PECS — When they first took the plunge two years ago, farmers around Pécs may have only seen it as a way to improve profit margins. Certainly nothing wrong with that. But as time went by, their foray into alternative energy production turned out to be much for this group of 50 pioneers, who live and work in the heart of Hungary"s great cereal-growing plain of Pannonia.

"Since we started working with the power station to supply it in straw, our revenues have doubled," says Ilona Hovathné Pinter, while her husband, driving his forklift truck, is busy moving huge haystacks that weigh several hundreds of kilos per unit.

At the Pannon Power cogeneration unit, a subsidiary of Veolia, 60 convoys of the same type unload their shipments every day. The material is fed into a 28 meter-high beast of an oven that swallows 600 tons of flammables every day (200,000 tons per year) to produce electricity and heat. The energy supplies Hungary's national power network as well as the 1950s-era heating network in Pécs, a fast-growing city that is now the country's fifth largest, with an estimated population of 155,000.

The facility, via a second boiler, also uses waste wood (400,000 tons per year) from logging companies and sawmills. Together, the two fuel sources generate 85 megawatts of electricity — a source of price for György Palko, the head of Veolia Hungary. "There is no other network of this scale in Europe that distributes energy and heat produced 100% from biomass," he says.

The plant's total reliance on biomass is all the more impressive given that overall, green energy represents just 13% of total electricity output in Hungary, where for decades "all things coal," long extracted in the hills of the Mecsek, along Pécs, and "all things gas" reigned supreme.

"All things biomass" took over by offering energy efficiency that is at least equivalent, but with less harmful effects on public health and the environment. The "new" Pécs, plant operators are pround to point out, produces 400,000 tons of CO2 less than it would by using natural gas.

A theoretically exportable model

Biomass is also significantly cheaper than natural gas. The operators now spend about half as much to produce the same amount of electricity. The Veolia subsidiary has not, however, passed the savings along to consumers, who continue to pay the same retail price of approximately 9.50 euros per gigajoule.

The price of straw, which is harvested locally (the supply sources don't exceed a 50-kilometer radius) and is abundant, is very stable. The same is true for local waste wood, which is far less expensive than wood imported from Russia, where prices have tripled in barely 20 years. That's another benefit of biomass: It has given Hungary more energy independence from its former "brother country." The model has also provided employment opportunities: approximately 400 permanent positions plus 500 seasonal jobs during the straw harvest.

Can other countries follow this example? Difficult to say. France, for example, has no lack of cereal crops or heat networks. But producers there might have trouble following a model that is heavily supervised by state, to the point that Hungarian authorities even dictate profit decisions.