As sustainable energy moves up the political agenda, low carbon solutions for heating and cooling are coming to the fore. Every year, almost 50% of the total energy consumed in Europe is used for the generation of heat for domestic or industrial purposes. There is an emerging consensus on what could be a big part of the solution here, with the International Energy Agency recently citing co-generation and district heating as ‘an essential part of strategies for greenhouse gas emissions mitigation and energy security.’

Close to 16 million Polish citizens are served by district heating, representing 41 % of the population. However, rehabilitation of the existing transmission and distribution network is urgently required (as almost half of the distribution network is older than 20 years). More than half the heat supplied to the network is produced through traditional installations, consequently there is potential for 25-30% fuel savings by developing heat production in combined heat and power plants.

At national level, the ‘Polish Energy Policy until 2030’ aims at ‘a double increase, by 2020, in electricity produced in co-generation technology, as compared to production in 2006’. Changes in construction law of 7 July 1994 (Article 33 paragraph 2 item 6) introduced by the Law on Energy Efficiency of 15 May 2011 resulted in a provision imposing an obligation to connect buildings (for which the expected peak thermal power of installation and equipment for the heating of these buildings is not less than 50 kW) to the district heating network where practicable, and specifies that ‘in the source powering the heating network, no less than 75 % of the heat throughout the calendar year is generated from renewable energy sources or the heat is co-generation or waste heat from industrial plants’.

There’s also a policy push on from Brussels by way of the Energy Efficiency Directive (Article 14). By the end of 2015, all member states are required for the first time to submit to the European Commission a comprehensive assessment of the potential for the application of high efficiency CHP and efficient district heating and cooling. What’s more, members states are obliged to ensure that cogenerated electricity from high efficiency CHP gets guaranteed transmission and distribution, priority or guaranteed access to the grid and priority of dispatch in so far as the secure operation of the national electricity system permits.

Speaking about the prospects for market development in Poland, Boguslaw Regulski from the Chamber of Commerce Polish District Heating said,

'District heating is vital for maintaining energy security in Poland. It’s important now to invest in environmental protection, which means improving the efficiency of heat production along with modernizing and expanding our existing heat networks. We must bring low carbon technologies and renewables on stream – and ensure affordable heat for our citizens.’

Switching to renewables

Work is ongoing to optimise the operation of existing heat networks, with the aim of reducing heat losses and improving the safety and comfort of consumers. Upgrades include the replacement of channel pipelines (heating pipelines installed in concrete casings) with pre-insulated ones, reducing unnecessary pipe diameters and the introduction of intelligent network management. Heat source upgrades include the construction of cogeneration units, and modernising coal-fuelled heating plants by enabling co-firing or fuel switching with biomass and other renewables.

There is concern, however, that modernising coal-fuelled plants and enabling co-firing is not addressing the more fundamental change that energy security and the climate challenge calls for, namely transition to a low carbon economy. It’s also a matter of using local resources, as more Polish regions have potential for renewable energy production than coal in the ground. Hard coal is located in three areas; and although renewable capacity cannot yet match coal in production volume, the spread of RES potential across regions is much more diverse.

Achieving European recognition in the 2014 ManagEnergy awards, a small community in the province of Warmia-Mazury, Kiselice’s first major installation of low carbon technology was a district heating network connected to a six-megawatt biomass boiler plant that runs on cereal straw bought from local farmers. The network supplies some 250 buildings, serving more than 90 % of the population. The heat network was initially financed by a national loan, the community budget and a small grant. Tax revenues from the wind farm and European Regional Development Fund grants funded the expansion of the network.

In December 2013, Kiselice brought additional sustainable heat on stream as construction of a biogas power plant was completed. The plant produces one megawatt of heat and one megawatt of electricity and is fueled by silage corn supplied from local fields, providing extra income to many local farmers. Waste heat from the plant supplies the village with hot water during the summer months. The biogas plant was financed through grants and private funds.

Video: Jerzy Buzek congratulates sustainable energy community Kiselice.

Regional energy planning

In terms of energy governance, the regional agenda is rising in importance. From 2014-2020, European Structural & Investment (ESI) Funds will channel more than EUR 38 billion into the low carbon economy, more than double the amount allocated in 2007-2013. Poland is emerging as a big winner here, with more than EUR 8 billion of funding available for the low carbon economy between 2014-2020. Moving away from the grants-based culture, the emphasis now is on using financial instruments (guarantee funds, revolving loans, soft loans, equity, etc) to combine public and private funding and maximise the impact of the funds.

In recent years, Mazovia Energy Agency has gained significant experience in using financial instruments for sustainable energy projects at local and regional level. Through the JESSICA initiative, an urban development fund was created for the Mazovia Region in September 2012 (The Mazovia Managing Authority is the fifth regional authority in Poland, following the Wielkopolska, Westpomerania, Silesia and Pomerania Managing Authorities, to establish a JESSICA Holding Fund with the aim of deploying ESI Funds for investment in cities). The urban development fund (managed by BGK) will invest EUR 39 million into projects in the region.

Mazovia Energy Agency is responsible for the evaluation of energy projects, providing expert assistance to the JESSICA beneficiaries and ongoing monitoring of activities. At time of writing, eleven projects of a total investment value of EUR 66.44 million had been signed (including PV, gas co-generation and energy infrastructure in the form of district heating). Investors include district heating companies, municipal and other utilities.

Speaking about the JESSICA experience, Bartosz Dubinkski, CEO of Mazovia Energy Agency said:

‘When we started, people wanted subsidies, not loans. Then project developers realised that it was cheaper to have a loan in the project than a grant, and the attitude changed. It was hard work to ignite the process, but we now have completed projects with good results and you can see the positive impact, people are catching on. Already there are ten projects in the pipeline and strong investor appetite – we’re experiencing a snowball effect.’ 

And it’s from the local and regional level that the real drive for change could come. Hundreds of Polish municipalities have local sustainable energy plans in place.

The National Fund for Environmental Protection and Water Management (NFOS) are playing a key role here, in supporting the development and implementation of these sustainable energy plans through training, capacity building and subsidies via the European Structural and Investment funds.

Synergies between funding instruments (EU programmes combined to finance different phases of the same project) is strongly supported going forward – between ESI funds, Horizon 2020 and transnational programmes such as INTERREG.

Project funding available under Horizon 2020

Launched in 2003, the Intelligent Energy Europe (IEE) programme has supported many projects in the heating and cooling sector.  From 2014 onwards the type of activities supported by Intelligent Energy Europe are funded under the European Union’s Research & Innovation Programme Horizon 2020, where opportunities for financing sustainable heating and cooling projects include:

• EE13: Technology for district heating and cooling
• EE14: Removing market barriers to the uptake of efficient heating and cooling solutions.
• Market uptake of existing and emerging renewable heating and cooling technologies, LCE-4
• Enhancing the capacity of public authorities to plan and implement sustainable energy policies including activities on heating and cooling planning, EE7
• Project development assistance for innovative bankable sustainable energy investment schemes and projects including district energy infrastructure investments are supported in H2020, EE-20
• Support for the demonstration of renewable heating and cooling technologies is provided in LCE-3
• Smart Cities and Communities, SCC-1
• R&D for the utilisation of heat recovery in large industrial systems, EE18

Find out more about the activities being supported under the Intelligent Energy Europe programme 2010-2013 in the area of heating and cooling here.

Antonio Aguilo Rullan, EASME

According to Antonio Aguilo Rullan, project advisor on energy efficiency programmes at European Commission agency EASME who are administering the energy efficiency (EE) topics in Horizon2020,

‘There will be significant focus on this topic in 2015. People are starting to realise the need for sustainable heating and cooling solutions in the energy transition.’

A high level conference focusing on the role of heating and cooling in the European energy transition will take place on 26-27 February 2015 in Brussels.

Managenergy