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The Hungarian Investment and Trade Agency took part in collecting and editing the projects appearing in the brochure. If You would like to receive more detailed in-formation on the projects, given sectors, or any industry which is not included in this publication, or need assis-tance in organizing meetings with project owners, please contact HITA on the contact details below.

Hungarian Investment and Trade Agency (HITA)

Hungary, 1055 Budapest, Honvéd street 20.Phone: +36 1 872 6520 Fax: +36 1 872 [email protected]

Editing closed: 24 Jan 2014

www.hita.hu

Table of Contents

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SECTORIAL OVERVIEW PROJECTS

nES - WASTE uTILIzATIOn WITh ThERmOSELECT TEChnOLOgy 3 bIO - bIOEThAnOL, bIOgAS And bIOmASS PLAnT

VEnTERfOR WIndfARm PROJECT VISOnTA ECO fuEL - bIOEThAnOL PROduCTIOn In hungARy TESLA - undERWATER hydROELECTRIC POWER PLAnT

6

12

18

22

26

30

110 m EUR

33.6 m EUR

8.5 m EUR

6.8 m EUR

2 m EUR

6 7

gEnERAL OVERVIEW

The liberalization of the Hungarian electricity and natural gas market was completed in 2008. Today, the choice of supplier applies for every consumer, although the prices for universal suppliers are still regulated.As far as European Union legislation is concerned, the application of the 3rd Energy Package has been carried out and market competition is constantly growing, mainly with reference to the electricity market. The major part of Hungary’s energy supply is imported, and it will remain so for a long time.Natural gas plays the most important role in Hungary’s energy consumption and accounts for 37.8%. Crude oil and petroleum products come second. The power generation mix is dominated by nuclear energy (42%), gas-fired generation (31%) and solid fuels (16.7%). Renewable energy sources (RES) play an increasingly important role in the consumption mix. The share of RES in energy consumption rose from 5.2% in 2005 to 8.7% in 2010. According to 2010-2020 forecasts, overall energy consumption will increase by around 1.6% / year on average. Electricity consumption, according to the forecasts will increase by 2.2% / year.

Gross electricity generation (as % of TWH ) 2010 Gross inland consumption (as of total Mtoe) 2010

ELECTRICITy mARkET

Hungary’s gross electricity consumption in 2011 reached 42,626 GWh. Consumption has been showing continuous growth since the 2008 crisis downturn. Within domestic electricity generation, nuclear power and natural gas represent the highest ratio.

Ratio of energy sources in electricity production in Hungary

Natural ga s37,8 %

Liqui d0,4%

Coal8,1%

Nuclear15,7%

Waste and other REN

1,4%

Biomass 4,2%Water

0,6%Wind1,7%

Natural ga s37,8 %

Solid fuel s10,5 %

Renewables7,7%

Crude oil and petroleum produ cts

26,3%

Other2,1%

Nuclea r15,7 %

Natural ga s31.3 %

Solid fuels16,7 %

Renewables8,1%

Crude oil and petroleum produ cts

1,3% Other0,4%

Nuclea r42,2 %

Total TWh: 37.37 Total Mtoe: 25.98

Energy Sector and Renewable Energy in Hungary

Why InVEST?• Fully liberalized energy market.• Competitive energy prices.• Competitive investment environment. • Favourable implementation costs.• Implementation of single energy market concept in process in the EU.• Constant dynamic development of the sector.• Government high priority focus sector.• Government commitment in the areas of sustainability and energy efficiency.• Ambitious renewable target (13% by 2020) – active area, regarding regulation.

State support, technological innovations and investment opportunity.• Feed-in-tariff system for renewable energy sources.• Constantly growing energy consumption.

8 9

Considering Hungary’s geographical conditions, of the renewable energy sources, energy generation from biogenic sources (forestry and agricultural biomass, biogas and biofuels), water, geothermal energy and, over the long term, solar energy, are the most important.Hungary’s 2020 RES target is 13%. However, in the Renewable Action Plan, the government has set a target of 14.65%.

Maximum of renewable energy potential

REn source Potential (PJ)Solar photovoltaic 1750biomass 300Solar thermal 102.5geothermal 63.5Water 14.4Wind 532.8TOTAL 2600-2700

In Hungary, the Government supports renewable energy production with a Feed-in Tariff Obligation System and guaranteed price. According to this regulation, all electricity produced by renewable energy must be purchased by the Transmission System Operator at a fixed price, which is indexed annually by inflation.

bIOfuEL

Bioethanol has long established itself as the world’s No. 1 biofuel and the bioethanol market has continued to grow rapidly in recent years. With the adoption of the Renewable Energies Directive in 2009, which prescribes a mandatory blending rate of 10% in the transport sector by 2020, market researchers predict a dynamic growth of the European bioethanol market, of up to 15 million m³ for 2020.

2000

10000

6000

14000

4000

12000

8000

2013 20172011 2015 20192010 2014 20182012 2016 2020

EU biofuel use expectation, based on the Action Plans of the EU member States

16000

In 1

000

m3

Yearly gas consumption 10.659 bn m3

Domestic production 2.640 bn m3

Import 8.019 bn m3

East direction (Beregdaróc) 3.606 bn m3

West direction (Mosonmagyaróvár) 4.414 bn m3

nATuRAL gAS mARkET

Hungary’s natural gas consumption in 2012 reached 10.44 Billion m3, Gas generation on the other hand was 2.46 Billion m3.

Hungarian gas consumption mix in 2011

The Hungarian natural gas grid is 5,783 km long.

CEEGEX Central Eastern European Gas Exchange Company Ltd began operation in January 2013.

REnEWAbLE EnERgy mARkET (RES)

The utilization and spreading of renewable energy sources could represent one of the breakthrough points for Hungary’s economy. Hungary has excellent comparative assets in certain areas of green energy resources.

Hungary has significant potential in biofuel production, supported by agricultural products. Based on an expert estimate, more than 10% of the estimated consumption for 2020 can be fulfilled just from first generation biofuels, while at the same time ensuring the fulfilment of food and feed provision objectives.

The installed total capacity of Hungarian power stations in 2012 was over 10,000 mW.

The HUPX Hungarian Power Exchange Company Ltd started its operation in 2009, and has achieved significant success alongside constantly improving liquidity. HUPX activities include Day-ahead auction (DAm) and Physical Futures (PhF), the aggregated turnover of which in 2012 has exceeded 13 TWh.

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bIOmASS And bIOgAS

Hungary possesses excellent agro-ecological conditions for the competitive production of biomass. Hungarian agriculture is capable of sustainably producing biomass in excess of food and feed demands, and at the same time, there is significant biogas production potential. The theoretical potential of energy sources of biological origin (bioenergy) could exceed, by as much as 20%, the energy source demand estimated for 2020, and bioenergy based electricity production, that can be planned well in advance, is also controllable. The limitations of bioenergy production mainly lie in competitiveness. Bioenergy can play a primary role in fulfilling local heating demands in the future, but there is also an intent to place emphasis on the spread of small and medium-capacity combined electricity and heat generating systems, according to Hungary’s Renewable Energy Utilization Action Plan.

SOLAR

Even though there is notable solar potential in Hungary, to date only a small amount of solar capacity has been added, which in total doesn’t reach 1 % of the total usage of renewable energy. Additionally, most of this is through solar collectors. most of the pv-panels and collectors are bought by private individuals, not by public institutions or establishments. EU competition laws, Operative Programmes, tenders and other incentives are trying to change this tendency. State and Union-level support plays a central role in the spread of solar energy systems.

WInd

The climate in Hungary is humid continental, and the ruling winds mainly blow from the rim of the basin towards the central parts. The optimal regions for the exploitation of wind energy can mainly be found in the country’s North, North-West, and some South-East areas.

The connection of wind energy to the Hungarian electricity system began in 2006, when the Hungarian Energy Office opened a 330 mW capacity quota for wind energy. This amount has not been extended since, which means that today, a wind turbine without a quota is not able to join the feed-in tariff system, but is entitled to sell the produced electricity on the market.

ThE SECTORIAL OVERVIEW WAS PREPAREd by: GRID CEE Consulting Ltd.+36 30 870 [email protected], 1031 Budapest, Záhony street 7.Graphisoft Park C. building

12 13

ShORT dESCRIPTIOnImplementation of a thermic waste recycling plant (100,000 tonnes/year) with the aim to treat local domestic and industri-al waste.

110 M EuR

Sector

Project owner

Location

Implementation period

Overall budget of the project

Renewable Energy

NES Recycling Ltd.

Gyöngyös, North Hungary

2014 - 2015

146 million EUR

bASI

C PR

OJE

CT d

ATA

I. PROJECT bACkgROund

II. PROJECT dESCRIPTIOn

Project ownerThe project company, NES Recycling Ltd, registered in Hungary, was founded exclusively for the im-plementation of the waste management project in the city of Gyöngyös, (North Hungary).The ownership of the project company is divided among three Hungarian individuals, according to the main project tasks. Next to a lawyer guaranteeing the legal background, and a company and project management expert, the professional knowledge and experience is supplied by the General manager mr András Hajdu.The experts of NES Ltd have been working on this project since 2000, with valued partners such as Siemens Hungary, Transelectro (Hungary), Seghers (Belgium), Indaver (Belgium), Thermoselect (Swit-zerland) and CET Co. (England).

The purpose of the investment is to install a complex waste converter system that is able to treat and utilize all kind of waste, and to utilize the produced energy and other by-products. The basis of the chosen technology is a modern Swiss gasification method by Thermoselect , an experienced and

funding requirement

NES - Waste utilization with thermoselect technology

recognised company with references in Germany, Switzerland, Italy and Japan.By implementing the technology, the organic waste components are transformed into synthesis gas, which can be used for power generation or as a raw material for chemical synthesis; the inorganic waste components are converted into directly usable mineral substances and metals. The process does not produce any ash, slag or filter dust.The key elements of the project can be outlined as follows:•Wastedisposal,treatmentandutilization•Saleoftheproducedelectricandheatenergy•Convertingtheby-productsintosaleableproducts

The main revenues of the project are generated from the waste disposal fee and the sale of electricity.The main target groups of the plant include industrial manufacturers and local governments on the waste input side, and electricity companies and the chemical industry regarding electricity and by-product production.An agreement with the local governments of Gyöngyös and nearby Salgótarján has been signed regarding the community waste treatment.

The total capital requirement of the project is 146.7 million EUR.The current business plan calculates with 30% own capital and 70% investment capital.According to the project owners’ plans, the own capital will include a bank loan, regarding which negotiations with several banks are in progress. The Hungarian Investment Bank has already indicated its interest in the project; the supporting documentation has been supplied and is under evaluation.

background infoThe Local Government of Gyöngyös passed a resolution in 1999, stating that the waste management tasks of the region should be solved by adopting a thermal waste converter technology. NES Ltd has been present from the early stages of the project idea, and has developed the business plan and ob-tained the necessary permits; it is the sole project owner. The project company is in constant contact with the local government of Gyöngyös and the region.

Permits, access to location site, implementationThe planned development is situated on the territory of the industrial park of the city of Gyöngyös. The building permit for the plant has been issued with the approval of the local government, for a 5 Ha size location within the industrial park.

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III. fInAnCIAL IndICATORS

A feasibility study has been prepared. As far as the permitting process is concerned, the Environmental Permit, Water Rights Permit and Building Permit are available.As soon as the finance is in place, plant construction can start right away and has a 24 month sched-ule.The plant will be implemented by leading multinationals and local engineering and construction compa-nies with outstanding references. The Thermoselect technology complies with the strictest environmen-tal standards of the EU.The generated electricity will be sold within the framework of the Hungarian Feed-In-Tariff system (“ KÁT”), at a higher price than the prevailing market price.

Availability of input materialAt present more than 250 thousand tons of special industrial waste is generated every year from the lo-cal industrial companies in the North-Hungarian statistical region. There is insufficient waste treatment capacity in the region, which guarantees the input material for the plant. At present, the project company has signed agreements with two cities, Gyöngyös and Salgótarján, for the intake of their communal waste.

market backgroundWaste management in Hungary is traditionally done by landfilling. At present the fee of landfilling is nearly 10 EUR / tonne, which according to Government indications will increase on a yearly basis until 2016, when it will reach 60 EUR / ton. This is expected to move the focus of industrial players toward alternative waste management solutions.The present market for alternative waste management in Hungary is rather small, with only a few strong international companies, such as AVA and ASA.The National Waste management Agency (OHÜ) was established in early 2012. This Agency will act as a single national coordinator between the collection companies and the treatment plants. In order to meet the 2016 diversion target of the Landfill Directive, there is a need for additional waste treatment capacity in the country. Currently there is only one municipal waste incinerator with energy recovery. According to the waste act, incineration or waste co-incineration shall be permitted only if the incineration or co-incineration is directed to electrical and thermal energy production or cement, bricks, tiles and construction and ceramic manufacturing.The North-Hungarian statistical region, where the project will be located, used to be the centre of the Hungarian chemical, steel and other heavy industry in recent decades. The companies, operating here, also play a significant role in the current economic life of Hungary. These companies, which are profit-able and solvent enterprises also produce a lot of industrial waste..As a result of the state support for renewable energy, there is an option for the produced electricity to be sold at a higher price (feed-in-tariff, higher than the market price) for a maximum period of 15 years.

Risk managementThe main risk factors of the project have been identified and the methods to prevent and solve them have been outlined by the project developers, as follows:

Risk factor mitigation / Solution Level of Risk

Plant constructional risk

can be mitigated by choosing experienced contractors with sufficient references, construction supervisor, and adequate contracting terms

medium

Availability of bank loan

on-going arrangements with a number of banks, ar-rangement of foreign bank loan facility

medium

Sale of produced electricity

Hungarian feed-in-tariff system guarantees the sale of produced electricity

low

Sale of by-products market monitoring, diversification of buyers

Outage of main waste supplier

diversification of supply sources, Hungarian market knowledge

low

Public opinion level of acceptance can vary, but can be handled with PR plan

medium

Assumptions and main indicatorsThe Business Plan of the project calculates with reasonable estimations both regarding CAPEX and OPEX costs, and uses realistic macroeconomic expectations; there are also several reserves built into the plan.The Business Plan has been drawn up for a 14-year period.

Quantitative and Qualitative Indicators

Quantitative Indicators

Expected investment return 10 years

Average yearly EBIDTA 28 million EUR

Average yearly revenue (100% efficiency) 41 million EUR

Average yearly operational costs 8.1 million EUR

Qualitative Indicators

poor adequate high

Elaboration level X

Existing client relations X

Reality of market ratio expectation X

Owner’s background (market presence, experience) X

management background (knowledge, experience) X

Level of innovation in the Project idea /Added value X

Risk management plan X

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IV. InVESTmEnT OffER

Why InVEST?• Serious shortage of waste management facilities in the country.• Low manufacturing costs, compared to Western Europe.• High pressure on the development of the renewables market in the EU and

Hungary resulting from the EU goals for 2020. (3rd Energy Package). • Highly elaborated, detailed project.• EU legislation compatible technology.• Expertise of the project developer team.• Interest of the Hungarian Investment Bank.• With sufficient financial background, the project will be selected among high.

priority investments by the Government.

Required amount of investment 110 million EuR

Form of investment 50-70% share in the project company (to be negotiated)

Investment return 10 years

fuRThER InfORmATIOnFor more information, business plans and contacts to the projects

owners, please get in touch with our team:

[email protected]

18 19

ShORT dESCRIPTIOnbioethanol-biogas-biomass plant project for the production of fuel quality bioethanol and green energy.

33.6 M EuR

Sector

Project owner

Location



Renewable Energy

HBT Helvéciai Bioetanol Termelő és Kereskedő Kft.

Helvécia, South-East Hungary

2014 - 2015

112 million EUR

bASI

C PR

OJE

CT d

ATA

3BIO - Bioethanol, Biogas and Biomass plant

Project ownerThe project company Helvéciai Bioüzemanyag Termelő és Kereskedő Kft. (Helvécia Biofuel manufac-turing and Trade company), registered in Hungary, was founded exclusively for the implementation of the bioethanol-biogas-biomass plant in Helvécia (South-East Hungary). The ownership of the project company consists of one Hungarian and two German companies, ac-cording to the following: -ÉGT Kft., Hungary, share: 30.1% -mETZ GmbH, Germany, share: 35.0% -STULZ-PLANAQUA GmbH, Germany, share: 34.9%

Project descriptionThe main objective of the bioethanol, biogas and biomass plant project is to produce fuel quality bioethanol and green electric power. The aim of combining the three plants is to utilize synergies. Bioethanol is produced using maize as a raw material. The by-product of ethanol production is the main feedstock of the biogas plant, mean-while the biogas- and biomass plant provide heat and electric power for the bioethanol production.


funding requirement

The Bioethanol will be sold in Western Europe, a contract has already been signed with one of the biggest redistributors: mitsui GmbH. Electricity can be fed into the national system or later to an open market in Europe. The main input is corn, and during the production phases most of it is used, so there is only a small amount surplus material remaining.With this setup, the Bioethanol Plant is able to produce biofuel with low energy costs and minimal waste.Furthermore, the plants will save more than 100,000 CO2 quotas, which can be sold in the CO2 ex-change system.The total capital requirement of the project is 112 million EUR.The current business plan calculates with 30% own capital (33.6 million EUR) and 70% bank loan (78.4 million EUR).Currently, 17.4 million EUR equity is required to receive a 78.5 million EUR investment loan from the Hungarian Investment Bank, where the negotiation phase has been closed. A 17.4 million EUR bank guarantee is required for the beginning of the financing process.Technology and the EPC contractors have been selected and pre-contracted. A professional study carried out by KPmG (www.kpmg.com) to evaluate the project is available.

Permits, access to location site, implementationAs far as the permitting process is concerned, the legally binding building permit is available (20th June 2013) and IPPC is also available. With the financing in place, plant construction can start immediately with a 22-24 months’ time frame.The 21 ha site in the industrial park of Helvécia is owned by the project company.The area is equipped with all the necessary public utilities (water, gas, electricity, waste water).

The bioethanol plant will be implemented by leading multinationals and local engineering and con-struction companies with outstanding references. The bioethanol technology and know-how will be supplied by Desmet Ballestra Ethanol GmbH.

Availability of feedstockThe feedstock of the ethanol plant is guaranteed as Hungary being an agricultural country has a per-manent oversupply of maize (5-10% surplus supply in each average year) for ethanol production. The bioethanol plant’s required feedstock is available in the neighbourhood and produced within 30 km. Annually 2.2 million tonnes of corn is grown around the plant within 100 km. There are several fields in the nearby district currently not in use and available for growing corn or sorghum. Next to corn, there are other types of raw material available in Hungary. Even though the change of raw material requires modifications to the technology, these can be carried out in a relatively short period of time and with low investment costs.

market backgroundThe marketability and commercial viability of the produced bioethanol product is guaranteed by the growing global energy demand, and sustainability oriented European Union regulation. The EU biofuel market is highly regulated, thus relies on significant imports due to demand exceeding supply. As far as market competition is concerned, the quantity of bioethanol produced by the present project is not likely to face serious competition due to over demand in Europe. moreover, the majority of similar producers use raw material other than corn.In Hungary there are two other operating bioethanol producers, namely Pannónia Ethanol Zrt. plant (opened 2012), and the Hungrana Zrt. plant. Both are operating profitably with their product also exported to the German market.


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Plant construction risk can be mitigated by choosing experienced con-tractors with sufficient references, construction supervisor and adequate contracting terms

medium

Availability of bank loan on-going arrangements with more banks, ar-rangement of foreign bank loan facility

medium

Outage of main buyer market monitoring, adequate contracting terms, experience and market knowledge of German owners, hedging the buy side by diversifying the final product contract

medium

Outage of main corn supplier diversification of supply sources, Hungarian mar-ket knowledge, change to other raw material,

low


medium

As a result of state support for renewable energy, there is an option for the produced electricity to be sold at a higher price (feed-in-tariff, higher than the market price) for a maximum period of 15 years.


financial IndicatorsAssumptions and main indicatorsThe Business Plan of the project calculates with reasonable estimations both regarding CAPEX and OPEX costs, and uses realistic macroeconomic expectations; there are also several reserves built into the plan.

The Business Plan has been calculated for a 15-year period. The calculated NPV is based on the estimates of energy and financial experts. The capital cost estimate takes into consideration the risk factors, such as the official sectorial risk factor, risk free yield, and the total risk premium of the target country.

The total capital requirement of the project is 112 million EUR.Currently, 17.4 million EUR equity is required to receive a 78.5 million EUR investment loan from the Hungarian Investment Bank, where the negotiation phase has been closed, and a 17.4 million EUR bank guarantee is required for the beginning of the financing process.





Average yearly EBIDA 28.1 million EUR

Average yearly revenue 90.9 million EUR

Average yearly operational costs 69.4 million EUR


poor adequate high

Elaboration level X







Why InVEST?• High surplus demand for the bioethanol in the EU and the target market.•Lowmanufacturingcosts,comparedtoWesternEurope.•HighpressureonthedevelopmentofrenewablesmarketintheEU and Hungary resulting from the EU goals for 2020. (3rd Energy Package). •Highlyelaborated,detailedproject,withallnecessarypermissions.•Well-knownandwidelyusedtechnology.•Expertiseoftheprojectdevelopmentteam.•Realisticandstablebusinessplan.•FinancingresolvefromtheHungarianInvestmentBank.

Required amount of investment 33.6 million EuR (counted with 70% bank loan and 100% share in the project company)

Form of investment 70-100% share in the project company (to be negotiated)





[email protected]

22 23


ShORT dESCRIPTIOnInstallation of eight wind turbines (total capacity of 16 mW) on an undeveloped area of 51.7 hectares in the administrative district of fertőd.

8.5 M EuR

Sector

Project owner

Location



Renewable Energy

VENTERFOR ENERGIE GAG.

Fertőd, West Hungary

2014 2Q - 2014 4Q

27.7 million EUR

bASI

C PR

OJE

CT d

ATA


Venterfor Windfarm Project

Project ownerThe project owner company, VENTERFOR ENERGIE GAG, registered in Hungary, was founded with the main aim of renewable energy project development and implementation. The one-man company is owned by mr Csongor Veress, a local individual with special interest in green energy projects, with biomass and windpark related references and project developments in the Central European region, namely Hungary, Romania, Slovakia and Croatia.

The main objective of the Fertőd Wind Farm project is the installation of eight wind turbines with a total capacity of 16 mW on an undeveloped area of 51.7 hectares in the administrative district of the Hungarian city of Fertőd (county: Győr-moson-Sopron) near Austria. The project involves the option for an additional eight turbine (16 mW) extension.

The additional advantage of the project lies in its closeness to Austria, with regard to the fact that in Hungary, at present, a wind turbine without a quota given by the highest energy authority, is not able to join the feed-in tariff system; a new quota tender is not expected in the near future.

funding requirement

As a result, the project owner is planning to sell the electricity produced in the wind farm via the Austrian electricity grid – either by joining the Austrian feed-in-tariff system, or by selling it on the electricity market.

The technical background of the network connection has been planned and supported by valid offers (Netz Burgenland ). The availability of the Austrian feed-in-tariff is under arrangement process, next to which the project owner has obtained offers for the purchase of the produced electricity from Austrian and German traders.

The installation of the wind energy plant is planned with Vestas V90 (2mWe) turbines. Vestas is among the leading wind turbine manufacturers in the world; the only global energy company dedicated exclusively to wind energy. The arrangements have reached the level of an informative offer, preceded by a preliminary feasibility study of Vestas Hungary, focusing on the expected annual production.

The total capital requirement of the 16 mW wind farm is 27.7 million EUR, whereas the extended project (16 turbines) requires 52 million EUR.The current business plan for eight turbines (16 mW) calculates with 25% own capital (6.9 million EUR) and 75% bank loan (20.8 million EUR). The project company is currently in the negotiation process with more, Hungarian based and foreign banks, but no financing partner has been chosen yet.

Permits, access to location site, implementationWind measurements and necessary calculations have been carried out by the Central Institute for meteorology and Geodynamics, Vienna. The project area is situated near the Central European Alps with average 7 m/s inflowing north-western air, and the number of windless days in the area is insignificant (approx. 30-40 days/year).

As far as the permitting process is concerned, the project, to date, has obtained a valid Building Permit and Small Power Plant Permit for eight wind turbines (16 mW capacity), both necessary for the implementation of the project. The development area is owned by Venterfor company, excluding all and any additional costs related to the project site.

With the availability of the financial background, the plant construction can start right away and has a eight month target deadline. market backgroundWind is a readily available source of energy, which has a high output even in colder winter times, when hydropower and solar installations are at their lowest. Wind energy barely results in any external costs. By exploiting a regenerative energy source, the reliance on other fuels and the resulting environmental damage are avoided.In 2012, Hungary had a total installed wind capacity of 330 mW. Higher capacity is distributed in the north west of the country, with most of wind farms installed in the Kisalföld region.

Austria has a long tradition of wind energy use, it is ranked as the world’s seventeenth largest producer of wind power with its 1400 mW installed capacity (2012). Today there is a target of 34% renewable energy by 2020 and 100% self-sufficiency in energy by 2050. The Austrian wind power supplier industry is globally leading in the fields of control units, wind power generators, design and high tech materials. moreover, public opinion regarding the use of wind energy in Austria is well above the average, a recent survey found that 77% of Austrians are in favour of wind power.

24 25



Plant constructional risk choice of experienced contractors with sufficient reference, construction supervisor, and adequate contracting terms

medium

Cable constructional risk good knowledge of Hungarian and Austrian legal background and permitting process

medium

Availability of bank loan on-going arrangements with more banks, arrangement of foreign bank loan facility

medium

Sale of produced electricity (if not as part of the Austrian feed-in-tariff system)

special reserves in the business plan, market monitoring, adequate contracting terms, experience and market knowledge

medium

Obtaining of permits for the 2nd 16 mW phase

precisely elaborated documentation, choice of experienced contractors

low


medium

Assumptions and main indicators

The Business Plan of the project calculates with reasonable estimations both regarding CAPEX and OPEX costs, and uses realistic macroeconomic expectations; there are several reserves built into the plan.The Business Plan has been calculated for a 15 years period.



Average yearly EBITDA 2.5 million EUR


Average yearly operational costs 810,000 EUR


poor adequate high

Elaboration level X








Why InVEST?•Lowmanufacturingcosts,comparedtoWesternEurope.•Highpressureonthedevelopmentofrenewablesmarketinthe EU and Hungary, resulting from the EU goals for 2020. (3rd Energy Package). •Highlyelaborated,detailedproject.•Well-knownandwidelyusedtechnology.•Expertiseoftheprojectdeveloperteam.•Reasonableandstablebusinessplan.

Required amount of investment 8.5 million EuR (6.9 Equity+1.6 project value) (calculating with 75% bank loan)

Form of investment up to 100% share in the project company

The investment value can be reduced by applying EU grants and achieving lower turbine purchase prices.




[email protected]

26 27

ShORT dESCRIPTIOnEstablishment of a bioethanol plant for the production of fuel quality bioethanol. The plant is to be built on the industrial site of mátrai Power Plant with the aim of utilizing synergies due to the cooperation between the two plants.

Sector

Project owner

Location



Renewable Energy

Visontai Bioetanol Development Co. Ltd

Visonta, North Hungary

2014-2015

34 million EUR

bASI

C PR

OJE

CT d

ATA


Visonta Eco Fuel - Bioethanol production in Hungary

6.8 M EuR

Project ownerThe project company, the Visontai Bioetanol Development Ltd, registered in Hungary, was founded exclusively for the implementation of the bioethanol plant in cooperation with the mátrai Power Plant.The ownership of the project company, with EUR 761,666 equity capital, consists of two Hungarian companies, according to the following: - Duna Development Co. Ltd, share: 67% - F-Estate Ltd, share: 33%The equity capital of the project company includes the technical plans, preparation works and fees of the permitting procedure. Duna Development Co Ltd was originally established as an independent Hungarian-Austrian state owned enterprise with the aim of supporting the Hungarian Government before entering the EU in the fields of environment and energy efficiency. Following Hungary’s admission to the EU, the compa-ny has been assigned by the Hungarian Government to find and evaluate the possibilities for domestic bioethanol, biogas and biodiesel projects.In 2008, the Hungarian Government sold its shares to private owners, who have since developed and managed the company successfully.Duna Development Ltd today is an acknowledged project development company with references from various fields of the energy sector, such as heating plants, gas engines and turbines, and bio-mass projects.

Investment need

Thus the members of the management are all experienced experts, having spent the last two decades in the energy and agriculture sector. F-Estate Ltd is an asset management company with a special focus on renewable energy projects. The company has taken in part in the implementation of biomass and agricultural projects in the past, and is acting as a capital investor in the project company.

The main objective of the bioethanol plant project is to produce fuel quality bioethanol from maize. The plant is to be built on the industrial site of mátrai Power Plant with the aim of utilizing synergies resulting from the cooperation between the two plants. The coal based power plant supplies the steam and electrical energy to the bioethanol plant, and the by-product of the bioethanol plant is utilized by the power plant as feedstock. Thanks to this cooperation, the bioethanol plant receives electricity and steam at a lower price, while the power plant uses a renewable resource, saving CO2 quota by doing so. As a result of this setup, the bioethanol plant is able to produce biofuel at the lowest energy costs and with minimal waste.The pre-agreement regarding the sale of the entire quantity of the produced ethanol has already been made with mitsui & CO. Deutschland GmbH.According to the signed supplier contract with the mátrai Erőmű Plant, the by-product of the bioeth-anol production is regarded as a renewable fuel and is delivered to the plant for burning. The plant in exchange sells the electricity produced from the renewable fuel at a reduced price to the bioethanol plant.The total capital requirement of the project is 34 million EUR.The current business plan calculates with 20% own capital (6.8 million EUR) and 80% bank loan (27.2 million EUR). The project company is currently in the negotiation process with several Hungarian based and foreign banks, although no financing partner has been chosen at this stage.

Permits, access to location site, implementationThe bioethanol plant’s project plan is in a highly developed state. The implementation plans and permissions are available.When the financial background is agreed, plant construction can start immediately and requires 12 months for completion.The development area is situated on the site of the mátra Plant, and a preliminary long term rental agreement has been signed between the parties. The area is equipped with all the necessary public utilities (water, gas, electricity, waste water).The bioethanol technology and know-how will be supplied by Desmet Ballestra Ethanol GmbH.

Availability of feedstockThe feedstock of the ethanol plant is guaranteed as Hungary is an agricultural country where there is a permanent oversupply of maize (5-10% surplus supply in an average year) for ethanol production. As far as the present project is concerned, corn suppliers are available at any time for production. Next to corn, there are other types of raw material available in Hungary. Even though the change of raw material requires modifications in the technology, these can be carried out in a relatively short period of time and with low investment costs.

market backgroundThe marketability and commercial viability of the produced bioethanol product is guaranteed by the growing global energy demand, and sustainability oriented European Union regulation. The EU biofu-el market is highly regulated, thus relies on significant imports due to demand exceeding supply. As far as market competition is concerned, the quantity of bioethanol produced by the present project is not likely to face serious competition due to over demand within Europe. moreover, the majority of similar producers use raw material other than corn.


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In Hungary there are two other operating bioethanol producers, namely Pannónia Ethanol Zrt. plant (opened 2012), and the Hungrana Zrt. plant. Both are operating profitably with their product also exported to the German market.



Plant constructional risk can be mitigated by choosing experienced contractors with sufficient references, con-struction supervisor, and adequate contract-ing terms

medium

Availability of bank loan on-going arrangements with a number of banks, arrangement of foreign bank loan facility

medium

Outage of main buyer market monitoring, adequate contracting terms, experience and market knowledge of German owners, hedging the buy side by diversifying the final product contract

medium

Outage of main corn supplier diversification of supply sources, Hungarian market knowledgechange to other raw material,

low

Closing of the matra Power Plant adequate rent terms for the bioethanol plant site, and change to other technology in order to utilize the by-product as animal forage (business plan ready for the scenario)

low

Public opinion level of acceptance can vary, but can be han-dled with PR plan

medium

Assumptions and main indicatorsThe Business Plan of the project calculates with reasonable estimations both regarding CAPEX and OPEX costs, and uses realistic macroeconomic expectations; there are also several reserves built into the plan.The Business Plan has been produced for a 15 year period. The calculated NPV is based on the estimates of energy and financial experts. The capital cost estimate takes into consideration the risk factors, such as the official sectorial risk factor, risk free yield, and the total risk premium of the target country.The ethanol sales provide 83 per cent of annual revenue, the average sale price of ethanol is calculat-ed as 573 EUR/m3 in the first year, 2014.





Average yearly EBIDA 13.2 million EUR


Average yearly operational costs 38 million EUR


poor adequate high

Elaboration level X







Why InVEST?•HighsurplusdemandforthebioethanolintheEUandthetargetmarket.•Lowmanufacturingcosts,comparedtoWesternEurope.•HighpressureonthedevelopmentofrenewablesmarketintheEUand Hungary resulting from the EU goals for 2020. (3rd Energy Package). •Win-winsetupbetweentheMátraiPowerPlantandtheProject.•Highlyelaborated,detailedproject,withallnecessarypermissions.•Well-knownandwidelyusedtechnology.•Expertiseoftheprojectdevelopmentteam.•Realisticandstablebusinessplan.


Required amount of investment 6.8 million EuR (counting with 80% bank loan)

Form of investment 100% share in the project company (5 million EUR)



[email protected]

30 31

ShORT dESCRIPTIOnProduction and testing an innovative renewable energy hydro power plant technology prototype with the aim of additional power plant construction, and the sale of 1000 mW patent right in hungary.

Sector

Project owner

Location



Renewable Energy

mr Tomislav Tesla, inventor, mr Róbert Uracs patent rights holder for Hungary and Slovakia

river (under discussion)

18-24 months

1st Phase-Prototype and production of a 1 mW capacity working turbine: 2million EUR

2nd Phase Construction of additional turbines: 1.25 million EUR/mW

bASI

C PR

OJE

CT d

ATA

I. PROJECT bACkgROundProject ownermr Tomislav Tesla, as an inventor, gained his experience in architecture and engineering. He began the implementation of his idea eight years ago and finished the development of the technology in 2011. The patent he received is a result of his work and that of other outstanding experts.

The head of the Hungarian project team is mr Róbert Uracs, a designer with significant experience and international connections. As a business partner of mr Tesla, he is in charge of handling the Hungarian and Slovakian patent rights of the innovation as well as the management of all tasks in connection with the project.

The first phase of the TESLA Project involves the production and testing of the prototype of an inno-vative renewable energy hydroelectric power plant technology; the construction of the first 1 mW working turbine, and as a result, the sale of patent rights (1000 mW in Hungary) and construction of new hydro power plants using the technology.

2 M EuR(prototype and production of the first 1mW turbine)

funding requirement


Tesla - Underwater hydroelectric power plant milestones of the project can be identified as follows:1. Production of the Prototype Turbine with the aim of proving the effectiveness of the power plant (expert participation of the Physical Sciences Research Institute of Belgrade (Serbia) and Technical Uni-versity of Novi Sad with other experts and engineers)2. Construction of the First Full Size Power Plant with a 1mW capacity on a smaller river in Hungary3. Start of patent right sales – the Hungarian project owner possesses the right for a 1000 mW patent to be sold within Hungary4. Construction of new hydroelectric power plants using the technology – In Hungary and abroad

The essence of the investment lies in the opportunity to take part in the implementation of a theoret-ically proven innovation, which – when constructed – will represent an outstanding business opportu-nity with special rights given to the investor.

Project backgroundThe basis of the project idea, the “T1 Tesla type underwater hydroelectric power plant” technology is owned by mr Tomislav Tesla, a relative of the famous inventor, Nikola Tesla. The innovation has a PCT (Patent Cooperation Treaty) certificate. The PCT makes it possible to seek patent protection for an invention in 140 countries.mr Tomislav Tesla received the patent (an exclusive right granted for an invention) from the World Intellectual Property Organization (WIPO ) on September 19, 2013.

A 1000 mW from the patent has been given to the Hungarian project owner to be sold within Hungary.The regarding contract between mr. Tomislav Tesla and mr. Róbert Uracs was signed and certified on October 03, 2013.

main objectives of the project:•Veryfavourableelectricityproductioncost:approximately0.02-0.03EUR/kWh•Constantelectricitysupply,novolatility•Quickandlowcostrepair–operationalcostscountforlessthan10%oftherevenues•Nofuelneededforoperation–lowvariablecosts•100%environmentfriendlytechnology,createsnodangertofloraorfaunawhatsoever•Doesnotinterferewiththerivertraffic–theturbinescanbeautomaticallymovedverticallyintheriver watercourse•Noneedforinundation–watercourserentisrequired•Onlyrequiresasmallareaoflandandriverterritory

The total capital requirement of the first phase, such as the production and testing of the prototype is 2 million EUR.

The project owner guarantees a maximum of 20% share of the project company, and of the sale of the 1000 mW patent right in Hungary. An additional maximum 70% share is optionally offered in the new hydro plants to be built by the project company.

Permits, access to location site, implementationThe technology has a PCT certificate and the patent rights given by WIPO.

The exact location has not yet been chosen for the construction of the actual working hydro power plant using the Tesla technology; this will be decided following financing. The necessary permits will be obtained after the production and testing of the prototype turbine The permitting procedure for renewable energy power plants is strongly supported by the Hungarian Government and the European Union.

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market backgroundThe energy consumption of the European Union and Hungary is constantly increasing. With current policies, this virtually guarantees the demand for electricity generated from renewable energy sources, using secure technologies with very favourable operational costs, both in Hungary and in the region-al power markets.

Risk managementThe main risk factors of the project have been identified and the methods to prevent and solve them have been outlined by the project developers as follows:


Prototype constructional risk choice of experienced contractors with suffi-cient reference, construction monitoring and supervision, adequate contracting terms

medium

Prototype test results highly detailed plans audited by professionals and experts

high

Delay in schedule due to proto-type improvement

constant process monitoring high

Permitting process for the first turbine

detailed preliminary study on the necessary permits and conditions, include adequate reserves in the project timeline, preparation of an environmental feasibility study

medium

Availability of location detailed preliminary study on the ownership of the planned river section and its surroundings feasibility study of network connection

medium

Public opinion level of acceptance can vary, but can be han-dled with PR plan

medium

III. fInAnCIAL IndICATORSAssumptions and main indicatorsAs a result of the defined and fix energy prices and the low level of variable costs, the future cash flow of the project is stable. As the innovative turbine is currently in the development phase (the prototype will be constructed


Life span of one 1 mW turbine 20-25 years

Average yearly energy production of a 1 mW turbine 7,800,000 kWh


Average yearly EBITDA 2.32 million EUR

Average yearly revenue / 1 mW turbine 0.51 million EUR

Average yearly operational costs 100,000 EUR / mW

Average yearly revenue – patent rights 1.8 million EUR


poor adequate high

Elaboration level X







IV. InVESTmEnT OffERWhy InVEST?•Beingpartoftheimplementationofanoutstandinginnovation.•OptionforashareofthepatentrightsfortheEuropeanUnion.•Highpressureonthedevelopmentofrenewables market in the EU and Hungary resulting from the EU goals for 2020. (3rd Energy Package). •Expertiseoftheprojectdevelopmentteam.

Required amount of investment 2 million EuR

form of investment maximum 20% share in the project company


when the financing is in place), the main input data of the business plan is based on professional assumptions.

The preliminary Business Plan is for a four-year period.



[email protected]

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NOTES

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