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Veolia enters virtual power plant market in Hungary

Energy company Veolia Hungary has announced the creation of its own virtual power plant (VPP) portfolio, with the acquisition of a 51% ownership share in CHP Erőmű Kft. representing the first step in the process, according to a press release sent to the Budapest Business Journal.

The company currently combines three small gas engine power plants into one regulated unit with a total electricity production capacity of 30 MW. Veolia is planning to integrate the combined cycle plants from Nyíregyháza and Debrecen into the same system, as well as its gas engine power plant park, making the company a significant player on the regulated market as well.

The agreement of Veolia Energia Magyarország Zrt. to buy a 51% ownership share in CHP Erőmű Kft. was signed on October 16. As a result of the transaction, Veoliaʼs portfolio will be expanded by small gas engine power plants in Újpalota (Budapestʼs District 15), Eger, and Dunakeszi. CHP already organized the three power plants (total production capacity: 30 MW) into a virtual power plant, controlled by a dispatch center in Budapestʼs District 11.

Linking the small plants and controlling their production makes it possible to bind their operation to real-time consumer needs and to sell their electricity in different market segments, on the Hungarian Power Exchange (HUPX), on the market of systematic services, and directly to end users.

"The creation and operation of virtual power plants is the most innovative area of energy in Hungary, as the fluctuation of consumption, and the spreading of weather-dependent renewable energy sources, drive demand for the regulation of the unevenness of electricity production in Hungary," explained Ferenc Fernezelyi, Veolia Hungaryʼs commercial director, noting that the company wishes to enter this rapidly expanding market segment.

Veolia is planning to integrate the linked power plants in Nyíregyháza and Debrecen, as well as its gas engine power plant park and renewable power producers into this system in the future.

"The platform needed for our entry into the regulated market is provided by CHP Erőmű Kft.ʼs virtual power plant, and with further integration of power plant units, we will become one of the biggest players in this market too," said Fernezelyi. Linking the capacity of Veoliaʼs flexible plants, acquired over the course of the past few years, into a virtual power plant makes optimal usage possible, according to the commercial director.

Buying the majority of CHPʼs ownership also means that Veolia will enter the Budapest teleheating market, as heat produced by the Újpalota plant will be taken over by Budapest district heating service provider FŐTÁV Zrt.

"As a result of the new acquisition, Veolia Energia Magyarország Zrt.ʼs activities now cover the whole value chain on the Hungarian energy market, ranging from gas and biomass trade, as well as heating production and services, to electricity production and sales," noted Fernezelyi. "As a strategic partner of the Hungarian government, Veolia Energia Magyarország Zrt.ʼs aim is to contribute to the spreading of innovative technologies and solutions in Hungary as a professional investor thinking in the long run, as well as strengthening the safety of Hungaryʼs energy supply."