According to data from the Central Statistical Office, more than half of Poles heat their homes with district heating. They are still protected against huge increases by the anti-inflation shield maintained by the current Sejm. When it stops working, you may have to choose between a warm home and paying your bills. However, the situation is complicated not only for heat consumers, but also for its producers. Increasingly stringent regulations pose huge challenges for the entire industry.
- Between 2012 and 2022, the market for air/water heat pumps in Poland increased over 100 times. The rising costs of district heating also made households giving up coal stoves more likely to choose gas boilers.
- District heating in Poland is mainly based on coal, which inevitably results in high exhaust emissions. Production plants, however, focus on current operations and do not have resources for investments that could improve this state of affairs.
- The sector burns approximately 14.5 million tons of coal annually, which means it is necessary to purchase an appropriate number of CO2 emission allowances. Although we have been observing a significant price correction for several months, they are still disproportionate to the revenues of many heat and power plants.
- Prices of CO emission allowances2 in 2023 they ranged from 100 to 60 euros. In a free market economy, fluctuations in the costs of EUA certificates and necessary fuels could be compensated by increasing prices for heat and electricity for consumers.
- The growing problems of the industry are also visible in the data collected by BIG InfoMonitor. The overdue debt of entrepreneurs producing and supplying steam, hot water and air for air conditioning systems recorded in this register in 2023 increased by 13%.
However, the maximum level of heat prices is set by the Energy Regulatory Office, and electricity prices depend on DAM quotations or are limited by maximum rates.
Legislators, offices, ecologists, heat consumers, raw material suppliers, employees, dependent plants, local governments, etc. Expectations towards the heating industry come from many directions, but they are often opposite to each other.
The ideal situation in which we have cheap, zero-emission heat produced in modern plants and without the need for any investments is too much even to dream of.
District heating in Poland is mainly based on coal, which inevitably results in high exhaust emissions. Production plants, however, focus on current operations and do not have resources for investments that could improve this state of affairs.
The situation of heating in Poland is quite complicated and undoubtedly requires changes. This is a sector that has many challenges ahead, but also opportunities for development. We now face not so much a necessity, but rather an opportunity to create a modern, clean and safe heating system that will serve the social and economic good. However, this requires investments requiring multi-million, or rather multi-billion, outlays, says Sławomir Wołyniec, president of the Altum Group.
The heating industry is trapped in CO emissions2
However, the transformation of heating in Poland will be very expensive and rather long-lasting. It requires specific investments in low- and zero-emission energy sources. In the current situation, collecting funds for investments has become impossible.
The sector burns approximately 14.5 million tons of coal annually, which means it is necessary to purchase an appropriate number of CO emission allowances2. Although we have been observing a significant price correction for several months, they are still disproportionate to the revenues of many heat and power plants.
Prices of CO emission allowances2 in 2023 they ranged from 100 to 60 euros. In a free market economy, fluctuations in the costs of EUA certificates and necessary fuels could be compensated by increasing prices for heat and electricity for consumers. However, the maximum level of heat prices is set by the Energy Regulatory Office, and electricity prices depend on DAM quotations or are limited by maximum rates. It may be hard to believe, but the facts are that in many cases they do not even cover the costs of fuel and CO2 emission allowances.2not counting other costs – explains Sławomir Wołyniec.
The growing problems of the industry are also visible in the data collected by BIG InfoMonitor. The overdue debt of entrepreneurs producing and supplying steam, hot water and air for air conditioning systems recorded in this register in 2023 increased by 13%.
District heating is becoming less and less popular
Between 2012 and 2022, the market for air/water heat pumps in Poland increased over 100 times. The rising costs of district heating also made households giving up coal stoves more likely to choose gas boilers.
The development of individual sources, improvement of thermal insulation of buildings, and ultimately climate change result in a reduction in the demand for district heating. As a result, the profitability of the entire network decreases, which makes modernization much more difficult. Lack of investment leads to destabilization of heating systems, which often require renovation, are inefficient and vulnerable to failures.
Moreover, as noted by the president of the Altum Group, Sławomir Wołyniec, most systems do not meet EU requirements regarding cogeneration, i.e. simultaneous production of heat and electricity.
Therefore, the government introduced a compensation mechanism for system heat recipients, which was to limit price increases in 2023 to a maximum of 40%. compared to September 2022. Compensation was to be paid to heat producers who were obliged to sell heat at a lower price than the cost of its production – explains Sławomir Wołyniec.
Therefore, recipients of system heat should be prepared for the possibility of increases or interruptions in heat supply if the situation on the energy market does not improve.
Unfulfillable obligations, falling demand and rising costs of generating system heat affect not only heat energy producers, but soon also its recipients. Unless state authorities intervene in this matter again.
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