Energy efficiency fuels the Polish economy

The industry was the first to notice the potential of saving energy. But it is also an opportunity for farms and small businesses.

The crisis is an opportunity for development and savings. The Americans saw this in the 1970s after the oil embargo imposed by the OPEC countries. The price of a barrel falling from $2 in 1970 to $30 in 1980 motivated automotive companies to improve engine efficiency.

After recovering from the oil shock, the economies of industrialised countries began to think more intensively than before about becoming independent from fuel imports and implementing alternative sources of energy production. In Poland, much is said about improving energy efficiency, also in the context of the untapped potential of this hidden fuel.

Industry as the leader

It was most quickly noticed by the industry. According to Zbigniew Szpak, President of the National Energy Conservation Agency (KAPE), the white certificates system has proved to work well. The certificates are awarded to companies investing in energy efficiency improvement.

“So far, all the completed and planned investments for which white certificates have been awarded will bring 790 ktoe (thousand tons of oil equivalent, 1ktoe is 11630 MWh) in primary energy savings. By 2020 we will have saved more than 18 Mtoe of primary energy, i.e. about 36% more than in the National Action Plan,” estimates the head of KAPE.

The greatest potential for efficiency growth can be seen today in the construction industry, but here we have to wait for the effects. On the other hand, business may not be inclined to save energy in the short term, because it focuses rather on increasing production. He believes that efficiency is increasingly associated with the use of renewable energy sources (RES).

Enginner Janusz Zyśk, PhD from the Department of Sustainable Energy Development of the AGH University of Science and Technology and an expert of the Polish Electricity Committee also considers millions of unheated and poorly insulated Polish homes to be the area with the greatest potential. “Looking at the structure of household energy consumption, the greatest savings can be made on heating and hot water preparation,” he points out.

System heating alone has made a significant leap forward in terms of efficiency improvement. In Poland, 33,000 MW of installed capacity of 55,000 MW is used. Sources work with an average efficiency of 85 percent, and transmission losses amount to about 11 percent. (ERO data from 2017). “These are really good results. However, we still see great potential for improvement. We have unused cogeneration potential (simultaneous production of electricity and heat),” says Jacek Szymczak, President of the Chamber of Commerce of Polish Heat and Power Engineering (IGCP). According to his estimates, approx. 3-4 thousand MW capacity could be built on the Vistula river. Diversification of the fuel structure of heat plants and heat and power plants burning mainly coal at present (75% of system heat sources use this fuel) will also be a challenge in the coming years. The sector is obliged to increase the share of renewable sources (up to 30% in 2030) under the Energy Efficiency Directive, which is part of the so-called winter package. The assumption is to reach the level of 30% of RES in the heating sector in 2030 and lower energy sales by 1.5% each year due to improved efficiency. The challenge will be to reach 17% of RES in 2020 in heating (the overall target is 15% of RES in final energy consumption). It is about the use of new technologies, because nowadays simple biomass combustion prevails. The industry is waiting for money from the programme prepared by the National Fund for Environmental Protection and Water Management, which is to finance two renewable sources (one depending on the weather and the other independent) together with a seasonal or short-term storage facility.

Potential of companies and municipalities

Polish companies and households could save about 3 thousand MW – as much as the planned nuclear power plant capacity.

“Thanks to fast and cheap technology, we can apply certain solutions in the field of energy optimization and energy management in office buildings and commercial properties. Thanks to the distribution of electricity and heat, we can achieve even 20-30% lower consumption. On the other hand, over 40 percent. gives us the flexibility to shift demand from hour to hour or even from minute to minute,” estimates Grzegorz Nowaczewski, President of VPPlant, who has made energy management her business idea. He adds that the next stage – after optimization of consumption in individual buildings – will be the launch of a virtual power plant, where such continuously optimized buildings connected in an ICT network can exchange the benefits of shifting the momentary demand for energy. An example is the possibility to quickly and cheaply charge electric cars in a small area.

For the time being, this is a vision for the future. Today, the problem is even to persuade companies operating in shopping centres to implement efficiency-oriented solutions. First of all, because the property manager includes energy costs in the price of rent. Secondly, some industries, e.g. meat industry, want to present their goods, lighting them with a special energy-intensive light bulb for marketing reasons.

Air conditioners have also become a standard in shopping centres and office buildings as they provide relief during the hot summer days. But here too, technologies and heating potential in our country could be of help. According to the head of IGCP, it is a matter of time when cold from system heat can be produced. “Applying this solution on a larger scale will help us increase the scale of efficiency improvement, because the heat will also be used in summer, but it will also relieve the system and enable an increase in electricity production in cogeneration,” explains Szymczak. The trend should first of all cover large cities, where there are most office buildings, as well as shopping centres. Only then will it move to multi-family buildings and finally – as in Finland – it will even reach the level of single-family housing.

Heating grids are a capital that cannot be overestimated. In combination with a nearby industrial plant, they can bring powerful synergy effects. “If we integrate such a plant into the heating system, we achieve savings of 20% at the very start. It is about the use of waste heat from technological processes, which the plant would still release into the air. Another 15-20 per cent optimisation is provided by activities related to energy management through consumption optimisation,” explains Sławomir Jurczyński, Member of the Board of Veolia in Poznań, Director for Development and Region. Digitalisation is the basis for offering efficiency improvement services to customers. Veolia is already implementing the first heat recovery projects from industrial processes and its use to power the district heating networks in Poznań and the Silesian City.

The future lies in heating systems based on multiple distributed sources of renewable resources and heat recovery. Those with a central heating unit will be a thing of the past. “If we include commercial buildings in such a system and manage their thermal nodes, some non-optimal elements of this system may be eliminated in the long run,” notes Nowaczewski. According to Nowaczewski, too many intermediaries providing services create conflicts of interest. Therefore, in the future, he sees the distribution network as an energy storage facility.

Mariusz Klimczak, Member of the Management Board of GeoSolar, agrees with this vision. “Warehouses in the grid would accumulate surplus energy produced in solar panels and wind farms, stabilizing the operation of these sources and making them independent of weather conditions. This would increase their efficiency,” he explains.

As he points out, business today is looking for solutions related to the implementation of its own generation sources due to the rapid increase in energy prices. It also sees the potential inherent in demand management. The biggest savings from the indicated 3,000 MW of potential demand reduction may be generated by self-governments and companies. These entities are already replacing bulbs with energy-saving LEDs. “Replacement of this element brings 60-65% savings by reducing the installed capacity, and in case of leaders – even 70%,” says Klimczak. “Further improvement is achieved thanks to the implementation of light intensity control systems, e.g. by programming street lamps that start when traffic is detected in moving cars,” he adds.

Homes with plenty opportunities for savings

Experts agreed that we still have a lot of work to do to increase efficiency in the construction industry. It is not just about a simple replacement of energy-efficient equipment. Zyśk argues that the potential savings would be small, because RTV and household appliances consume only 7% of the energy in our homes. What is more, the replacement of fridges or washing machines with appliances of a higher class just because of their greater energy efficiency would be more harmful to the environment, because energy is also needed to produce the equipment. The head of KAPE claims that consumers with a higher energy efficiency class choose conscious consumers, so educating the public is a prerequisite for increasing sales of A++++ class equipment. Paradoxically, white goods retailers add a kettle that consumes more energy to a better class fridge as a bonus.

However, the main source of savings will be the insulation of hundreds of thousands of uninsulated houses in Poland. This is the purpose of the government programme „Clean Air” run by the Ministry of the Environment with a 10-year budget of PLN 103 billion managed by the National Fund for Environmental Protection and Water Management. Although the budget seems to be quite large, the needs are even greater. According to a World Bank report from May this year, out of the about 5.5 million single-family houses in Poland as many as 85% of them need to replace their boiler and 2/3 of them are not insulated. In order to solve this problem, it would be necessary to make investments estimated at about PLN 150 billion. “The main objective of the „Clean Air” programme is to fight against smog. An extremely important aspect related to achieving this goal is the continuous improvement of energy efficiency, although this is not a goal in itself, but as a task contributing to the improvement of air quality. One of the tools, among others, is thermal upgrading of single-family buildings and liquidation or replacement of inefficient and highly emitting heating sources,” explains Przemysław Hofman, director in the Department of Low-Emission Economy at the Ministry of Entrepreneurship and Technology. As he emphasizes, it is important to implement both measures at the same time – changing the source of heating and insulating the building. The exceptions are situations in which single-family houses have already been insulated or connected e.g. to a heating or gas network. The programme is to provide support for such investments in the municipal sector, as it is the source of most of the pollutants released into the air.

The Clean Air programme consists of two tracks. On the one hand, the funds from the National Fund for Environmental Protection and Water Management are to serve as a universal incentive for all citizens with their own funds or creditworthiness (for whom the subsidy in the form of grants ranges from 30 to 90 percent, which can be supplemented by obtaining an additional loan from the same source). On the other hand, the state sees the need to provide 100% financial support for single-family households qualified to the group of the so-called energy-poor households. The number of such households in Poland is estimated at about 850,000 (according to research, as many as 87% of them are located in cities of up to 100,000 inhabitants). According to calculations by the Institute of Structural Research, people affected by this phenomenon constitute about 12% of the Polish population (3.5-4 million people).

Who can count on the support

“The funds will be channelled primarily to cities with a population of up to 100,000 people, including, among others, the municipalities included in the World Health Organisation’s list of the most polluted cities in Europe,” indicates a representative of the MPiT. The government money is to cover up to 70% of needs. The rest will be provided by municipalities from various sources. The self- governments are also to decide on the implementation of the most optimal solutions in a given place, e.g. construction of a heating or gas network, installation of RES sources and heat pumps or replacement of domes with less emission boilers.

According to experts, a smog reduction programme is a step in the right direction. However, the weak points of the programme are pointed out. “If we replace poor quality furnaces with fifth generation boilers, but still coal-fired, we will legalise sources burning fossil fuels for the next several years. This will not solve the problem, it will only prolong it,” notes Jurczyński. He also draws attention to not taking into consideration the poor living in blocks of flats and in multi-family buildings, who cannot afford to modernise the internal installation, which generates huge losses.

Szymczak, on the other hand, argued for the application of individual heating solutions only there, where the construction of a network would not be economically efficient. He admitted, however, that system heat will also become more expensive, but mainly due to the costs independent of enterprises. “In the heating system after 2030 there will be no more room for coal. In large and even small towns up to 100,000 people could still connect buildings to the network, but in many cases its rapid development is a barrier. It can take up to two years to agree with many owners and often end up in court,” explains the head of IGCP. Therefore, the industry postulates the creation of legislative solutions enabling more efficient investments.

The President of KAPE postulated the introduction of clean air to the programme of cyclical verification of the effects achieved, as well as making it more flexible, among others, by admitting small and medium-sized systems to the group of beneficiaries.

“PLN 100 billion is a lot, but also far too little,” said Klimczak pragmatically. He believes that money from the government programme will be used ineffectively. Because it is governed by the public procurement system on which the administration is based. “A greater benefit for the environment would be to use it to co-finance projects of companies building systems with multiple solar sources and control systems allowing for their management. The companies would earn money by selling the effect, i.e. thermal comfort, to their customers,” he adds.

A representative of MPIT assured that the assumption is that it is the municipalities that can choose the best solutions for a given location from their entire range. He promised to supplement the program with dedicated tools for revitalization of tenement houses in large cities, for which it seems ideal to provide a gas or heat network (except for those under conservation care, where other activities may be necessary). The Ministry also wants to work with the Minister of Investment and Development, Energy and the heating and gas sector to develop regulations facilitating and improving investment in the heating network.