by installing individual air conditioning systems without a relevant study, using low efficiency appliances, not performing maintenance of heating systems, etc. Within this context, the Ministry of the Environment, Energy and Climate Change (YPEKA), having completed the legal framework on buildings’ energy efficiency, has developed a set of financial incentives, with cofinancing from the European Union, for the implementation of energy efficiency upgrading interventions in residential buildings, via the “Energy Efficiency at Household Buildings” Program. http://exoikonomisi.ypeka.gr/Default.aspx?tabid=629&locale=en US&language=elGR

COOPERATION 2011 – Partnerships of Production and Research Institutions in Focused Research and Technology Sectors The Action supports the collaboration between Greek enterprises and research organisations through the joint implementation of research and technology projects that promote the “green” growth, competitiveness and extroversion of Greek enterprises and improve the quality of life of Greek citizens. More specifically, the Action will provide funding for the implementation of R&D projects in specific sectors and activities which: - Are of interest to Greece’s production sector and will contribute, directly or indirectly, to the development of new or improved products and services and to the penetration in new markets.

- Meet the needs of society and of various areaspecific policies, such as energy policy and environmental policy. - Produce new knowledge that can be further utilised.

The present Call for Proposals refers to highly specific R&T sectors, selected on the basis of the demand by the Greek production sector for exploitable research and technological results, and covers all of Greece. It should be pointed out, however, that each transitional support region and each one of the eight Objective 1 regions has been allocated specific funds within the Action’s total budgeted funds. The total public expenditure of the present Call under the Action stands at 68.32 million €. Of these, 10 million € of public expenditure will be made available exclusively for projects in highpriority services sectors. The Action’s total budget is estimated at €85 million. The public expenditure is cofinanced by the European Regional Development Fund (ERDF) of the European Union and by National Resources. The financing contributed by the ERDF is intended to stimulate economic, social and territorial cohesion through the reduction of regional imbalances and the support of structural improvements and adjustments in the regional economies, including the restructuring of industrial areas in decline. The Action is addressed to domestic partnerships between dynamic enterprises of all sizes, research centres, institutes, Tertiary Education Institutions, technological, public and other organisations, established to implement R&T projects in focused priority sectors. It is pointed out, however, that the Action’s key recipients (target groups) are enterprises –regardless of their size– and research institutions (Universities, Technical Education Institutes, Research Centres, Institutes). Other organisations will participate, with only a few exceptions, as endusers/recipients of the products/technologies/services to be developed. http://www.gsrt.gr/Financing/Files/ContentFiles168/SYNERGASIA%202011_PROKHR YXH_EN_.pdf

Appendix III – Field visits

Újszentmargita – local municipality Újszentmargita is a 96 km 2 village with 1600 inhabitants, in the microregion Polgár in HajdúBihar County. While visiting Újszentmargita the peer review team was briefed on a KEOP RESbased spatial development project in the microregion. The project runs from 02/2012 to 04/2013 and is based on facilities and to; - Conduct energy renovation and modernization of 1 building in each settlement - Establish a briquette factory - Establish a district heating plant and an education centre in Újszentmargita The planned budget for these actions are 3.4 million €. Partners in the project are ENEREA and the University of Debrecen Centre for Agricultural and Applied Economic Sciences. Some cooperation areas are: promoting developments and investments, organising conferences and workshops, cooperation in different education systems, consultancy services and practical utilization of RES. The projects aims are to increase the employment rate, create new employments, increase the level of income locally, solve local environment protection problems, develop socially disadvantaged areas, utilize existing settlement pattern features, and to confirm local communities. The project is a model project which means it needs to display its work and results, and act as good practice for other municipalities and projects. This also requires: - Introduce result of spatial development - Use RES in complex ways and apply innovative technologies - Deliver significant added value to the field of environment protection - Ensure a high dissemination value - Possibilities to implement similar projects in other territories The implementation of the first phase of the project is done with support from the KEOPprogramme. The project is supported by the National Development Agency, with the Energy Centre as intermediate body. The main tasks for the municipality in the project are; a preliminary and a detailed feasibility study, implementing public procurements, perform impact assessment, providing external project management, planning, and performing licenses and costbenefit analysis. When it comes to energy renovation and modernization of public building, the plans are to: - Replace doors and windows and apply external heat insulation - Renovate the current heating system - Install boilers for bio briquettes and build solar heat and PV systems Further future plans exist to establish a biogas plant and a PV park. This would create employment opportunities, create a model for investments in RES, increase tax incomes and start up professional tourism. The budgeted cost for these projects is about 10.5 million euro.

University of Debrecen Centre for Agricultural and Applied Economic Sciences The roots of higher education in Debrecen go back to the 16 th century. The Reformed College of Debrecen, founded in 1538, had a nationwide leading role in the preservation and development of Hungarian education and culture for centuries. According to historical records, by the end of the 18 th century the College had five departments, three of which were devoted to teaching philosophy. A great turn took place in 1908, when the Reformed Academy of Humanities was created and teacher training started, although within rather narrow bounds. Over the time the colleges and universities of the HajdúBihar County were united, and, as a result, in 2000 the University of Debrecen came into being with five universities and three college level faculties and with a student population of 20,000. The three large universities of Debrecen that entered this union included the University of Agriculture, Lajos Kossuth University (with the universitylevel faculties of Arts, Humanities and Social Sciences, Natural Sciences, Institute of Economic Studies and Business Administration, Institute of Law as well as college level Faculty of Engineering) and the Medical University. Further faculties entered on an independent basis: the collegelevel Conservatory of Debrecen, schools of the University in Hajdúböszörmény and Nyíregyháza. Three of the socalled academic “institutes” (Dentistry, Law and Pharmacy) have already reached the rank and status of faculty. The Centre for Agricultural and Applied Economic Sciences has two faculties: the Faculty of Agricultural and Food Sciences and Environmental Management and the Faculty of Applied Economics and Rural Development. It has a number of 4000 students and 139 instructors and manages three research institutes and study farms: Debrecen Farm and Regional Research Institute, the Research Institute of Karcag and the Research Centre of Nyíregyháza. It also includes four innovation organisations: Institute for Research and Development, Institute of Plant Molecular Genetics, Logistical Coordination Centre and the University Knowledge Centre of Regional Development: SAP Excellence Centre. The basic objective of the Centre is to turn out welltrained, knowledgeable agricultural specialists, and to provide them with further training that will enable them to play a creative role in society and the development of agricultural production. The Centre provides its students with uptodate, comprehensive professional knowledge, based on solid theoretical foundations. Students also acquire the practical skills and competence needed to excel professionally and to actively participate in activities in the public sector. As part of a research network, the Centre works to meet social and economic challenges by conducting basic and applied research, both integrated into its educational programs. The Centre is also engaged in wideranging extension service activities, and takes part in various joint scientific and production projects, including those towards environmental protection. The Centre has strong ties with industry, and the cooperation between the University and the companies of the region ensure that the 4000 students of the Centre get a thorough practical education. Students can choose from 19

bachelor programs, 12 master programs and 4 doctoral schools, supervised by highly qualified instructors and researchers. There are strong ties with Central European (German, Polish, Croatian, Romania) higher education institutions, but in the past decade numerous cooperation agreements have been signed with universities of Western Europe, the USA, China, Japan and Mongolia, too. Presently, this centre has more than 70 partner universities and is a member of the most significant mobility programs, such as ERASMUS, CEEPUS and Leonardo. Students and instructors can participate in exchange programs in most European countries and at a number of overseas universities.

College of Nyíregyháza The College of Nyíregyháza came into being in 2000 as a result of the integration of György Bessenyei Teachers Training College (1962) and the Nyíregyháza Agricultural College Faculty of the Agricultural University of Gödöllı (1961). The college has five faculties with a number of undergraduate courses of 33 with 60 specializations, a postgraduate training with 9 teaching subjects, 22 further training courses and 20 postsecondary training courses. The five institutes of the faculty are: 1. the Agricultural and Molecular Services and Research Institute, 2. the Environmental Sciences, 3. the Institute of Mathematics and Informatics, 4.Institute of Physical Education and Sports Science and the 5. Institute of Tourism and Geography Sciences covering the following training areas: Natural Sciences (Biology, Geography, Chemistry, Ecology, Mathematics); Social Sciences (IT librarian), IT (Software Engineer, Web Programmer Advanced Specialization), Sport Science (Sport Organizer, Physical Education, Sport Communicator Advanced Specialization), Hospitality (Expert in tourism management advanced specialization), and Teacher trainings middle school level ( Teacher of Geography, Teacher of IT, Teacher of Chemistry, Teacher of Ecology, Teacher of Mathematics, Teacher of Physical Education). Also, it is the only place in Hungary where in the curricula there are also comprised: aviation trainings, pilot trainings and flying engineer trainings. The College of Nyíregyháza has wide international relations with institutions of higher education in Europe, Asia and America. It is a primary mission of the college to reinforce cohesion of institutions of higher education along the eastern areas of the European Union: Slovakia, Romania and the Ukraine. The new mission of the College of Nyíregyháza is to become a centre of knowledge, covering the entire vertical system of higher education from undergraduate through postgraduate to doctoral and postdoctoral courses with a powerful R&D potential and a considerable regional effect. They are creating a studentcentred, effectively managed institution of higher education that is open to the challenges of the environment, with special attention to training professionals for the needs of SzabolcsSzatmárBereg county and Nyíregyháza in a system of cooperation with actors of the business world and the local community. They have ”Green Region” – a research and development programme – that emphasis on developing the natural and technical scientific research and

development potential of the college, adding new priorities to their R&D portfolio. The college shall, in this way, be even more capable of meeting the environment conscious expectations and requirements of companies, of monitoring and preserving the natural environment of the area. The major projects of the K+F programme include development concepts regarding the BioMonitoring and Environment Studies Centre, the conversion of the practice farm into a multifunctional unit and enlarging the Molecular Research Institute. Through the visit in The Faculty of Agriculture and Engineering it was presented that they work on different projects, including also Bulgarian partner – University of Ruse. The Faculty of Agriculture and Engineering of the College of Nyíregyháza intends to become a regional professional centre the effects of which reach out to the entire Northern Plains region and across the borders to the neighboring countries. The Faculty plays an important role in the longterm employment strategies of the city and the county, offering educational, training, R+D and other services to agricultural and industrial users of the area. As Nyíregyháza is located in the corner of three international borders, the college is in close cooperation with institutions of higher education in the neighbouring countries. The faculty is an innovative and financially stable educational and research centre with a wide range of domestic and international professional relations, offering educational and other services that are popular with the students and the partner institutions. The college is among the 11 owners of the regional energy agency (ENEREA) with whom they have a strong collaboration. The college has successfully implemented an energy audit project. Although the college is not yet certified for energy audit, the professors involved are certified energetic auditors. The energy audit targeted two companies in the area: the local public transportation company (Volan) and a can factory that delivers fruits. The project was concerned with assessing the energy consumption of these companies by evaluating the energy technologies they used and then making recommendations for appropriate RES technologies. The project had two parts, one dedicated to general reduction of consumption in these companies and a second one that targeted the reduction of the use of fossil fuels by offering RES alternatives. The can company has reduced its energy consumption with 15 % and the transportation company with 7.8 % after having implemented the recommendations of the auditors. Another successful project was implemented with the help of the EszakAlfold Regional Development Agency within a financing in the framework of the Regions of Knowledge Initiative of the Seventh Framework Programme (FP7 Programme) dedicated to the research in the field of biomass. It was an international partnership project that connected SME’s, universities, development and energy agencies in network called BioMob. The overall concept of BioMob was the development of researchdriven clusters for biomassmobilisation in the benefit of the regional development. The challenge was to identify appropriate biomass synergies between regions, research themes and enterprise opportunities. As examples were shortly presented local companies that use biomass like the 4 megawatt biomass plant from Nyirbator and the Tisza Cooperative.

The Department of the Landscape and the Rural Development manages the “Agriculture and Rural Development Engineer" vocational training. Besides the department’s educational activity, great emphasis is laid on research as well. Besides the technology and research development of the region's traditional agricultural sectors, there is more and more emphasis on the development of biological bases, organic farming and research of bioenergy. The college is undertaking research in the mineral nutrition of energy crops – open feeding research (feeding plants with biomass compost) and also a study on growing the Swedish willow.

Hajdúszoboszló – Hungarospa Jsc Description of the location: Hungarospa has set up in Hajdúszoboszló an Aqua Palace with indoor and outdoor facilities on a surface of 15.000 square meters and with a water surface of 1600 square meters. The indoor compound has two dedicated relaxation areas: the thermal bathing area located on 4 different levels and the surfing, squash and relaxation area on 3 levels. It has a capacity of 1000 persons that can use its facilities on a daily basis. The spa was opened for the first time in 1927 the socalled "sandspa" and Pávai Vajna Ferenc, a distinguished geologist was considered the 'father' of the thermal water. During a search drilling for oil the thermal water appeared from the depth of 1100 m, at 75°C, and according the analyses it turned out that the water contained iodine, bromine, salt, hydrocarbon as well as bitumen and different trace elements: vanadium, copper, zinc, silver, strontium, barium, lead. The thermal water has a very interesting feature as its concentration and composition is quite similar to the composition of human tissue fluids. It is especially remarkable compared to seaside spas, since the Hajdúszoboszló thermal water is nothing but the conjured up spirit of the Triassic age seas. Considering its salt content it can be regarded as diluted sea water, but it still differs from sea water because it has a low magnesium and calcium content and at the same time has a significant amount of hydrocarbon in it. The baths are recommended for several illness like: chronic joint inflammation, degenerative joint problems, different acute inflammatory degenerative problems of spine , chronic problems, inflammations of the nervous system, rehabilitation from general and sport injures, chronic gynecological problems and infertility, acute skin problems. It is owned by the local government and other key investors as a share holding company named since 2004 Hajdúszoboszló Hungarospa Spa and Health Tourism Co. This organisation has been able to attract financing (Phare supporting in 2000, then the Széchenyi programme offered a 2,5 billions HUF ~ 9 M€ investment in 20002002) for extending its facilities, so around the spa over the years several new facilities were set up: a three star hotel that offers complex medical therapy, a new modern research laboratory, a modern mineral water bottling plant and the Hungarospa Sport Centre (a covered area dedicated to sports: tennis, football, etc.). The investments made here to put in value the local thermal water boosted the private investments in the area as numerous private lodgings, small hotels and

pensions, restaurants have developed shortly after the setting up of the spa. From tourism point of view this area is known as the ‘’golden triangle’’ made up of: Hajdúszoboszló (for the thermal water potential), Hortobagy (the Hungarian pusta that is a UNESCO monument) and Debrecen (for its cultural and religious potential). The Aqua Palace Covered Adventure Bath has been opened for public from 2010 after having rehabilitated the old premises of the local thermal spa , supported by a funding from the Regional Development Programme (85 % financing from the national level, 15 % own contribution) with a total investment of 4,85 Billion forints (~17 M€). For sustaining the daily activities of this huge compound more than 100 employees work there during the whole year. The fossil gas (methane) and water is extracted from wells at a depth of 800 – 1000 m, and then the gas is separated from the thermal water in a reservoir where the methane usually stays up. The gas is extracted at a quantity of 250 m 3/h. The gas has a temperature of 70 – 80°C and needs to be cooled down for preparation. Afterwards it is injected into the engine by a compressor. The warm moist air from premises is withdrawn from the fan system and the heat turns back on the premises. The engine produces electricity (P=1,2 MW) and heat (P=1,3 MW). A portion of the electricity is used to run a heat pump that ensures the heat generation (max P =4,6 MW) of the plant. The general manager of the compound proudly stated that the COP (coefficient of performance) of the heat pump was 6, taking into consideration that the average COP value in all Hungary is somewhere 4 – 5. The cost for installing this engine and system has been 2.60 billion forints (~9.1 M€). The planning of the system has been executed by a Hungarian firm from Budapest, the equipment and the working procedures have been imported from Germany and U.K, but the work force used to set up the entire system has been mainly Hungarian. This ingenious system has been awarded in the year of installation with a European award. There are six workers assigned to maintain the system working and there is a full time working dispatcher that watches over the functioning of the engine and also there is an alarm system. When there are malfunctions the responsible persons are prompted with a SMS, but only the general manager receives one on daily basis that informs about the functioning of the system.

Nyírtávh ő district heating A field visit to the Nyírtávhı District Heating plant was planned, but the team never visited this project. One peer review team member found it a very interesting project and looked at Internet and prepared this summary about the district heating system. Nyíregyháza municipality has 119 000 inhabitants, 44 000 households, 22 000 block of flats, 8 day nurseries, 33 kindergartens, 18 primary schools, 15 secondary schools and 18 other institutions.

The installed capacity of the district heating system consists of steam boilers (151 MW), hot water boilers (128 MW), heat exchangers (60 MW) and CHP generators (19 MW), totally 358 MW. The contracted capacity was 108 MW district heating, 64 MW and 724 bar steam for industry and 19 MW electricity from the CHP. The distribution system provides primary hot water at 13 bar and 150/80°C. The length of main pipeline (DN400) is 46 km. It has 256 heating centres (large users and groups of users). 149 of the heating centres have variable mass flow system and the remaining 107 centres have constant mass flow system.

On the consumer side of the district heating system there are about 15 600 heated flats and more than 700 heated public buildings. The total heated area is almost 4 million m 2. Energy consumption per year is about 290 GWh (1 050 TJ). The company has been involved in two projects lately. One project started with a reconstruction of the distribution network. It consisted of replacement of main pipe work in parts, improvement of insulation, variable mass flow control in every reconstructed heating centre, implementing of uptodate valves, pumps and DDC controllers, and installing individual heat meters in every building. In the other project, the “NYÍTÁS project for consumers Partial refurbishment of secondary side”, they have taken infrared pictures of buildings, given advices on maintenance of panel insulations, installed new valves, installed temperature regulation by DDC controllers depending on external conditions, made hydraulic adjustments for optimal operation, installed main heat meters in every staircase, and installed heating costdividing device on radiators. This has been done in about half of the flats, and the reasons that this programme has been so successful is that the consumers now have an opportunity to control heating, only pay for heat that is used, can heat the flats at lower cost, have a higher comfort level, and can keep or even increase the value of their flats. The financing of the project was: - consumers’ onetime payment (1600 Ft/radiator) - own profit of Nyírtávhı Ltd. - benefits of government (EEP) - third Party Financing

Debrecen district heating Another district heating example in the region is that in Debrecen. This is a good example of RES utilisation in district heating. Here industrial waste heat and biogas have been successfully integrated with heat from a CHP plant. The company, the Debrecen District Heating Company (DDHC), is owned by the local government. In 1999 an agreement was made to purchase waste heat from the Alföldi letter press. The amounts of heat is rather limited but and the price is lower than for the heat bought from the Debrecen Power Plant Ltd. A longterm agreement between DDHC and Debrecen Power Plant Ltd was and is the main basis for new customers. Signed in 2001 and lasting until 2018, the agreement ensures that heat for new public sector customers is bought at a special rate which enables DDHC to guarantee their customers a heat price 5 % lower than the gas price. In 2003 a modern landfill was built, where the municipal waste of Debrecen can be dumped for decades. The landfill was built partly to enable utilisation of biogas. Already in the first year 5134 GJ (~1400 MWh) of heat was sold from this source. The estimated future potential is 75 600 GJ/year (21 000 MWh), saving 5000 tonnes of CO2 per year. DDHC also tried to use geothermal heat from a well, but the quality of the hot water was not acceptable for an economical usage. DDHC is an example of a successful transformation from an inefficient centrally regulated scheme, very typical throughout the Central and East European countries, to a modern, efficient and environmentally friendly system. The company learned from good examples in Western Europe and applied the knowledge effectively to their own plant. Although benefiting from grant programmes from the EU and the Hungarian government, about 75 % of the restructuring of the company and the system has been financed from the company’s own resources. In addition to all the technical changes made there has also been an innovative development of customer relations. Nowadays the company provides information, advices and financial assistance. The recent extension of the scheme of 48 MW is a testimony to their success. The crucial element in this success story has been the partnership between DDHC and the municipality of Debrecen. The municipality has used its regulatory authority to designate obligatory district heating zones in the city. The local government has the aim both to operate the district heating profitably and also have satisfied customers. The plant has been selected as an excellent example to demonstrate a number of key recommendations of the District Heating in Candidate Countries (DHCAN) portfolio.

HAJDÚ Hajdúsági Ipari Zrt. Manufacture The team saw a part of the production process and understood that the company manufactures and sells hot water tanks, water heaters, solar collectors, washingmachines and spin dryers. They provide to the consumers modern, reliable household goods, which are environmentfriendly and are of good quality. ”HAJDÚ is the natural supporter of the family households” – as they says. Their products are electric and gasfired hot water tanks, heat up boilers (by boiler or solar collector), water heaters of different sorts and solar systems. HAJDÚ Hajdúsági Ipari Zrt has distributed solar energy systems for hot water production and auxiliary heating since 2002. It’s not their production, but they are distributors in order to have all the range of needed parts for solar heating systems. Their solar energy products are collectors of both flat plate and evacuated tube type. The absorber surface of the collectors has a special selective coating, which results in high efficiency, good heat resistance and a long life. Another advantage is that it contains no black chrome, which is highly polluting to the environment. Auxiliary heat for the pumped systems they offer can be supplied by an optional electric heating element or a central heating system. They also supply the other components necessary for the installation and operation of a complete system (storage tank, solar regulator, expansion tank, etc). The share of overall energy requirements that can be supplied using these appliances in the case of hot water production is 7080 % at annual level. Owing to the low price of the units and the high share of solar power within total energy consumption, the system can be expected to pay for itself in 68 years. HAJDÚ started to cooperate with the company Swiss Alfatherm just one year ago, in July 2010. The aim of the cooperation is to buildup manufacturing facilities of the airwater heat pumps at HAJDÚs site. Their partner has several years of experience in development, manufacture and installation of these products. On the basis of these experiences they have created a production line, for assembly and for safety tests. As a result, in May 2011 they have produced the prototype and the first series of the heat pumps, suitable for heating a 100150 m 2 family house. They presented one of the first units of LV 80 model at the Renexpo exhibition held in Budapest in May 2012.

Appendix IV – Recommended literature and websites

Literature

Solar energy usage in the region of Debrecen A report on the potentials of solar energy in the region of Debrecen

Private financing of renewable energy – a guideline for policymakers This guide provides an outline of how financing renewable energy projects works, with a particular focus on more mature end of the market i.e. proven technologies that can be deployed now and at scale. It aims to show how policy looks and where it fits in from a financing perspective; as well as a range of other factors that need to be taken into account in doing an actual project or deal.

Joint Public-Private Approaches for Energy Efficiency Finance – policies to scale up private sector investment As part of the IEA 25 Energy Efficiency Policy Recommendations, the IEA recommends that governments support private investment in energy efficiency. A joint publicprivate approach can use public finance and regulatory policy to support the scaling up of private investment in energy efficiency. This Policy Pathway outlines, through the experiences and lessons learned from country examples, the critical elements to put in place a publicprivate partnership to finance energy efficiency. It focuses on three mechanisms dedicated credit lines, risk guarantees, and energy performance service contracts and presents the planning, implementing, monitoring, and evaluating phases of implementation.

Business models for renewable energy in the built environment The report provides insight to policy makers and market actors in the way new and innovative business models (and/or policy measures) can stimulate the deployment of renewable energy technologies and energy efficiency measures in the built environment. The project is initiated and funded by the IEA Implementing Agreement for Renewable Energy Technology Deployment. It analyses ten business models in three categories (amongst others different types of Energy Service Companies (ESCOs), Developing properties certified with a ‘green’ building label, Building owners profiting from rent increases after EE measures, Property Assessed Clean Energy (PACE) financing, On bill financing, and Leasing of RE equipment) including their organisational and financial structure, the existing market and policy context, and an analysis of Strengths, Weaknesses, Opportunities and Threats. The study concludes with recommendations for policy makers and other market actors.

Financing Renewable Energy in the European Energy Market: The study provides an up to date and thorough assessment of the costs of renewable energy and the support and financing instruments available for renewable energy R&D demonstration projects and largescale deployment.

Fast charged hybrid buses in Umea (Sweden) Two existing hybrid diesel electric buses were converted in 2011 to be the world's first ultrafast chargeable “PlugIn” hybrid buses. By placing an automatic fast charger at one end of a bus route, these buses can run entirely in electriconly mode. They have the extra security of a backup biodiesel generator. The fast charger fills the batteries each time a driver reaches the end of a route. The first results from testing these buses are presented in the article.

Websites

Regions4GreenGrowth The project wherein the peer review was conducted and this report written

INNOVA The mission of INNOVA is to become a regional innovation centre in ÉszakAlföld that manages innovative ideas to market success by creating network between national and international actors along the regional innovation strategy.

ÉARDA The regional development agency

ENEREA The regional energy agency

Hungarian Energy Office (HEO ) The national energy agency

Hungary’s Renewable Energy Action Plan for 2020 Here you can find the national renewable energy action plans of all EU member states in english, including Hungarys’.

Hungarian Green Investment Scheme The national investment program of investments in EE and RES, run by the Ministry of National Development

The Hungarian renewable energy support system A website about the Hungarian renewable energy support system.

Covenant of Mayors The Covenant of Mayors is the mainstream European movement involving local and regional authorities, voluntarily committing to increasing energy efficiency and use of renewable energy sources on their territories. By their commitment, Covenant signatories aim to meet and exceed the European Union 20 % CO 2 reduction objective by 2020.

In order to translate their political commitment into concrete measures and projects, Covenant signatories notably undertake to prepare a Baseline Emission Inventory and submit, within the year following their signature, a Sustainable Energy Action Plan outlining the key actions they plan to undertake.

South East Europe (SEE) Science Project The SEE Science project is a South East European project aiming at the increase of public awareness on the importance of natural sciences, technology and innovation as key determinants of economic growth, including partners from Debrecen.

Network of Eastern External Border Regions The overall objective of the NEEBOR project is to exchange and exploit solutions for a more competitive and innovative SME sector while increasing the efficiency of regional SME development and innovation policies in the external border areas.

Intelligent Energy Europe financing The Intelligent Energy – Europe programme (IEE) funds three different types of activities: projects pioneering sustainable energy ideas in practice; products and services procured to meet the needs of the European Commission and/or the EACI; and the project development assistance facilities to mobilise funds for investments in sustainable energy at local level.

European Local ENergy Assistance (ELENA) ELENA aims to facilitate the mobilisation of funds for investments in sustainable energy at local level. The support covers everything necessary to make cities' and regions' sustainable energy projects ready for EIB funding.

Joint European Support for Sustainable Investment in City Areas (JESSICA) JESSICA is an initiative of the European Commission developed in cooperation with the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). It supports sustainable urban development and regeneration through financial engineering mechanisms.

Joint Assistance to Support Projects in European Regions (JASPER) JASPER provides advice to the 12 Central and Eastern EU Member States and Croatia during project preparation to help improve the quality of the major projects to be submitted for grant financing under the Structural and Cohesion Funds.

The South East Europe Transnational Cooperation Program The South East Europe program is an instrument which, in the framework of the Regional Policy's Territorial Cooperation Objective, aims to improve integration and competitiveness in a complex and diverse area. The programme is supporting projects developed within four Priority Axes: Innovation, Environment, Accessibility, and Sustainable Growth Areas in line with the Lisbon and

Gothenburg priorities, and is also contributing to the integration process of the nonEU member states.

The Central European Initiative's Know-How Exchange Program (KEP) KEP is an instrument dedicated to offering cofinancing to projects and programmes focused on the transfer of knowhow and best practices from EU to nonEU Member States of the CEI. It operates through calls for proposals. The objectives are to strengthen economic and social advancement of the CEI non EU Member States; to help the recent EU members in their transformation from recipients to donors of development assistance; and to promote principles of foreign development aid and support international collaboration among institutions in CEI member countries.

LIFE, co-financing of pilot and demonstration projects LIFE is the EU’s funding instrument for the environment throughout the EU, as well as in some candidate, acceding and neighbouring countries. The programme is a financial instrument supporting environmental and nature conservation projects is the EU’s. The general objective is to contribute to the implementation, updating and development of EU environmental policy and legislation by cofinancing pilot or demonstration projects with European added value.

EU’s Seventh Framework Programme for Research (FP7) Energy is one of the ten high level themes proposed for EU action in the FP7 programs. As part of a 10.8 billion € budget for research and innovation agreed for 2013, the European Commission has announced an 8.1 billion € package of calls for proposals under the EU’s Seventh Framework Programme for Research (FP7). This is the final and largest ever package of FP7 calls, and is an important part of the Commission’s commitment to work for growth and jobs in Europe.

Energy Service Companies (ESCO) An ESCO, or Energy Service Company, is a business that develops, installs, and arranges financing for projects designed to improve the energy efficiency and maintenance costs for facilities over a certain time period, normally five to ten years. ESCOs generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project. Typically, they offer the following services: - Develop, design, and arrange financing for energy efficiency projects, - Install and maintain the energy efficient equipment involved, - Measure, monitor, and verify the project's energy savings, and - Assume the risk that the project will not save the amount of energy guaranteed.

These services are bundled into the project's cost and are repaid through the savings generated. ESCO projects are comprehensive, which means that the ESCOs employs a wide array of costeffective measures to achieve energy savings. These measures often include the following: high efficiency lighting, high efficiency heating and air

conditioning, efficient motors and variable speed drives, and centralized energy management systems. What sets ESCOs apart from other firms that offer energy efficiency, like consulting firms and equipment contractors, is the concept of performancebased contracting. When an ESCO undertakes a project, the company's compensation, and often the project's financing, is directly linked to the amount of energy that is actually saved.

The European Wind Energy Association (EWEA) EWEA promotes actively wind power in Europe and worldwide. It has over 700 members from almost 60 countries. It is the world’s largest and most powerful wind energy network. Especially interesting for the R4GG project is a report, published in March 2012, called “Green Growth. This report examines the impact of wind energy on jobs and the economy in the EU.

Appendix V – Peer Review Questionnaire

This questionnaire was filled out before the peer review by the Észak Alföld hosts in order to inform the visiting peer partners on the local situation.

1. FOCUS OF THE PEER REVIEW? Question/Problem/Matter Explanation/Short description 1.1 Please briefly define the The Peer Review can be mainly focused on the focus of your region’s Peer following aspects: Review. Use of RES is not a priority at municipality investments, and not compulsory at infrastructural investments, Complicated licensing process,  Licensing process concerning RES: Generally 36 licences, more than a dozen permits of competent authority(!), it has considerable expenses, different processes in different technologies The intensity of participation in direct international calls for proposals is low, Introduction of good practices (GPs) is not efficient,  Now good practices are not presented by other organisations only by ENEREA Észak Alföld Regional Energy Agency. The agency disseminates the GPs via their electronic newsletters. Presenting GPs is a compulsory part of the projects, but those publications are disseminated mostly among project partners. There is no website, where energy savings data can be found. Lack of energy investment instruments not financed from different funds (i.e. private capital, bank sources etc.) 1.2 Please state any specific How could the population be involved questions that, as the Host and how their opposition could be reduced Region, you wish to ask the against the use of RES? For example as for Peer Review Team. biomass power plants/biomass communal heating points population does not support investments that “has a chimney”, thereby licensing procedures can be hindered. Therefore soundly informing the inhabitants would be needed about the fact that the flue gas emitted is not pollutant in case of less power plants. The reason of the resistance of population

is the uncertainty concerning the added value of the project, real or percieved impact on environment, health and safety concernment, as well as the involvment of stakeholders usually is too late and the way is not appropriate. How could the planning of efficient energy tools be fostered already at project preparation? How could it be applied at building authorities to prescribe the use of RES to certain extent? How could licensing process be more efficient? What kind of informal channel could be applied between municipalities that would help the dissemination of good practices and results of implemented projects? How and with what kind of tools could the role and effect of municipalities be increased in regional development focusing on energy? 1.3 Please state any specific We expect that the number of investments in outcomes you expect to renewables, applying for international calls will achieve from this Peer increase in the region. Review (development of a particular field / project, etc.).

2. REGIONAL FIGURES Question/Problem/Matter Explanation/Short description General economic indicators - 17 749 km 2 - Area of region - 3 counties - Population - 389 settlements - Estimated no. of - 1.5 million inhabitants businesses involved in - About 110 businesses are involved in sustainable energy sustainable energy. o No. of people No. of people: about 300 employed - GDP 5930 EUR/inh. - GDP per head Legal frameworks are set by the national government. Several policy making bodies are exist on county and settlement level, but the main decisions are made centrally. - Market analysis of - In the last few years the role of main economic agriculture decreased, and the sector(s) proportion of service sector increased. o Extraction of - Agriculture: 7.5 % raw material - Industry: 31.1 % sector Most important raw materials are agricultural o Manufacturing products, the most relevant industries are sector food, pharmaceutical, plastic industry and o Service sector mechanical engineering - Service sector: 61.4 % Investments in energy related The Energy mix is not available for the indicators region. The Hungarian energy mix is the Energy mix following: % of local production Primary energy supply: % of imported energy 26.2 Mtoe = 304.706 TWh Domestic production: Main energy sources 10.2 Mtoe=118.626 TWh % Fossil Net imports: % Renewable 15.9 Mtoe=184.917 TWh Final Energy Consumption: Energy consumption 17.4 Mtoe=202.362 TWh Private Electricity generation: 33.7 TWh Businesses The main energy sources: Transport Built in capacity in the region (electricity production):

 Fossil: 95 MW (79.2 %) Who owns and manages the energy distribution?  Renewable: 25 MW (20.8 %)  Nuclear: 0 MW (0 %)

Who owns and manages the The energy consumption in the region: 65 energy production plants? 154 TJ The high voltage transmission network is state owned and integrated with the power system operator as a subsidiary of the state owned Hungarian power company. The medium and low voltage distribution system (120 kV and below) is privatised and in different regions is owned by different companies RWE, E.ON and EDF. Partly state owned (a nuclear plant and a coal plant), but the larger share is privately owned by foreign and Hungarian companies. 70 % of the buildings are heated by gas in the region, and 11 % of the buildings are connected to the district heating system in the region.

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3. AMBITIONS, GOALS AND POLICY Question/Problem/Matter Explanation/Short description 3.1 What are the national Until 2020, the national target for the share of ambitions on Renewable energy from renewable sources in gross final energy sources (RES) and consumption of energy: 14.65 % (determined by energy efficiency (EE)? the National Renewable Energy Action Plan) Short term (> 5 year) The goal is that the primary energy consumption Long term (< 5year) does not exceed the 1150 PJ by 2030 (the primary energy consumption in 2010 was 1085 PJ). Another goal is to reduce the heat demand of the buildings by 30 % by 2030.

3.2 What national policy - Public funding: instruments are in place to The rate of nonrecoverable funds: achieve these ambitions? Enterprises, SMEs: 50 % (Please state the most Nonprofit organisations, local governments: relevant) 85 % - Public funding This means that the maximum support intensity (national subsidies) is 50 % at SMEs, and about 85 % at nonprofit - Private funding (fully organisations and local governments in private, public projects cofinanced by the EU. companies, private - Private funding is not frequent law, public private

partnerships) - Indirect support: So called ESCO projects (very successful in Hungary). - Direct (direct investments in a The new feedin tariff system in Hungary is just project) being reshaped; the new FIT decree is expected to enter into force on January 1, 2013. The policy - Indirect (support to a intention is that those technologies which are third party to invest in suitable for combined heat and power a project, laws or production (mainly biomass) will only receive regulations that ease support on the basis of RES heat rather than RES investments, tax electricity so as to motivate investors to seek measures) heat markets and thereby increase efficiency. Wind and solar power will also get FIT. 3.3 What are regional, local - RES: (increasing the proportion of the use ambitions on RES and EE? of the RES in the total final energy use) Short term (<5 year) Until 2015: 10.2 % Long term (< 5 year) Until 2020: 16.2 % - EE: (decreasing the aggregate energy consumption in the buildings owned by local governments in settlements; base year is 2012) Until 2015: 3 % Until 2020: 8 %

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3.4 What regional local Policy making is centralized in Hungary. policy instruments are in There was a decision making body, the Észak place to achieve these Alföld Regional Development Council, but it ambitions? ceased on 1 st January 2012, the proprietary (Please state the most rights and charge was taken by three county relevant) selfgovernments. - Public funding The decision that the ÉszakAlföld Regional (regional/ local Development Council ceased to exist was a subsidies) statutory amendment. - Private funding (fully The ÉszakAlföld Regional Development Agency private, public manages the proposals and makes a decision companies, private on them. law, public private ÉARDA is the intermediate body of the Regional partnerships) Operational Programme. There are no proposals - Direct (direct referring directly to energy, but at some calls for investments in a proposals (e.g. development of premises) it is an project) advantage if an applicant intends to use RES. - Indirect (support to a third party to invest in a project, laws or regulations that ease investments, tax measures) 3.5 Is there an ‘energy ENEREA (ÉszakAlföld Regional Energy Agency) master plan’ for the region? prepared the Regional Energy Strategy of the Please explain. ÉszakAlföld region. During the development of the energy strategy several working groups were made (wind, sun, water, geothermal, biomass and strategy working groups). They consisted on the experts working in the region therefore a wide range of social and professional sectors were included. Following the social broad debates the elaborated energy strategy was approved by the founder owners of the Energy Agency. Suggestions made on the debates were examined by the different working groups and after delivering an opinion they were built in the strategy.

Three energy strategies at county level are now being prepared. Two SEAPs (Sustainable Energy Action Plan) at local level were completed in the region, but several others will be prepared in the next year. The Regional Energy strategy and the strategies at county level are connected to the

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achievement of national targets. And SEAPs are connected to the Covenant of Mayors 3.6 Is there a midterm No. evaluation available? Please explain 3.7 Is there an inventory of Tenders, Projects, Results can be available on all the RES / EE projects: the website of the National Development realised, initiatives, Agency. chances? The successful energy applications are listed at Please explain. www.nfu.hu sorted by priorities and applicants. As for the projects where contractors are chosen with public procurement, the calls can be found here: www.kozbeszerzes.hu. 3.8 What is the main sector Energy sustainable policy focuses on EE in of energy sustainability buildings and RESH based on biomass. policy? It is an overall objective that after the energy Focusing on for example investment energy use of the related building mobility, housing, industry, has to reach the “C” class – 170 kW/nm. etc. 3.9 Are there supporting It is also centralized. At regional level there are policies? nonprofit organisations like for example ENEREA For example: and INNOVA (ÉszakAlföld Development and Innovation Agency) who can give advice but Innovation, employment. they do not give financial support.

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4. ORGANISATION Question/Problem/Matter Explanation/Short description 4.1 What organisations play an important role in the energy field in your region? (From the point of view of the government) Please describe per organisation below: Goal (i.e. corporate mission) Role in the energy field (project development, research, policy making, etc.) What do they specifically do to contribute to the acceleration to achieve the set goals? Public bodies ENEREA ÉszakAlföld Regional Energy Agency Nonprofit Llc. The ENEREA ÉszakAlföld Regional Energy Agency was established in March 2009 as the first (and until now the only one) regional energy agency in Hungary with support from the Intelligent Energy Europe Program. The mission of the agency is to promote EE, to support the rational usage of energy resources, to foster the usage of new and renewable energy resources and to support energy diversification in the ÉszakAlföld Region in order to assist the fulfilment of the aim of Hungarian energy policy. The activities of the agency extend to the Észak Alföld Region primarily. During its operation the energy agency works with local governments, enterprises, associations, schools as well as other professional and nonprofessional individuals and communities. Main activities of the ÉszakAlföld Regional Energy Agency are: Energy planning (SWOT analysis, energy strategy at regional and local level); Sectoral activities (promotions, professional workshops – Energy Day for Local Governments, Energy Café Houses); Horizontal activities (trainings, helpdesk service, energy award, energy marketing, project management); Building capacity, cooperation (exploring ‘good practices’, making contact with energy agencies, international projects – INTERREG IVC, SouthEast Europe Programme, ENPI CBC); Communication and dissemination (communication strategy, webpage – www.enerea.eu, newsletter – ENERGLOBE News, energy magazine, leaflets, media relations).

Public bodies, continue INNOVA aims to become in the region of Észak

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Alföld such an innovation centre that manages innovative ideas to market success by creating network between national and international actors along the regional innovation strategy. INNOVA formulated the following direct objects to be realized in the region: Beyond that INNOVA has a crucial role in the implementation of the Innovation Strategy of ÉszakAlföld. With cooperation of regional experts the agency is working on the renewal of the regional innovation strategy, the first result of this work is the refreshed analysis of the region. Private bodies There are not so much private bodies connecting to the energy sector.

BioGenezis Ltd. – was established in 1996 in the city of Nyíregyháza eastern Hungary. Its main activity is environmental engineering. They work in the fields of water management, waste management and utilization of RES and they prepare related national and international tenders. BioGenezis Ltd. has relevant experience in the field of RES and EE. They give professional and technical advices to other companies on the field of EE. It also takes part in the implementation of international projects as a Hungarian partner. Their main effort is to solve the partners' environmental related problems with the best achievable technology and at a very high professional level Research institutes University of Debrecen – energy education, researches in energy performance in buildings, bioenergy Manufacturing industries Manufacturers of pellet, biomass boilers and biobriquette. Other Energy clusters were established in the last few i.e. Public/private energy years, for example: Innovation Energy Cluster (it board, intergovernmental is a HURO crossborder cooperation), Cluster for Energy Efficient Buildings, Green Energy Cluster 4.2 Is there structured ENEREA ÉszakAlföld Regional Energy Agency cooperation between the has a bridge role to connect these above organisations? organisations.

4.3 Is there cooperation There are several projects where the cross

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between this region and border cooperation exists. International neighbouring regions? programmes enable the close cooperation, for For example: example HUROSKUA tenders, SouthEast Europe Programme, INTERREG IVC. In these projects Exchange of knowledge exchange of good practices and knowledge, Good practices pilot project were achieved and will be Project development achieved in the near future. Please describe the HUROSKUA Creation and promotion of an EE cooperation. and RES potential rationalization in practice on the scale of an institutional cooperation through creating a strategy plan and knowledge transfer for green economy development.

SEE program: M2RES – Marginal Areas to investment in RES Interreg IVC: GEOPOWER – Geothermal energy to address energy performance strategies in residential and industrial buildings Interreg IVC: ECOREGIONS 4.4 What is the involvement It is also centralized. Energy Centre (the national of your region in the energy agency) is responsible for the development and implementation of regional projects. implementation of investments in sustainable energy strategies? 4.5 What are your views on Strengths: the strengths and - All of the projects are in one hand. We think weaknesses of such policies? it is good if managing applications is in one hand, because it is easy to aggregate competencies, and therefore application procedure can be accelerated, the different stages of evaluation can be entrusted to experts that are specialised to implement the certain sessions. - Regional bodies facilitate participation and involvement of stakeholders, due to the accessibility because of the proximity. - Experience in the regulatory development of Renewable Energies Weaknesses: - Lack of financing - Frequent changes in the regulation. These changes cause an unstable regulatory framework at national level. - It does not take into account regional conditions - Slow decision making process - Long-continued evaluation process

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4.6 Is there specific - Yes, at two faculties of the University of knowledge on energy issues Debrecen there are postgraduate courses in the available in your region? field of energy. For example, a University faculty. 4.7 What are the skills There is a lack of energy experts which slows shortages and training the energy investments. opportunities in your region? The aim of ENEREA is to prepare a single training material and establishment of the Advisory Body for Regional Energy Education. The curriculum elaborated by ENEREA is made for leaders of SMEs and decisionmakers and it aims to assist the mechanism of decisionmaking on RES and EE. 4.8 What is the quality of There is a well meshed and extended power physical infrastructure in your grid and natural gas network in the region. This region? fact facilitates the access to different fuels throughout the region, covering the whole demand and providing a choice of the used energy source. As for the frequency of rail routes rail network is above the national average, but low utilisation, frequency and obsolete fleet are problems. Considering the length of routes the region is the 2nd in Hungary. The M3 highway leads to Debrecen and Nyíregyháza, every settlement can be reached on roads. We have district heating in the region, mostly in the seats of counties: Debrecen, Nyíregyháza, Szolnok. District heating suppliers are usually owned by the cities. Heat is produced in gas power plants, usage of renewable is not common.

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5. REALISATION OF PROJECTS Question/Problem/Matter Explanation/Short description 5.1 Are there any plans to See 3.5. implement RES/ EE projects in There are a lot of private investments mainly in the region? solar energy (both electricity and heat) and Please explain. biomass. 5.2 In which phase are these Most of them are in idea phase (Regional projects currently at? Energy Strategy, energy strategy of the i.e. Idea, exploration, counties); The two SEAPs are in feasibility phase; feasibility, business case. and private investments and investments at local governments are in business case. There is a great interest from the population, there are a lot of projects implemented, but there are also a lot in preparation waiting for resources. 5.3 Which partners are There were private investments. involved? i.e. initiators / investors 5.4 Which factors hold back Financial, legislation. the realisation of the projects? i.e. financial, legislation, technical, organisational, etc.

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6. FINANCING Question/Problem/Matter Explanation/Short description 6.1 What national financial - Conditions: KEOP (Operational instruments are available? Programme for Environment and Energy) Please describe: tenders: Financing rate: 50% for enterprises, SMEs, 85% for nonprofit - Conditions organisation and local governments. - Reliability - Reliability: Unpredictable both the

- Accessibility sources and the opening and closing (procedures, are they date of the funds. wellknown, etc.) - In the ÉszakAlföld region ENEREA can

- How they are used help. - Financial resources are used up in a very short time, but the interesting in the tenders is huge. There is a great interest for grants, commitment of funds happens within a short time. 6.2 Are there tax measures No. that favour investments in RES / EE? 6.3 What regional, local There are no available local or regional sources. financial instruments are available? Please describe: - Conditions - Reliability - Accessibility (procedures, are they wellknown, etc.) - How they are used 6.4 Are there any private The ownership of Hungarian Volksbank was investors? (Banks, private taken by the Russian Sberbank, and now they equity, pension funds, etc.) look for possibilities in investment in RES, and this Please describe: phase they are collect all information needed, and wait for the new feedin tariff system. - Criteria for these investors to 30 % of the savings in “Lakástakarékpénztár” participate / invest can be spendable for renewable energy investments after four years. - Risk profile, requested rate of return, Lakástakarékpénztár (LTP) = building investment volume society/home savings bank - In what phase of the They are specialised credit institutions dealing project do the solely with collecting housing deposits and investors step in (idea, giving housing credits. exploration, feasibility, Saving plans for housing loans is a possibility for

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business case) housing financing supported by the state. It gives support after the savings. When the savings period is up LTP provides a favourable credit possibility. It is available for every Hungarian citizen irrespectively of family status or incomes. 6.5 What public / private There are some public / private cooperation cooperation is there? projects in the region, related to EE and the Please describe. utilisation of biomass, e.g. the refurbishment of block of flats or local waste water projects (with the creation of water utility associations). Biomass power plant in Szakoly, community heating plant in Mátészalka, Biogas plant in Csenger (0,5 MWh), biogas power plant in Nyírbátor (2,5 MWh). ESCO projects also serve as a good and successful example for PPP in the field of energy related investments. 6.6 Are the European Funds No. International tenders seem to be too wellknown and used? complicated, and there is also a language barrier. Which ones are used/applied for? Intelligent Energy Europe, FP67, HUROSKUA, Ecoinnovation 6.7 Are there other initiatives No. / funding schemes? (Crowd funding, community initiatives, etc.)

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7. COMMUNICATION Question/Problem/Matter Explanation/Short description 7.1 Is there a central ENEREA (ÉszakAlföld Regional Energy Agency), information point where INNOVA (ÉszakAlföld Regional Development investors can find information and Innovation Agency) and ÉszakAlföld about investments in Regional Development Agency. sustainable energy? ENEREA can provide the most information about (Regulations, laws, subsidy the applications on RES and EE. options, etc.) Recommendations for investors happen on conferences and workshops. 7.2 Are there organisations No. that take responsibility for communication about investments in sustainable energy? Please describe the organisations.

Are there possibilities for the organisations to work together? 7.3 Which organisations National Development Agency, Energy Centre would be suitable to take at national level. responsibility for the ENEREA at regional level in the ÉszakAlföld communication about region. investments in sustainable energy?

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8. OTHER FACTORS Question/Problem/Matter Explanation/Short description 8.1 Describe the non Complicated administration procedure, too financial factors influencing many permissions needed, lack of information, the realisation of RES/ EE mayors are incapable to make decisions. projects. (Legislation permits, etc.) 8.2 How is the local/ regional There is no compulsory public green authority using their public procurement in Hungary yet, but there is an green procurement? action plan and it is getting delay. However the local/regional authorities during their public procurements authorities prefer sustainability principles (e.g. requiring sustainable paper handling from applicants/contractors: two sided printing, rechargeable cartridges, recycled paper). They might even specify the existence of environment management systems (ISO 14001, EMAS).

9. ANY OTHER COMMENTS Question/Problem/Matter Explanation/Short description Please provide any other additional information.

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Appendix VI – Program of the Észak-Alföld peer review

November 6 th to 9 th , 2012

06/11/2012 Tuesday Venue: Észak-Alföld Regional Development Agency (31 Széchenyi Street)

8.30 – 10.30 Welcome Schedule of the week Conciliation of the peers – tasks and responsibilities 10.30 – 10.45 Coffee break 10.45 – 12.00 1st module – Introduction of the Észak-Alföld region The region and the ÉARDA Melinda Mátrai, project manager, Unit of International Affairs, ÉARDA Nonprofit Ltd. Energy issues in the region Valéria Szabó, project manager, ENEREA ÉszakAlföld Regional Energy Agency Role of ENEREA, as the only energy agency and introduction of “Weboverheads” Gábor Vámosi, director, ENEREA 12.00 – 13.00 Lunch 13.00 – 15.00 1st module – Introduction of the Észak-Alföld region (cont.) Utilisation of geothermal energy in the region Tamás Buday, Lecturer of Department of Mineralogy and Geology, University of Debrecen Faculty of Science and Technology Usage and possibilities of wind energy Dr. Andrea Kircsi Bíróné, assistant professor, University of Debrecen Faculty of Science and Technology, Department of Meteorology Energy trainings and education Dr. Andrea Kircsi Bíróné, assistant professor, University of Debrecen Faculty of Science and Technology, Department of Meteorology “Building energetics” in the region – state of play, facilities Imre Jónás, Architectexpert on “building energetics” Waste management for energy Krisztián Benkı, environmental planner, BioGenezis Ltd.

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Introduction to the activities of the Energy Club Lilla Csanaky, project leader, Energy Club 15.00 – 15.15 Coffee break 15.15 – 17.00 Interviews 17.00 – 18.00 Group discussion at the hotel – evaluation of the day 19.00 Dinner

07/11/2012 Wednesday Venue: University of Debrecen Centre for Agricultural and Applied Economic Sciences

8.30 – 10.30 2nd module – Good practices and the role of municipalities in the region Energy strategy and vision of Debrecen Tamás Baranyi, head of Urban Operation Unit, Municipality of Debrecen State of play and role of municipalities Attila Tóth, vicepresident of general assembly, HajdúBihar County Sustainable energy action plan (SEAP) of Martfő Dr. Edit Kiss, Mayor, City of Martfő Alternative heating and the sample programme for the related community service in Magyarhomorog Károlyné Barabás, mayor, Magyarhomorog Cooperation of municipalities – A cluster for thermal energy utilisation Dr. Zsolt Zsadányi, project manager, “TEneHI” – Thermal Energy Utilisation and Innovation Cluster 10.30 – 11.30 Interviews 11.30 – 12.00 Site visit University of Debrecen Centre for Agricultural and Applied Economic Sciences 12.00 – 13.00 Lunch 13.00 – 17.00 Study visits Hajdúszoboszló – Hungarospa Jsc. Újszentmargita – RESbased spatial development in Polgár micro region 17.00 – 19.00 Group discussion at the hotel – evaluation of the day

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08/11/2012 Thursday Venue: ÉARDA

8.30 – 10.30 3rd module – Financing renewable energy investments in the region Advisory activities of Széchenyi Programme Office János Péter, development advisor, Széchenyi Programme Office Hungarian energy policy in light of the National Energy Strategy and connected action plans Márk AlföldyBoruss, head of Unit of Renewable Energy, Dep. for the Development of Green Economy, Ministry of National Development Main features of the Hungarian renewable support system’s reform Éva Szabina Somossy, Energy Market Analyst, Dep. of Economic Analysis and Environmental Protection, Hungarian Energy Office Financing solutions and possibilities for municipalities Imre Ling, director, ÉszakAlföld Regional Development PLC. Bank financing of RES Tamás Polonkai, deputy reg. manager, Hungarian Volksbank PLC. 10.30 – 10.45 Coffee break 10.45 – 12.00 Interviews 12.00 – 13.00 Lunch 13.00 – 17.00 Study visit HAJDÚ Hajdúsági Ipari Zrt. College of Nyíregyháza 17.00 – 19.00 Group discussion at the hotel – making the 1 st version of recommendations 19.30 – 22.00 Dinner

09/11/2012 Friday Venue: ÉARDA

08:30 – 09:40 Conclusions and recommendations of peers 09:40 – 10:00 Coffee break with press conference 10:00 – 10:50 Roundtable discussion and interviews for the peers and main actors in EE and RES 10:50 – 11:00 Closing of the peer review

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Appendix VII – The Peer Review Team

Region Name Function in project Email adress

Norrbotten Mr Fred Nordström Coordinator [email protected] Mr Kenneth Backgård MB member [email protected] Mrs Satu Norsten Manninen SC member satu.norsten[email protected] Ms Maria Eliasson Student [email protected]

Flevoland Mrs A P (Diny) Weener Expert [email protected]

Ms Winnifred C Prins Expert [email protected] Mr Pieter de Haes Expert [email protected]

Maramures Ms Adina Dumitru SC member/CP3 leader [email protected] Ms Noemi Ganea Expert [email protected]

Western Greece Mr Gerasimos Mentzelopoulos SC member [email protected]

Sofia Ms Ralitsa Manolova SC member [email protected] Ms Mary (Maria) Basheva Expert [email protected]

Mr Plamen Venkov Expert [email protected]

Mr Manol Manolov Expert [email protected]

Észak-Alföld Ms Melinda Matrai SC member [email protected] Host coordinator Ms Éva Pásti Project team member [email protected] Mr András Ibrányi Project team member [email protected] Mr Gábor Vámosi Director of ENEREA [email protected] Ms Valéria Szabó Project manager of [email protected] ENEREA Dr Zsuzsanna Antal Project manager of [email protected] ÉARDA

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