05 Jul 2023

Plan to decarbonise district heating at PGE Group

Sponsored article by PGE Group: the leader in energy transition in Poland

PGE Group is the leader in energy transition in Poland. Thanks to our stable market position, expertise and ambition that led us to declare the goal of climate neutrality as one of the first Polish utilities, we are at the forefront of a massive investment programme. District heating has great potential to accelerate its decarbonisation. For example, in Poland, around 40% of households make use of district heating, giving a total of 6 million users. However, considering the specificities of existing district heating systems, particularly in Central and Eastern Europe, the evolutionary transformation of district heating will be essential. For example, the biggest challenge in the upcoming years is high temperature required in the networks, which cannot be provided by low-temperature renewables, whereas building stock in Poland is largely energy intensive. Acknowledging these conditions was crucial for the Polish sector during negotiations on the most important files of the "Fit for 55" package, namely the Energy Efficiency Directive and Renewable Energy Directive, being already agreed at the EU level.

Where do we start?

Compared to other European Union’s countries, Polish district heating distinguishes by its scale. Urban agglomerations are covered by large-scale district heating systems with high production capacities (i.e. hundreds of megawatts of ordered thermal capacity). Nearly 6 million households in Poland, out of a total of around 14 million, use this type of heating and the total length of heating networks in Poland amounts to over 22 000 km. These figures prove Poland to be one of the key EU’s district heating markets. To that end, the share of heat generated in cogeneration supplied to district heating systems in Poland is approximately 66%. And although the energy mix is still dominated by coal at almost 70%, efforts are being made to upgrade inefficient heating plants to low-emission, high-efficiency combined heat and power plants, mainly to phase out coal in heat generation.

PGE Group in the district heating sector is responsible for generating ca. 20% of heat in Poland and, by operating 16 CHP plants, delivers heat supply to ca. 2 million users.

How are we going to act?

PGE Group’s strategy aims to strengthen our position as a leading supplier of heat and to contribute to the fight for clean air in Polish cities. PGE Group will become climate-neutral by 2050. At PGE, coal-based heat generation is expected to end by 2030. In fact, by the end of 2024 heat generation based on coal will be terminated in our branches in Lublin, Rzeszów, Zgierz and Gorzów Wielkopolski. In total, there are about thirty investments in the implementation and planning phase at PGE Energia Ciepła, which will permanently change the face of the Polish heating industry in the next few years. New sources will produce heat from natural gas, municipal waste and renewables of various kinds with a contribution of utilising waste heat as well. In several of our locations, PGE is assessing the possibility of building large-scale heat pumps. However, as district heating markets are diversified due to the local conditions, all alternatives to replace solid fossil fuels (for example geothermal facilities) are taken into account.

[Grafika z mapka aktywów PGE obecnie i po ukończeniu procesu dekarbonizacji]

We are facing challenges that are extremely important for the future of heating industry in Poland, so that it can continue to function and ensure energy security. Poland is a specific market when it comes to heating. For example, the volume of district heat generation by PGE alone amounted to almost 50 PJ in 2022. The Polish district heating industry must develop itself towards zero and  low-emission sources and extend the services provided to our customers.”- concludes the President of the Management Board of PGE, Wojciech Dąbrowski.

Power-to-heat as an option for sector coupling and large-scale district heating

Centralised district heating systems are a natural storage system for thermal energy – creating an opportunity to develop power-to-heat sources. In combination with the ability to store heat they can serve to utilise renewable electricity at times when power system is oversupplied – thus improving its economics. Power-to-heat is a great example of establishing sectoral integration at local level. Technologies such as electrode boilers fueled with renewable electricity and large-scale heat pumps are key to provide both base and peak heat demand and will significantly contribute to successful decarbonisation of district heating.

In 2021 PGE commissioned an electrode boilers facility in Gdańsk. This is the first implementation of such large-scale power-to-heat installation in Poland. It consists of two electrode boilers of 35 MWt each and enables a quick response to changing heat demand to start operation in just a few minutes. Since launching the investment 8500 GJ of heat was generated which contributed to the avoidance of 920 tonnes of CO2 and combusting 440 tonnes of coal fuels.

[Zdjęcie kotła elektrodowego w odrębnym załączniku]

With electricity generated from renewables and great scalability potential, power-to-heat technologies contribute to achieving the goal of climate neutrality. These energy sources are a necessary element of phasing out of fossil fuels in district heating and provide for reliable measures to decarbonise building stock in urban agglomerations. Electrode boilers also offer tangible opportunities for the power system via facilitating excessive renewable electricity generation to avoid any curtailments. Their technological features make them a flexible peak-demand heat source suitable for colder EU regions.

Decarbonisation of the district heating sector under the “Fit for 55” package

EU energy and climate policy will significantly impact the further development of system-based district heating in Poland. In this context, the most important are the provisions in the “Fit for 55” legislative package proposed by the European Commission and – for the most part – already agreed by the European Parliament and the Council, in particular Energy Efficiency and Renewable Energy Directives.

The most important regulatory changes pertain to a new definition of an efficient district heating and cooling system as of 2028, a new emission criterion for high-efficiency cogeneration of 270 gCO2/kWh for new units (the same will apply for the existing ones from 2034) and new possibilities to count renewable electricity towards district heating and cooling renewable energy targets.

According to the latest report by Polish Association of Professional Heat and Power Plants (PTEZ), meeting the requirements of the EU’s “Fit for 55” package in total will require, in Poland’s case, depending on the scenario, expenditures from EUR 61 billion to EUR 93 billion for the decarbonisation of the district heating sector. The cost will be disbursed unequally depending on the size of a heat market and feasible technological mixes.

In any case, the new ambitious trajectory of decarbonisation of district heating will be a cost-intensive process under Polish conditions, requiring fundamental changes in terms of, among other things, adapting consumer installations to lower network temperatures, a prerequisite for integrating higher volumes of low-temperature heat from renewable energy sources. The relationships between the impacts of the directives analyzed confirm that effective reduction of the carbon performance of system heat generation in Poland, although already underway, will require the involvement of all key stakeholders over the long term.

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