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Heating Sector Policy Reform in Poland Adam Gula

AGH University of Science and Technology in Krakow Faculty of Fuels and Energy. Heating Sector Policy Reform in Poland Adam Gula AGH-University of Science and Technology, Kraków , Presented at International Conference Heating Sector Institutional Reform in the Former Soviet Union

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Heating Sector Policy Reform in Poland Adam Gula

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  1. AGH University of Science and Technology in Krakow Faculty of Fuels and Energy Heating Sector Policy Reform in Poland Adam Gula AGH-University of Science and Technology, Kraków, Presented at International Conference Heating Sector Institutional Reform in the Former Soviet Union Baku, Azerbaijan October 21, 2005

  2. POLAND – COUNTRY IN TRANSITION • 1980 August: Solidarity • 1989 First non-communist goverment • 1999 NATO • 2004 EU Accession

  3. August 1980 „Solidarity” December 1981 Marshal Law Summer 1988 Revival of „Solidarity” March 1989 Round Table June 1989 First democratic elections Since 1989 Transition (shock therapy) Political and economic transitionin Poland very visible in the heating sector:

  4. BACKGROUND • Old Economy • Heavy energy intensity • Idealogy-driven • No respect to environment - low energy efficiency - no interest in RES

  5. TRANSITION in the HEATING SECTOR from large state-owned structures (voivodship level = oblastnyj uroven) to smaller municipal units

  6. Municipal Space Heating Ownership/Legal Structure 80.5% Ltd companies 7.0% State owned 8.5% Stock Exchange Reg 2.5% Budgetary Units 1.5% Other More than 90% belong to the communes („gmina”)

  7. Heat supply/trade structure 73,6 % Own heat sources 16,0 % >75% from other sources 10,4 % mixed structure

  8. Space Heating Structure in Poland 27% individual heating 11% built-in boiler houses 20% municipal boiler houses (DH) 35% dedicated heat industries (CHP,..) 7% industrial sources

  9. Price: Transmission costs Energy costs both broken into fixed costs and variable costs component Fixed < 0.3 Total Prices regulated individually for each company bythe State Energy Regulatory Authorityon the basis of the „justified” eligible costs

  10. Heat price in PLN/GJ Net 1USD = ca 3 PLN VAT = 22% Source: State Energy Regulatory Authority, URE

  11. Transmission price/GJ Net in PLN 1USD=ca 3PLN VAT = 22% Source: State Energy Regulatory Authority, URE

  12. POLAND - A COAL-BASED COUTRY: 96% electricity generation, 89% primary energy • International Obligations (Kyoto and EU targets)

  13. Fuel Structure in the Heating Sector 90.33% coal 5.69% gas 3.62% heating oil 0.35% other (biomass)

  14. COAL BASED COUNTRY Electricity generation by sources (2001) : Coal power plants 57,5 % Brown coal power plants34,4 % Renewable energy2,8 % Industrial power plants5,3 %

  15. 624 532 KPRE with derogations + D 20000 + new sources KPRE without derogations + D 20000 + new sources SOx – NEC & LCP targets kton 3 000 2 000 NEC Goteborg 1397 1 000 LCP’01 1 462 857 804 AT 426 454 358 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Non-LCP sector Accession Treaty (AT) LCP sector Source: EdF-Polska

  16. 356 KPRE with or without derogations NOx – NEC & LCP targets kton 1 200 NEC Oslo 879 800 671 400 LCP’01 270 262 AT 251 254 239 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Accession Treaty(AT) Non-LCP sector LCP sector

  17. Total Polish CO2 emissions Sources: EDF Polska Environment Workshop; EETT2030; PP2030

  18. Goverment Plans: • Dominance of coal in „near” future • Increased use of gas • Decrease or „staus quo” in heat demand • Increased importance of local heat markets • Increase of the use of biomass

  19. International Obligations (Kyoto and EU targets) • Polish Energy Act(Energy Efficiency and RES) • Development Strategy of theRE Sector (2001) - 7.5 % RES in 2010 - 14 % RES in 2020 - 7.5% gross in 2010in the total electricity use • Ordinance of the Minister of Economy on RES ElectricityPurchase Obligation (2001)

  20. High investment costs: Effect of scale Huge marketfor lowcapacity biomass boilers(25-300 kW) estimated 400 000 units countrywide can be enhanced if international First projectin Trzcianne communein Northeast Poland - 41 small individual boilers (25-50 kW) - 3 larger ones (100-300 kW)

  21. The Use of RES in 2002 Biomass – 92% of the total RES (without large hydro) Source: ECBREC

  22. RES Potentials Hydropower - Poland - mostly a flat country Geothermal energy - significant potential,but - high investments costs Wind energy - onlyBaltic coast, offshore Solar energy - typical for this latitude Biomass - dominant

  23. BIOMASS !!

  24. Biomass • for energy • heat orelectricity? • or industry(paper, plywood..) • ? Relax!

  25. Rough Estimates according to ECBREC: 4%of green electricity from cofiring, 65 PJ chemical energy of delivered biomass 10-12 mln m3 wood per year ca. 3 mln m3 from forestry and 7-9 mln m3 biomass plantations i.e. ca. 300 000 hectares of energy plantations needed vs. 2 mln ha of available land

  26. Nationwide... seems to be no issue (300 000 ha vs 2 mln ha), but..... Locally.... draining of GreenHeating fuel burning of low quality coal ctd. (environmental impact) drives up costs of Green Heat (social impact)

  27. New RES Capacity up to 2010 - according to the RES Strategy Source: ECBREC

  28. GREEN ELECTRICITY DIRECTIVE 2001/77/ECis it productive or counterproductive ??

  29. Shortage RES Power Purchase Ordinance

  30. WOULD BE MORE EFFICIENTLY USED FOR HEATING PURPOSES LOCALLY or even INDIVIDUALLY BIOMASS IN POLAND

  31. Huge market for lowcapacity individual biomass boilers (25-300 kW) wood and (mostly) straw (at present most often usessly burned in the fields) estimated 400 000 units countrywide

  32. High investment costs: remedy Effect of scale + Support First projectin Trzcianne communein Northeast Poland - 41 small individual boilers (25-50 kW) - 3 larger ones (100-300 kW) In a single project (decreased transaction costs) (now to be scaled-up to ca 200 units)

  33. ENERGY EFFICIENCYHEAT SAVING MEASURESPolish Thermal Modernisation Act20% of the loan abolished

  34. Energy (primary) intensity of GDP in Poland [kgoe/000$] Source: Current situation in energy sector, Ministry of Economy

  35. Energy is wasted mainly where there is no money to invest in energy conservation

  36. Financial savings Improved comfort for low income families Jobs (especially local) Local economy Climate change (CO2 emissions) USAID Projects in PolandLOW COST MEASURES of SAVING ENERGY1992-1994, 1997-2000

  37. Draught-proofing of window carpentry elimination of parts of the overglazed surface the second or third pane insulation of attics using blow-in technology installation of the radiator shields other techniques selected by the auditor after a walk-through inspection on the building Low Cost Measures include

  38. Trends Coal seems to have secure future BUT Heat Suppliers increasingly interested in biomass: 160 companies and rapidly increasing: examples Straw: Lubań 8 MW, Czernin 5 MW, many other in the range about 1 MW Wood: Czarna Białostocka, Kępice, Jelenia Góra 3-5 MW and many smaller Demand stable or decreasing leads to necessity to attract new customers = competition mainly with gas and oil or individual coal

  39. THANK YOU Acknowledgements: My gratitude to co-authors of this contribution: Mr. Jacek Boron, President DH Company in Chrzanów, PRATERM Co. Mrs. Elzbieta Gula, The Krakow Institute for Sustainable Energy

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