Economic analysis of combined heat and power plants participating in the district heating service of BudapestPublished: 1 of February, 2018

With energy efficiency and climate policy requirements and lingering uncertainty over the future role of gas, a number of questions face the future of gas based combined heat and power plants (CHPs) that currently participate in district heating. In our analysis, we present key business data from the prior fiscal year for the power plants with a notable weight in the district heat supply of Budapest (Budapest Power Station (BERT), Alpiq Csepel, MVM North-Buda Heating Plant), pointing out some of the factors that explain the difference between their business performance, especially the effects of taxation. The
investigated power plants are active market participants in both the electricity and the heat markets, therefore data inputs reflect the performance of both business lines. The three BERT and single MVM CHPs operate as heating plants, thus their primary purpose is heat production and power generation is secondary. The production of the Csepel Power Plant, on the other hand, is driven to a much higher extent by the electricity market with a much smaller proportion of heat production. An analysis of the business line reports based on the rules of accounting separation can help provide a more nuanced picture of the recent performance of each power plant, highlighting their similarities and differences, and heat and power market strategies with projected district heating market potential.