Poland's promising market segments for heating with solid biomass ...

Poland’s promising market segments for heating with solid biomass (> 100 kW)

Horizon 2020 Coordination and Support Action number 646495: Bioenergy for Business „Uptake of Solid Bioenergy in European Commercial Sectors”

Deliverable No. D.2.1 “Country Summary Report of promising market segments for

use of bioenergy”

Dissemination Level Public

Partner Name The Polish National Energy Conservation Agency

Work Package 2 In-depth analysis of market segments

Status Final Version

Task 2.4 REPORT

Authors Bartłomiej Asztemborski Ryszard Wnuk

Client European Commission Innovation and Networks Executive Agency

Horizon 2020, LCE-14, 2014

Date: Warsaw, July 2015

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LEGAL DISCLAIMER

This document is funded under the LCE 14-2014 Support Programme „Market uptake of existing and emerging sustainable bioenergy“, as part of the Horizon 2020 Framework Programme by the European Community.

The content of this document reflects solely the views of its authors. The European Commission is not liable for any use that may be made of the information contained therein.

The Bioenergy4Business consortium members shall have no liability for damages of any kind including, without limitation, direct, special, indirect, or consequential damages that may result from the use of these materials.

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Executive Summary

Poland is one of the European leaders in forest area and lumber production from 1 hectare of forest. The image below shows the abundance (m3/ha) of wood in chosen countries. In 2013 this was 9177.2 k ha, so 29.4%. Poland’s significant forest cover gives reason to develop a forest economy, including the use of forest wood to produce biomass.

The biomass energy market in Poland is less developed than that of fossil fuels, and is restricted to wood residues. However it is continuously growing, primarily due to the recently dynamically developing use of wood biomass in co-firing with coal for power and heat generation.

The majority of energy from biomass in the energy industry is generated using co-firing processes in high capacity coal condensing boilers. The main source of wood biomass fuel using in co-firing are wood chips. The inland pellets consumption in 2012 was 0,35 M tonne. The total biomass consumption of electricity consumption in 2012 was 10 M tonne, 19 M tonnes was allocated to heat production. So the pellets consumption was allocated both for heat and electricity generation. The share of pellets of electricity generation in co-firing is could be estimated at 1,1 M tonne (7,5 M tonne of biomass generally uses to co-firing).

85 % of all biomass boilers are appliances up to 300 kW. In this segment the target group consists of individual customers and institutions, who buy boilers or heating appliances for producing heat for their own needs or as a replacement.

Contents

1 INTRODUCTION 7 2 FOSSIL FUEL USAGE IN POLAND 8 2.1 Share of fossil fuels in gross inland energy consumption 8 2.2 Domestic usage of fossil fuels 9 2.3 Prices of fossil fuels, biomass 12

3 POLAND’S SUPPLY SITUATION OF SOLID BIOMASS FOR ENERGY PURPOSES 14 3.1 Energy wood from domestic forests 16 3.2 By-products of wood-based industries 17 3.3 Pellets 19 3.4 Straw and other agricultural residues 20 3.5 Development stage of the domestic biomass supply 21 3.6 Development stage of domestic solid biomass combustion technology 21

4 POLAND’S SOLID BIOMASS BOILER MARKET BEYOND 100 KW HEAT LOAD 24 4.1 Number of domestic installations of solid biomass boilers 24

5 RESULT OF STAKEHOLDER INTERVIEWS 26 5.1 List of interviewees 26 5.2 The most promising bioenergy sources 27 5.3 The most promising market segments 27 5.3.1 Criteria for selection of promising market segments and their influence regarding market

penetration 31 5.3.2 Summary of the most important factors that influence the success of market introduction at the

most promising market segments 34 5.4 Most promising market segments abroad – view from Austrian market actors 35

6 CHARACTERISATION OF PROMISING MARKET SEGMENTS (FACTS & FIGURES) 37

6.1 Biomass availability and energy consumption 37 6.2 Biomass promising market sectors 41 6.3 CO2 mitigation potential 42

7 ANNEX I – POLISH ENERGY FLOW CHART 45 8 GREENHOUSE GAS EMISSION FACTORS 47

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1 Introduction

The Horizon 2020 project Bioenergy4Business aims to increase the usage of bioenergy through an (at least partial) fuel-switch from coal, oil or natural gas, which are used in “in-house” boilers in commercial sectors for heat purposes or in district heating, to solid biomass sources. The erection of completely new biomass heat applications is considered as an option as well. Bioenergy4Business focuses on solid biomass sources and on medium and large heat-only boilers (> 100 kW heat load) providing low temperature and process heat for commercial usage.

Bioenergy4Business builds bridges between policies and markets to support the creation of an enabling environment, the use of sound business and financing models and the careful assessment and implementation of bioenergy heat in local and district heating and in “in-house” applications. These aspects are considered for the most promising market segments among industry and commerce, residential buildings, agriculture and commercial and public services.

Bioenergy4Business involves partners from 12 EU Member States and Ukraine. 11 of these project partners (AT, DE, BG, CR, FI, GR, NL, PL, RO, SK and UA, except BE and DK) are target countries, where tailor-made activities for the most promising market segments will take place from January 2015 until August 2017.

Figure 1: Countries where Bioenergy4Business is implemented.

Bioenergy4Business helps exploiting the considerable economic and sustainable potential of European bioenergy sources for heating, which are locally available at reasonable prices. These can offer a viable alternative to vulnerable European businesses currently depending on fossil resources, which are often imported from politically unstable regions.

Bioenergy4Business makes new market segments for solid biomass usage accessible and enhances the use of both more solid biomass sources and so far not used ones (e.g. pellets, straw etc.) in European heat markets.

National contact point: Bartłomiej Asztemborski [email protected]/ Ryszard Wnuk [email protected]

mailto:[email protected]/

mailto:[email protected]

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2 Fossil fuel usage in Poland

2.1 Share of fossil fuels in gross inland energy consumption

The Polish energy sector is first and foremost reliant on fossil fuels i.e. coal. In 2014 the energy consumption from fossil fuels was 1086 TWh (92%), with a clear lead for coal (coal, lignite and coke). More than 7% of the domestic energy consumption was generated from renewable energy sources, i.e. biomass, biogas, hydropower and wind. Graph 1. shows the domestic energy consumption divided into fossil fuel and non-fossil fuel energy carriers.

Figure 2: Gross inland energy consumption in Poland (2014)

Source: Central Statistical Office: Energy 2015

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2.2 Domestic usage of fossil fuels

Coal

In 2013 Poland’s coal consumption was 77 300 000 tonne (547,5 TWh). According to the data of the Central Statistical Office the largest amounts of coal were used by power and CHP plants, industry, construction and households. The table below shows the use of coal in 2013.

Table 1: Coal consumption in Poland (2013)

Total consumption in kt TWh

77300 547,5

Energy industry power and CHP plants 40679 288,00

Energy industry heating plants 1527 10,8

Non-industrial heating plants 244 1,73

Industrial heating plants 3569 25,28

Industry and construction 17883 126,67

Transport 29 0,21

Small scale users 13370 94,70

Agriculture 1600 11,33

Domestic households 10770 76,29

Other users 1000 7,08

Source: Central Statistical Office Poland 2014

Natural Gas

In 2013 Poland’s natural gas acquisitions totalled 5.76 B m3. It constituted over 34% of the total gas consumption in Poland. The remaining 66% (around 16 M m3) was imported (the majority coming from Russia and Germany, as well as the Czech Republic).

In 2013 Poland’s total natural gas consumption was 560 164 TJ (155,601 TWh). Industry and construction sectors as well as domestic households noted the highest consumption. The table below shows Poland’s natural gas consumption in 2013.

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Table 2: Natural gas consumption in Poland

Total consumption in TJ TWh

560164 155,601


Industrial CHP plants 11152 3,098


Non-industrial heating plants 1530 0,425

Industrial heating plants 6947 1,930


Transport 18073 5,020





Table 3. shows liquefied gas consumption (stationary use, no vehicles).

Table 3: Natural gas consumption in Poland


815 10,941







In 2013 the domestic oil extraction was 1.0 M tonne, which constitutes a minor part of Poland’s fuel oil consumption (slightly above 4%). The remaining 23.7 M tonne (96%) came primarily from Russia and Norway.

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Poland’s heavy fuel oil consumption in 2013 totalled 876 K tonne. The table below shows Poland’s 2013 heavy fuel oil consumption broken down into sectors.

Table 4: Heavy oil consumption in Poland 2013


876 35,828


Industrial CHP plants 186 7,607



Transport 31 1,268



Poland’s energy consumption in 2013

The amount of heat generated from fossil fuels consumed was 461 994 TJ, most of which was used by the industry and construction sectors, and domestic households. The table below shows heat consumption broken down by economy sectors.

Table 5: Heavy oil consumption in Poland 2013

Total consumption in TJ TWh

461994 128,332


Self-produced 213301 59,250

Transport 1989 0,553

Small scale users 213000 59167



Other users 36000 10


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The amount of power generated from fossil fuels consumed was 146 390 GWh, most of which was used by the industry and construction sectors, and domestic households. The table below shows power consumption broken down by economy sectors.

Table 6: Power consumption in Poland 2013 [GWh]

Total consumption TWh

146390

Energy industry power and CHP plants (including energy industry heating boilers) 14104

Heating plants consumption 272

Mining industry 8754

Industry and construction 47918

Water supply; waste management 2631

Transport 4104

Small scale users 68607

Agriculture (production only, excluding agricultural household consumption) 1539

Domestic households (including agricultural households) 28442

Other users 38626


2.3 Prices of fossil fuels, biomass

The table presented below shows the prices of fossil and renewable fuels for the retail segment.

Table 7: Costs of generating energy from fuels in Poland 2014

Price per fuel unit [zł/m3]/[zł/t] ([€/m3]/[ €/t])

Cost [zł/MWh] ([€/MWh])

Cost [zł/GJ] ([€/GJ])

Electricity 620 (147,85) 172,2 (41,07)

Heating oil 3200 [zł/m3] (763,12 [€/m3]) 322(76,80) 89,6 (21,37)

Natural gas 2,3 [zł/m3] (0,55 [€/m3]) 188,5 (44,95) 52,4 (12,50)

Coal 800 [zł/t] (190,78 [€/t]) 115,2 (27,47) 32,0 (7,63)

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Briquette 720 [zł/t] (171,70 [€/t]) 153,2 (36,53) 42,5 (10,14)

Pellets 670 [zł/t] (159,78 [€/t]) 142,6 (34,01) 39,6 (9,44)

Wood chips 170 [zł/t] (40,77 [€/t]) 50 (11,92) 13,9 (3,31)

Straw 150 [zł/t] (35,77 [€/t]) 32,8 (7,82) 9,1 (2,17)

Biogas 630 (150,24) 175 (41,73)

Large land-based wind farms - 360 (85,85) 100 (23,85)

Large hydroelectric plants - 470 (112,08) 130,5 (31,12)

Small hydroelectric plants - 630 (150,24) 175 (41,73)

Photovoltaics - 463 (110,41) 128,6 (30,67)

Solar collectors - 601 (145,47) 167 (39,83)

Source: KAPE

The price of wood chips varies between 80 zł/t 200 zł/t (19 [€/t] – 41,62 [€/t]). It depends on the quality and the distance between the production plant and the heating plant. The price of fossil fuels for the energy industry is significantly lower than the cost for individual consumers.

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3 Poland’s supply situation of solid biomass for energy purposes

The structure of generating energy from solid biomass in Poland is primarily the result of the country’s characteristic geographical conditions and the possibilities of utilizing resources. Energy generated from renewable resources comes predominantly from solid biomass (80%), liquid biofuels, wind and water power, and biogas (graph below).

Figure 3: Shares of particular renewable energy carriers in the total primary energy generation from RES in Poland in . (Source: Central Statistical Office Poland: Energy 2015)

The figure below shows the share of renewable energy carriers in heat generation in Poland, 2013.

Figure 4: Shares of renewable energy carriers in heat generation in Poland. (Source: Central Statistical Office Poland: Energy 2015)

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The table below represents the share of solid biofuels in the total energy generated from renewable resources in Poland between 2007 and 2013. It shows that over 80% of the energy generated from renewable resources originates from solid biomass.

Table 8: Costs of generating energy from fuels in Poland 2014

2008 2009 2010 2011 2012 2013

Solid biofuels [%] 87,48 85,77 85,29 85,00 82,16 80,03


Energy from solid biomass in thermal plants

The majority of energy from biomass in the energy industry is generated using co-firing processes in high capacity coal condensing boilers. The main source of wood biomass fuel using in co-firing are wood chips. The inland pellets consumption in 2012 was 0,35 M tonne. The total biomass consumption of electricity consumption in 2012 was 10 M tonne, 19 M tonnes was allocated to heat production. So the pellets consumption was allocated boos for heat and electricity generation. The share of pellets of electricity generation in co-firing is could be estimated at 1,1 M tonne (7,5 M tonne of biomass generally uses to co-firing).

Table 9: Power generation from solid biofuels [GWh] in 2003 - 2013

Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Solid biofuels [GWh] 768,2 1399,9 1832,7 2360,4 3365,4 4904,1 5905,2 7148,4 9528,7 7923,5

In those co-firing [GWh] 620,5 1236,3 1644,6 2125,6 2963,3 4660,8 5592,5 6388,8 7238,6 3928,5


Table 10: Generating capacity of power plants using solid biofuel energy [MW] in 2003 - 2013

Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Solid biofuels [MW] 24 25 25 33 40 42 53 175 455 582


Table 11 shows the 2013 share of renewable energy carriers in generating power in Poland.

In the heating and cooling sectors heat from biomass constitutes almost 98% of the energy generated from renewable resources. This energy is generated predominantly by distributed small and medium capacity plants, unconnected to the heating network.

Table 11: Heat generation from renewable energy carriers [TJ] 2003-2013

Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Solid biofuels [TJ] 2242 2768 3049 4008 5414 10448 11479 13320 18840 15572


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3.1 Energy wood from domestic forests

Poland is one of the European leaders in forest area and lumber production from 1 hectare of forest. The image below shows the abundance (m3/ha) of wood in chosen countries.

Figure 5: Wood abundance m3/ha in chosen countries Source: SoEF

In 2013 this was 9177.2 k ha, so 29.4%. Poland’s significant forest cover gives reason to develop a forest economy, including the use of forest wood to produce biomass.

Figure 6: Poland’s forest cover according to Voivoidships Source: Central Statistical Office Poland 2014

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Poland’s net lumber harvest in 2013 was 35 796K m3 ( 818K m3 more than in 2012), of which 1 246K m3 was harvested in private forests, and 159K m3 in national parks. The most wood was harvested in the following Voivodeships: West Pomeranian (4 144K m3), Warmian-Masurian (3 353K m3) and Greater Poland (3 111 k m3). The least wood was harvested in the following Voivodeships: Łódź (1 118 k m3), Lesser Poland (1 196 k m3), Świętokrzyskie (1 212 k m3) and Opole (1 230 k m3).

The State Forests National Forest Holding harvested 36 286 k m3 of wood in 2013, including 34 152 k m3 net lumber.

3.2 By-products of wood-based industries

The biomass energy market in Poland is less developed than that of fossil fuels, and is restricted to wood residues. However it is continuously growing, primarily due to the recently dynamically developing use of wood biomass in co-firing with coal for power and heat generation. Biomass trading is mostly handled between power plants and brokers. Brokers offer biomass with specific parameters, mostly in DDU (Delivered Duty Unpaid) contracts. The Delivered Duty Paid price includes the transport, duty and insurance of biomass. Brokers buy biomass from several producers, and offer it to several power plants. In practice, the biomass is supplied to the power plant that offers the highest price.

Increasing demand for wood biomass has led to a boost in imports of this type of fuel to Poland. The main directions of imports are Ukraine and Belarus. Wood biomass is predominantly traded via electronic auctions (www.e-drewno.pl). Brokers process woody biomass at specific parameters, and offer a final product (wood chips, pellets) to power plants at a higher price. One way of improving the status of biomass is boosting its significance at the Polish Power Exchange (Towarowa Giełda Energii S.A.). It is believed that this move would enable the domestic market to gain optimal results in solid fuel trade, including biomass trade, and improvement in physical exchange and transport logistics, which remain a vital issue. The projected trading volume of the TGE Biomass Market is 400.000 tons per year, which is about 10 % of the consumption of biomass for energy needs. Another helpful initiative in this respect is establishing the Polish Chamber of Commerce Energy and Environmental Protection (Izba Gospodarcza Energetyki I Ochrony Środowiska). Forecasts show that the biomass turnover on this market should reach 15 million Tonne per year. The average auction prices by energy wood achieved by the State Forests are shown in table below.

Table 12: The average auction prices by energy wood* achieved by the State Forests

Item M1M2 S4 coniferous S4 deciduous S2 coniferous S2 deciduous

PLN/m3 50,7 91,8 114,9 170,2 152,0

PLN/t 169,1 306,3 383,2 567,4 506,7

PLN/GJ 9,4 17,0 21,3 31,5 28,1

EURO/GJ 2,3 4,1 5,1 7,6 6,8

*Energy wood – wood intended to energy purposes

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In recent years, with the increase in the role renewable energy sources play in the energy industry, wood residues have become a sought after energy carrier. The figure below shows a 2013 estimate of the supply of wood biomass for energy purposes in Poland.

Figure 7: Estimate of the wood biomass supply for energy purposes in Poland Source: Szostek and others

The potential supply of wood by-products for energy purposes was around 5.3 M m3 in 2013, which makes up close to 35 % of the total estimated supply of wood based energy carriers in Poland. The source of wood by-products were the sawmill industry – 2.3 M m3 (44 % of the total supply of the wood sector) and the furniture industry – 1.4 M m3 (27%).

Table 13: The average auction prices by energy wood* achieved by the State Forests

[k m3] [%]

Wood sector, including: 5250 100

Lumber industry, including: 330 62,8

Sawmill industry 2320 44,2

Composite wood industry 800 15,2

Carpentry industry 180 3,4

Furniture industry 1400 26,7

Pulp and paper industry 550 10,5

Source: Szostek and others

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3.3 Pellets

Up until 2012 biomass use increased dynamically, reaching close to 29 M tonne. However government requirements limiting the use of biomass in power generation in favour of agricultural biomass caused an increase in the use of straw and pelletization. The additional demand for agricultural biomass created by these requirements was met by imports from the Ukraine and other countries, which further weakened the polish industrial wood pellet market. The graph below shows the production and consumption of (not only wood – agricultural too) pellets over a 10 year period. Poland is producing more wood pellets than consumed in the country. A large part of pellets produced is exported outside the Polish at a higher price than the offer heating plants. Cheaper wood biomass is import from the eastern border.

Figure 8: Pellet production and consumption in Poland Source: Stelmet The following graph shows the prices of pellets between 2006 and 2014. In 2014 the average price of pellet for household consumers in Poland was 900 zł per tonne , about 180 zł/kWh (42,86 €/kWh).

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Figure 9: Pellet prices in Poland 2006-2014 Source: Central Statistical Office, cenapradu.strefa.pl, ebiomasa.pl

3.4 Straw and other agricultural residues

Over the last couple of years straw production in Poland totalled on average 30 M tonne. Until recently straw was used primarily as bedding and feed for animals, however despite various straw uses, each year Poland has large surpluses of this resource. It is estimated that the surplus constitutes about 9 M tonne, of which about 30 % (including all rapeseed straw) could be used for energy purposes without any detriment to other industry branches. In the case of areas dominated by large agricultural plots this could be up to 40-50%.

Poland’s straw production is dominated by the following types of straw: ∗ cereal (92,6%), ∗ canola such as rapeseed (5,1%), ∗ legumes (2,3%). The domestic energy potential of straw is high and the full utilization of the surplus straw produced could meet 4% of Poland’s demand for primary energy.

In the coming years, forecasts show a rising trend in straw’s technical (the amount of biomass, which can be used for energy purposes after considering the technical possibilities of procurement) and market (the amount biomass possible to procure by buying a ready product) potential, as well as a slight rise in economic potential. Similar trends are present for forest biomass, and biomass from permanent pastures. The graph below shows a prediction of the technical, economic, and market potential of the use of straw for energy purposes.

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Figure 10: Prediction of the technical, economic, and market potential of the use of straw for energy purposes Source: Fuels and Energy 1/2015 (Paliwa i Energetyka 1/2015)

3.5 Development stage of the domestic biomass supply

The technical potential of biomass in Poland is estimated to be about 900 PJ/year. Biomass is one of the main sources of renewable energy and the share of solid biomass in all renewable energy carriers acquired in 2010 was 85.4%.

The largest domestic potential is solid biomass constituted by forest biomass: including wood residue from forest 202 – 240 PJ, wood industry residue – 30 PJ, reclaimed wood – 43 PJ and agricultural biomass, including wood from orchards 15 – 16 PJ, parks and roads maintenance – about 1 PJ, as well as surplus straw – about 114 PJ and hay – about 10 PJ.

Poland possesses a large biomass potential, which could be used in biogas plants using methane technologies. The potential of fermented gas is estimated to be about 290 PJ /year.

In 2012 the production of electric power from biomass, including wood pellets, was 8 943 865.98 MWh, which is equivalent to over 10 M tonne of this fuel. Due to a temporary crash of the green certificate market between 2012 and 2013 (resulting in a threefold devaluation) followed by a certificate price stabilization at about 60-70% of the initial price, combined with simultaneous increases in biomass prices and decreases in the price of coal, less effective co-firing installations returned to their original fuel - coal. Following the 2013 requirements limiting the use of wood biomass in large co-firing power plants, the use of biomass in this area decreased. From January to June co-firing for electric power generation fell by 60%, which was the result of the decreased use of processed agricultural biomass, whose price has risen from the previous year, while average prices for forest biomass decreased.

3.6 Development stage of domestic solid biomass combustion technology

Currently there are 3 groups of technological solutions being used in Poland:

∗ Biomass combustion ∗ Co-firing with coal using existing boilers

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∗ Pyrolysis and biomass gasification

Biomass combustion The low capacity biomass heating appliances market, from a couple of kW up to 2 MW, has a number of innovative technical solutions. Continued development of installations firing biomass, taking into account the technological requirements its combustion, should be focused on raising the standards of the engineering and material solutions used. Replacing coal with biomass is beneficial in spite of the fact that energetically 1 tonne of coal is equivalent to 2 tonne of biomass. The relative ecological advantages of using straw and wood chips instead of coal in small and medium capacity installations is shown in figures 8 and 9.

Figure 11: Relative ecological effectiveness of wood chips combustion compared to coal Source: Biomass combustion and co-firing with coal - techniques, advantages and barriers

Figure 12: Relative ecological effectiveness of straw combustion compared to coal Source: Biomass combustion and co-firing with coal - techniques, advantages and barriers

As shown in the data, the emissions of each pollutants during biomass combustion are significantly lower than in the case of coal. The CO2 emission balance of biomass combustion is zero since the emitted amount is equal to that absorbed by plants during photosynthesis. In the case of perennial energy plants the amount of CO2 emitted can be lower than the amount absorbed. Due to the low

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sulphur content in biomass, replacing coal with biomass also decreases sulphur oxide emissions, removing the flue-gas desulfurization problem.

Co-firing with coal using existing boilers

Co-firing biomass with coal is understood as a group of process involving firing coal with various types of adequately selected solid biofuels or their derivatives. The technology combines using renewable energy resources with using energy from fossil fuels. Co-firing is most often used in already existing installation infrastructure and can be used in all previous combustion processes, that is stationary bed, fluidized bed, and pulverized coal.

Co-firing of pulverized biomass together with coal can be effectively used in both small capacity boilers used in individual heating, as well as the energy industry. The only requirement is maintaining an optimal share of biomass in the mixture. This ensure energetically and ecologically efficient combustion. Increasing the share of biomass necessitates modifying the organization of the combustion process in the boiler.

The graph below shows the relative ecological effectiveness of co-firing coal with biomass (wood pellets).

Figure 13: Relative ecological effectiveness of co-firing coal and biomass (pellets) compared to coal mixture Source: Biomass combustion and co-firing with coal - techniques, advantages and barriers

As shown in the presented data, the effective reduction of pollutant emissions is higher than expected given adding biomass to coal. The addition of biomass to coal, apart from limiting CO2 emissions, causes a synergistic effect on CO emissions, organic pollutants (TOC), including PAHs and volatile organic compounds (VOCs). Moreover when combusting fuel mixtures lowers SO2 and NOx levels in the exhausts as well as decreased amounts of combustible particles in the ash.

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4 Poland’s solid biomass boiler market beyond 100 kW heat load

85 % of all biomass boilers are appliances up to 300 kW. In this segment the target group consists of individual customers and institutions, who buy boilers or heating appliances for producing heat for their own needs or as a replacement.

4.1 Number of domestic installations of solid biomass boilers

Figure 11 shows the sales of biomass boilers. Among the presented capacities the largest sales were observed in biomass boilers with between 500 and 1000 kW capacity and above, which are small residential heating boilers, and those by small enterprises. The lowest sale numbers were observed by boilers between 100 and 200 kW capacity.

Figure 14: Sales of biomass boilers by capacity in Poland 2013 Source: Institute for Renewable Energy (EC BREC IEO) research

Figure 12 shows the distribution of biomass producers by the type of end fuel, after processing. The data shows high shares of processed biomass, particularly wood pellets (65 producers - 59%).

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Figure 15: 2013 distribution of domestic biomass producers by main product in Poland Source: Institute for Renewable Energy (EC BREC IEO) research *wood pellet – no specified

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5 Result of Stakeholder Interviews

The main objective of these interviews was identifying at least 3 to 4 market segments, where a case for commercial “in-house” or district heating using solid biomass seems to be most likely. We would like to focus our national activities on those market segments identified at an early stage of our project. National activities in other countries might focus on other market segments. To identify the 3-4 most promising market segments in commercial “in-house” or district heating we performed interviews with 2-3 biomass boiler manufacturers and with 2-3 district heating developers/operators in our country.

5.1 List of interviewees

Table 14: Overview of the key stakeholders interviewed to identify promising market segments for Bioenergy4Business activities

Name Function Company Type of business Interview details

Website

Bączyk Tomasz Chairman of the board

Mora Polska

Boiler producer

Poznań

28. May

personal

http://www.mora.com.pl/

Bembnista

Ewa

School headmistress

John Paul II Centre of Education in Stara Kiszewa

Heat plant user

Stara Kiszewa

26. May

personal

http://zkiwstarakiszewa.superszkolna.pl/

Białorucki Janusz

Chief engineer

District Heating Company in the city of Płońsk

district-heating operator

Płońsk

24. April

personal

http://www.pecwplonsku.li.pl/index.html

Junosza-Cieśliński Andrzej

Manager

RADMAR-EKOENERGIA

Boiler producer

Poznań

28. May

personal

http://radmar-ekoenergia.pl/

Paech Leszek Owner and manager

AKAPIT

Boiler producer

Poznań

28. May

personal

http://www.ogrzewanie-akapit.pl/kotly-na-pelet/

Source: The Polish National Energy Conservation Agency

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All interviewees were asked the following four questions:

∗ What are the most promising bioenergy sources available in larger quantities locally (at reasonable prices) in our country?

∗ Which promising market-segments are promising (where a business case seems to be most likely) in our country?

∗ Due to which technical, economic etc. criteria did you select these promising market segments and what influence do these criteria have concerning market penetration?

∗ In case you sell biomass boilers abroad: To which countries do you export and what are the promising market segments there?

5.2 The most promising bioenergy sources

Findings from interviews in Poland:

In Poland wood chips and other by-products from wood based industries are the most promising fuel for installations in new plants, due to high local availability. Another promising fuel are pellets.

Tomasz Bączyk: Forest wood chips and pellets are the most promising.

Ewa Bembnista: Switching fuel is not effective and relatively expensive. We should build new heating plants based on biomass.

Janusz Białorucki: The CHP plant in Płońsk supplying District Heating, utilizes wood chips. For a CHP plant, the best solution is utilizing biomass in dedicated biomass facilities (boilers). The CHP plant is against changing the type of fuel used in boilers, systems utilizing fossil fuels (coal in case of Poland generally, particularly in our own case).

Andrzej Junosza-Cieśliński: The sawmill and furniture industries are both promising markets. Forest wood-chips are very often used in larger biomass boilers (e.g. CHP). Pellets, as a biomass fuel of the highest quality, are becoming more common among individual clients.

Leszek Paech: The most promising biomass fuels are pellets and briquettes, but pellets are a better fuel.

5.3 The most promising market segments


District heating market (new plants)

Market segments which are prospering and willing to invest in biomass are existing district heating plants, as well as newer small and large district heating plants.

Tomasz Bączyk: The most promising market segment is the housing sector, located outside the existing district heating systems fuelled by coal. Another segment which could be promising are public buildings e.g. schools, offices or hospitals, as well as commercial buildings such as hotels and

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restaurants (probably not supermarkets) located outside the area of district heating network powered by fossil fuels.

Concerning which boiler size would be a profitable option for a fuel switch, the interviewee claims it should have a power up to 10 kW.

Ewa Bembnista: All of district heating market segments are prospering and willing to invest but with subsidies and grants.

Currently 100 kW and more would be a viable option (due to economies of scale) for a fuel switch. Installing new biomass district heating for housing developments would be a profitable scheme in our country.

Janusz Białorucki: Irrespective of the magnitude of the DH system, using biomass in new plants is always intended. Taking into account the effectiveness of boilers biomass dedicated biomass boilers are recommended. For domestic use these may be small (up to 24, 25 kW) or larger.

CHP Plant in Płońsk utilises existing DH, which was earlier generated from coal. Poland has a well developed district heating systems, although it requires refurbishment in many cases. There is potential for biomass utilisation, particularly in new, dedicated boilers. In such cases the effectiveness of biomass in significantly higher than in old facilities fuelled by coal.

Housing developments appear to be a viable market segments for installing new biomass district heating in our country.

Andrzej Junosza-Cieśliński: In the case coal boilers for individual users switching fuels is not recommended.

An economic analysis is crucial to determine which market segments would be viable for installing new biomass district heating in our country.

Leszek Paech: The most promising sector for biomass heating development is District Heating. The most promising segments in our country are the sawmill and furniture industries. In these segments there is a large potential of high quality biomass. Another segment constitutes users of oil or gas boilers, who wish to pay less for heating and are willing to invest in biomass boilers.

The interviewee is against switching fuels in existing widely coal boilers. The reasonable option is establishment of new, efficient biomass boilers utilising possible support systems.

Due to installing new district heating schemes, where biomass would be viable in our country, housing developments appear to be a good market segment. Furthermore, all sizes of boilers would be a profitable option for these schemes.

“In-house” boiler markets (new plant)

The most prominent markets for AKAPIT are:

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Residential buildings: ∗ Multiple storey buildings (house owners) - district heating

Commercial and service buildings: ∗ Bakery

Public use buildings: ∗ Schools ∗ Hospitals ∗ State (municipal offices)

Industry Sector Branches: ∗ Wood and wood products: sawmills This is prospering, nevertheless there is potential for development.

The most prominent markets for RADMAR – EKOENERGIA are:

Residential buildings: ∗ Multiple storey buildings (house owners)

Commercial and service buildings: ∗ Hotels ∗ Motels

Public use buildings: ∗ Schools ∗ Hospitals

Industry Sector Branches (new plants and process heat): ∗ Iron and steel ∗ Chemicals and petrochemicals ∗ Non – ferrous metals (process heat only) ∗ Non – metallic minerals (glass, pottery, and building mat. industry) ∗ Transport equipment ∗ Machinery ∗ Mining/quarrying ∗ Food, beverages and tobacco: dairy factories, breweries ∗ Pulp, paper and print ∗ Wood and wood product: sawmills, furniture producers ∗ Textiles and leather Everywhere where the process heat is required, the installation of a biomass boiler is a profitable solution. Process heat is needed throughout the year (not only seasonally) and maintenance cost of biomass boiler are lower than in the case of coal.

The most prominent markets for Mora Polska are:

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Residential buildings: ∗ Multiple storey building (house owners)

The most promising market segment is housing. This market segment is willing to invest.

Commercial and service buildings: ∗ Hotels ∗ Vacation Village ∗ Motel

Public use buildings: ∗ Schools ∗ Hospitals ∗ State (municipal offices)

Agriculture, Forestry: ∗ Greenhouses ∗ Drying plants (e.g. grain, maize, straw, etc. ) Greenhouses yes but not in the case of buildings housing livestock since there is too much heat (from the animals) and there is no need for heating (except poultry breeding)

Industry Sector Branches: ∗ Wood and wood products: sawmills, furniture producers Process heat is a market segment where biomass boilers will be distinctly more profitable than fossil fuels boilers. Therefore every industry where process heat is needed is a promising market segments.

The most prominent markets for DH Company in Płońsk are:

Residential buildings: ∗ Multiple storey building (house owners)

Public use buildings: ∗ Schools ∗ State (municipal offices)

Agriculture, Forestry: ∗ Farmhouses ∗ Greenhouses ∗ Poultry breeding ∗ Drying plants (e.g. grain, maize, straw, etc. )

Industry Sector Branches: Generally a CHP plant has no knowledge on that topic. It seems that in every industry sector where heat is needed and there are no obstacles to invest.

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The most prominent markets for the president of school are:

Public use buildings: ∗ Schools ∗ Hospitals ∗ State (municipal offices) The public sector is prospering and willing to invest in biomass based heating systems.

Industry Sector Branches: Lack of knowledge to this subject.

5.3.1 Criteria for selection of promising market segments and their influence regarding market penetration

5.3.1.1 State Risk and –support


Tomasz Bączyk: Biomass heat is mentioned positively in the national energy strategy.

Ewa Bembnista: The time required and the procedures need to be completed to start a company should be improved. Procedures, duration, and costs of formalities for construction are ineffective in Poland.

Heat from biomass is not mentioned positively in the national energy strategy, because biomass is largely co-fired. There is a lack of coherent regulation which would integrate Environmental, Buildings Energy Efficiency, Energy aspects.

Janusz Białorucki: Heat from biomass is mentioned positively in the national energy strategy.

Permitting procedures for biomass investment (biomass boiler) last approx. 2 years. Shorter procedures would cause the biomass market to develop.

Andrzej Junosza-Cieśliński: Heat from biomass is mentioned positively in the national energy strategy.

Leszek Paech: Heat from biomass is mentioned positively in the national energy strategy.

5.3.1.2 Technical questions

Tomasz Bączyk: Fuel quality is a very important factor. Fuel supply logistics are difficult and an unsolved problem so far. Redistribution networks are not developed enough. Fuel depots are no ready to sell biomass due to lack of storage for dry biomass and a lack of interest (only interested in coal).

Ewa Bembnista: Biomass quality (wood chips) has improved.

Janusz Białorucki: There are no problems with the fuel or the availability of technology which is proven and demonstrated. Space requirements in building and quality management systems are not an issue.

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The identified problems concern sand content in the fuel, which could cause facilities damage and shorter lifetimes. The issue of fuel quantity/long-time security of fuel-supply is generally crucial, but in the case of the CHP Plant in Płońsk the security of the supply is guaranteed.

When it comes to transport, there is no requirement regarding railroad accessibility. Overland transport by rail is efficient enough.

Existing emission-thresholds can be fulfilled by biomass.

Andrzej Junosza-Cieśliński: To be profitable the source of biomass fuel should be no further than 50 km, which is very important thing. Fuel quantity/long-time security of fuel-supply is an extremely important factor. Problems with fuel quality occur in some cases of locally available biomass.

Leszek Paech: Fuel quality is very important in individual biomass fuelled heating systems. Fuel supply logistics are also significant. It is not easy to find good quality biomass close by. Biomass transport over great distances is unprofitable.

5.3.1.3 Economic questions

Tomasz Bączyk: The investment cost for biomass boilers is higher than in the case of fossil fuel boilers. Biomass boilers have better fuel economies. Organisation & maintenance costs are cheaper and it is the reason which appeals to people and why they decide to buy biomass boilers. The price of biomass fuel accounts for 80% of the price of fossil fuel. Its cost depends mainly on state forest policy. There was a period when large power plants had priority in buying biomass and there wasn’t enough biomass for smaller users. Now the situation is better because large power plants lost support and the price of biomass is more stable. When it comes to taxes, there are no incentives. Introducing such may help in market development. The investment subsidies are not sufficient.

There is one bank where investor can get a loan for biomass heating system. It is Environmental Protection Bank (Bank Ochrony Środowiska). The “Prosument” programme is interesting. Only one bank has an official policy on supporting bioenergy for heating projects.

Ewa Bembnista: Organisation is very important and financial incentives are crucial.

Janusz Białorucki: Biomass fuel costs 250 PLN/Tonne, meanwhile coal amounts to 427 PLN/Tonne. Generally the price of biomass fuel is changing. However the CHP plant in Płońsk is signing contracts for biomass fuel supply every 2 years with fixed pricing for this period.

Overall there are no incentives for RES-H generation. CHP Plant obtains green certificates for RES-E generation. The possibility for obtaining red certificates (for efficient CHP) is not being utilized due to additional requirements, the fulfilment of which would require additional investments, which are not profitable at the moment.

Subsidies are crucial element enabling investments implementation. To some extent subsidies for fossil fuel competitors exist, they could also obtain support from environmental protection fund aiming to reduce pollution from existing fossil fuelled systems.The support of bioenergy for heat

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projects is in the bank’s official policy and that is why CHP Plant has access to capital, bank loans. The CHP Plant has no problem with credit. There is no feed-in-tariff for heat produced.

There is no local availability of a fossil fuel competitor.

Andrzej Junosza-Cieśliński: Investment costs are much higher than in case of fossil fuel competitors. Organisation and maintenance costs are lower than in case of coal boilers. Generally there is no investment subsidies in case of small scale boilers. Tax incentives do not exist.

Low and zero energy buildings are preventing investment in heat from bioenergy.

Leszek Paech: Investment costs for biomass boilers are higher than in the case of coal boilers. Organisation and maintenance costs of biomass boiler are lower than in case of coal boilers. Raising awareness of that fact would help with the biomass market development.

The financial incentives are not sufficient to cause developments in the biomass market (as in other countries like Germany). There are no tax incentives and that discourages potential investors, even though operational costs of biomass heating are lower than in case of e.g. natural gas. Access to capital, bank loans is not the problem.

Low and zero energy buildings are preventing investment in heat from bioenergy. The price of bioenergy-fuel is volatile, which is an important issue, however changes in prices aren't great during the season. Cost stabilisation could be assured by contracts with local biomass supplier. There are local available fossil fuel competitor.

5.3.1.4 Organisational questions

Tomasz Bączyk: There is a problem with availability of engineers and other experts who will advise on biomass heating system. The regulatory framework is not stable. An association for big heating plants is not helping the market.

Ewa Bembnista: Lack of opinion.

Janusz Białorucki: There are no problems with availability of engineers and service-experts, and similarly with social acceptance. There is also no landlord-tenant problem.

The time required to receive a permit is 2 years.

The Polish District Heating Chamber of Commerce is assisting the market in contrary to a supportive association for big heating plants.

Andrzej Junosza-Cieśliński: There is no problem with social acceptance. Regulatory frameworks are not stable.

Leszek Paech: Unfortunately the regulatory framework is changing. There are no encouraging incentives.

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5.3.1.5 Motivation of investors

Tomasz Bączyk: Creating regional biomass access points will help the situation of biomass market by creating supply security

The role of every adviser regarding investment into biomass boilers is crucial for the investor.

Ewa Bembnista: A very important aspect is biomass availability in the region, which could be utilised in local heat plant.

Janusz Białorucki: There are no problems with social acceptability and the noise pollution of an operating plant. What appears to be important is the benefit to the national economy.

Locally available biomass sources are enough to secure supply and the fuel is being transported from the distance up to 150 km.

Andrzej Junosza-Cieśliński: Social acceptability and noise from the plant are not problems. Using fuel from the region is an important issue. It is significant to be near a source of biomass. Biomass should be identified in the distance not higher than 50 km.

Leszek Paech: Utilisation of local biomass is profitable. However the quality of the locally available biomass could be low.

5.3.2 Summary of the most important factors that influence the success of market introduction at the most promising market segments


Tomasz Bączyk:

1. A factor which may influence the development of the market is subsidies levels which are still higher in other countries e.g. Germany and Sweden and relate to higher class of biomass boilers (4 or 5th grand boilers).

2. Low purchasing power of customers is limiting development of the market.

3. Low awareness. There are a lot of benefits to biomass utilisation, not only environmental, but also economic. A lot of people do not realize that organisational and maintenance cost of biomass boilers are lower.

Ewa Bembnista:

1. Financial incentives are crucial for the market development.

2. Local biomass availability is a very important aspect.

3. Organisation is very important in plant planning, implementation and maintenance.

Janusz Białorucki:

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1. State support and grants promote a biomass heating market.

2. Requirements regarding carbon emission reductions and emissions trading systems promote a biomass heating market, which result in economic profits.

3. Unstable law and uncertainty of regulatory frameworks inhibit the development of the biomass heating market.

4. The process of co-firing of biomass in large power plants inhibits the development of the biomass heating market. As big biomass consumers power plants dictate the price of biomass and create very strong competition for small local recipients, which disrupts the natural, free competition inside this market.

Andrzej Junosza-Cieśliński:

1. In Poland there are no sufficient financial incentives. Conversion from fossil fuels to biomass should be more promoted by different kind of supporting measures.

2. Poland’s regulations in Poland are not stable, which is a significant barrier for the development of a biomass market.

3. The industrial sector is a promising segment for the development of a biomass market mainly due to constant demand for heat. Biomass could enable obtaining lower fuel costs than in case of fossils: oil, gas, LPG.

4. Industry (sawmills, furniture manufacturers) has easier access to biomass fuels. Nevertheless there is potential for further growth of existing biomass utilisation for heating purposes.

Leszek Paech:

1. Regulations and taxes highly influence the biomass market. VAT on pellets is 23%, while straw is taxed only at 8%. Tax reductions would contribute to the development of the market.

2. In Poland there are no subsidies for biomass boilers (except for the public sector). That fact influences the market.

3. The stimulation of the biomass market is low and inefficient. Society has a low awareness of environmental protection. In the case of Poland stronger financial incentives are required for the development the biomass market. Informational campaigns would be useful to present the ecological aspect and economic incentives of biomass boilers deployment.

5.4 Most promising market segments abroad – view from Austrian market actors

Tomasz Bączyk: We sell biomass abroad (especially to Germany and Sweden). The most promising market segment in those countries is housing. In those countries biomass boilers are much more

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popular than in Poland. There are financial incentives (even 100% of the cost of the boiler but it must be special fifth class of boiler).

Ewa Bembnista: Not applicable.

Janusz Białorucki: Not applicable.

Andrzej Junosza-Cieśliński: We do not sell biomass boilers abroad.

Leszek Paech: We do not sell biomass boilers abroad.

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6 Characterisation of promising market segments (facts & figures)

6.1 Biomass availability and energy consumption

The development of the Polish biomass for energy purposes market could be realized in three sectors.:

∗ forest biomass, ∗ agricultural biomass, ∗ residue biomass. Forest biomass Direct supply of wood biomass for energy purposes from forests and other forested areas Compared to 2009 in 2015 and 2020 the amount of total harvested wood will decrease by over 2.5 Mm3 and 2.74M m3 respectively, due to changes in the area of the NATURA 2000 protection programme. These limitations will significantly impact the availability of biomass for energy purposes. In connection to the current modifications of the forest economy in NATURA 2000 areas, its effect on harvesting wood is difficult to define.

Indirect supply of wood biomass for energy purposes

In Poland trading of wood based industry residues is not monitored, which significantly increases the difficulty of estimating realistic possibilities of supplying wood industry residue biomass for energy generation. According to an analysis by the Wood Technology Institute (ITD) the technical potential of residue wood from wood based industries and other sources could be about 58.1 PJ, that is 16.139 TWh.

Agricultural biomass

In Poland there is about 0,41 ha of farmland per capita, while in countries of the six core members of the EU this is only 0,19 ha per capita. As a result Poland was and remains to be perceived as a country which could have a significant share of the production of biomass for energy purposes in EU-15. Increasing the use of biomass originating from energy crops requires creating an entire system covering biomass production, distribution and use. Poland possess the required resource and processing potential enabling levels of biocomponent production included in the 2020 National Targets.

It is estimated that by 2020 the average cereal effectiveness will increase to 4 t/ha from current the current level of 3,2 t/ha. To produce around 670K tonne of bioethanol by 2020, necessary for the achievement of the climate targets (assuming that the product will be manufactured exclusively from

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domestic resources), about 2,4M Tonne of cereal crops, covering about 600K ha (if using corn the area required will be smaller by about 200 ha) will be required. Forecasts show that the increase in production will allow decreasing the area of cereal crops, without detrimental effects to food and industry requirements, by around 0,7 – 1,0M ha, which could be used for producing biomass for energy purposes.

Biomass from district refuse

When predicting the amount of biodegradable district refuse, it was assumed that between 2015 and 2020 the amount of refuse produced will slightly decrease. It’s a result of demographic forecasts which show a decrease in Poland’s population in the same period. It was also assumed that the largest value in the total volume of reclaimed wood, from district refuse will come directly from wood product consumers. Refuse which would be combusted could be used to reclaim energy through CHP or exclusively power generation. Another assumption is that about 42% of electric power generated from co-fired district refuse will be classified as “green”. It’s estimated that up to 2020 grow by 1% annually. Table 15: Predicted domestic biomass supply for the electric power as well as heating and cooling for 2015 and 2020

Biomass sector 2015 2020

Predicted amount

of domestic resources

K tonne

Primary energy

production (ktoe)

Predicted amount

of domestic resources K tonne

Primary energy

production (ktoe)

A) Forest biomass:

1. direct wood biomass for energy purposes supply from forests and forested areas

6411 1071 6081 1016

2. indirect wood biomass for energy purposes supply what is indirect wood biomass

5572 931 6375 1065

B) Agricultural and fishing biomass:

1. agricultural crops and fishing products supplied directly for energy purposes

1414 405 4056 1156

2. by-products and processed refuse from agriculture and fishing by-products for energy purposes

5690 1358 7428 1773

C) Residue biomass:

1. biodegradable solid city refuse, including biorefuse (biodegradable garden and park refuse, food and kitchen refuse from domestic households, restaurants, food drives, and retail)

4339 932 6373 1369

2. biodegradable part of industrial refuse (including paper, cardboard, pellets)

645 154 1127 269

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3. waste 340 65 6285 120

Source: Own research based on NREAP

The tables shows the predicted share in final energy consumption and installed capacity in realizing the 2020 targets and an approximate course of renewable energy shares in the energy industry, heating and cooling, as well as cooling and transport.

Table 16: 2010 - 2020 final energy use in Poland (ktoe / TWh)

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Solid biomass [ktoe]

3846 3871 3890 3919 3953 3996 4118 4250 4361 4594 4636

Solid biomass [TWh]

44,73 33,39 45,24 45,58 45,97 46,47 47,89 49,43 50,73 53,43 53,92


Table 17: 2010 -2020 installed capacity in Poland (MW)

Year 2015 2016 2017 2018 2019 2020

Solid biomass [MW]

1300 1350 1400 1450 1500 1550


Figure 16 shows the final energy use of various economy sectors in Poland between 1972 and 2030.

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Figure 16: Total final consumption by sector, 1973 to 2030 Source: Energy Policies of IEA Countries: Poland, 2011 Review

Figure 17 shows the final energy consumption by resource in Poland between 1973 and 2030.

Figure 17: Total final consumption by resource, 1973 to 2030 Source: Energy Policies of IEA Countries: Poland, 2011 Review

Table 18: Projected energy‐related CO2 emissions to 2030

Source category Carbon dioxide emissions by year (Mt)

2015 2020 2030

Fuel combustion: 278,85 266,34 286,27

Energy industry 157,36 141,18 149,71

Industry and construction 27,69 29,66 33,16

Transport 42,52 45,46 55,56

Other users 51,28 50,05 47,84

Fugitive emissions from fuels 0,53 0,51 0,43

Solid fuels 0,01 0,01 0,01

Oil and natural gas 0,53 0,51 0,43

Total Energy 279,38 266,85 286,70

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Source: Poland’s Fifth National Communication to the UNFCCC, February 2010.

6.2 Biomass promising market sectors

District heating District heating in Poland is a well-established industry with approximately 59 000 MW of installed capacity, 254 000 TJ of heat sold to the customers, a total network length of 19 400 km and 488 enterprises generating approx. 14,6 billion PLN annually. District heating covers more than 60% of the demand in urban areas. It serves approx. 15 million citizens and has an ever-growing potential for market gain. Over 65% of district heating consumers are housing associations, condominiums and communal flats. Only 2% of the customers are individual users. 13% of District Heating is delivered to public utilities, 10,5% to industry and 9% to other customers. The pricing tariffs on heating need to be accepted by the Energy Regulatory Office. The major fuel in DH is coal (75,1%), renewable share is still low (totally 7,8%, but share of RES in heat sold to final consumers is less – app. 4%). The figure below presents share of different fuels in DH in 2014, accordingly last report of Energy Regulatory Office Report.

Figure 18: . Share of fuels in DH, 2014

Compared to its potential biomass usage in the DH sector is rather low. This creates opportunities for biomass utilisation promotion and development.

Public sector - In-house biomass boilers

coal 75%

gas 8%

oil 4%

renewables 8%

others 5%

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This market is growing as support measures are available and will be available in the coming Regional Operational Programmes and from national environmental protection funds. Available investments grants will cause development of medium size biomass boilers, in particular in public sector.

6.3 CO2 mitigation potential

The usage of hard coal as the main fuel makes environmental protection very challenging since there are no technologies available to noticeably lower CO2 emission in coal installations. Starting from 2013 the number of allowances has been gradually decreased and the shortfall has to be purchased through the open market. In 2013 the allocation of free emission allowances was reduced by 20% and this number will decrease linearly to zero in 2027. Additionally, the IED Directive requires reduction of SO2, NOx and dust emission. This challenges hard coal installations to seek new solutions and investments in production technologies. In 2014 total CO2 emission from DH sector was equal 37 526 878,1 t CO2. Emission intensity of the sector is 104,2 t CO2/TJ (375,12 t CO2/GWh).

The DH, participating also in ETS system, has got significant potential to increase biomass utilisation. Assuming the 50% growth of biomass utilisation in DH, the CO2 mitigation potential is estimated at 1,464 Mt CO2.

Other promising sector for biomass penetration for heating purposes is services sector. Of course in some extent the sector is being supplied by DH, but the direct consumption of other fuels is also high: LPG consumption of tertiary sector 779 GWh heating oil consumption of tertiary sector 4144 GWh fuel oil consumption of tertiary sector 0 GWh gas consumption of tertiary sector 21252 GWh hard coal consumption of tertiary sector 8277 GWh brown coal consumption of tertiary sector 143 GWh peat consumption of tertiary sector 294 GWh Heat consumption of tertiary 12644 GWh electricity consumption of tertiary sector 43092 GWh other consumption of tertiary sector : wood, wastes … 2555 GWh Total consumption of tertiary sector 93198 GWh

Taking into account the emissions factor in Poland (as below), for fuels used in services sector: coal 333,756 t CO2/GWh gas 200,952 t CO2/GWh heating oil 263,988 t CO2/GWh and assuming the 5% of fuels: oil, coal and natural gas, substitution by biomass, the CO2 mitigation is equal 0,113 Mt CO2. The promising sectors in services are public buildings and health care buildings.

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Adding the CO2 mitigation from DH and services sector, totally biomass utilisation increase leads to of 1,576 Mt CO2 reduction.

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7 ANNEX I – Polish Energy Flow Chart

Figure 19: . SEQ Figure \* ARABIC 21. Energy balance flow chart Balance (2013) Source: International Energy Agency

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Figure 20: Energy balance flow chart Source: International Energy Agency

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8 Greenhouse gas emission factors

Table 19. Greenhouse gas emissions (CO2, CH4, N2O ) for different categories for Poland in 2012

GREENHOUSE GAS SOURCE AND SINK CATEGORIES

CO2 CH4 N2O Total

CO2 equivalent (Gg )

Total (Net Emissions) 286 189.28 43 305.05 30 134.92 359 629.25

1. Energy 302 127.65 15 431.78 2 098.13 319 657.56

Fuel Combustion (Sectoral Approach)

298 403.80 3 138.72 2 097.93 303 640.45

Energy industry 168 641.71 106.55 854.82 169 603.08

Industry and construction 30 635.46 94.26 172.13 30 901.85

Transport 46 148.22 102.76 573.55 46 824.53

Other users 52 978.41 2 835.15 497.43 56 311.00

Others IE, NO IE, NO IE,NO IE, NO

Fugitive Emissions from Fuels 3 723.85 12 293.07 0.20 16 017.12

Solid Fuels 1 869.44 7 545.88 NA 9 415.32

Oil and Natural Gas 1 854.41 4 747.19 0.20 6 601.79

2. Industrial Processes 17 819.61 303.79 1 050.83 19 174.23

Mineral Products 10 064.05 NA NA 10 064.05

Chemical Industry 4 316.53 277.45 1050.83 5 644.81

Metal production 2 297.08 26.34 NA, NO 2 323.42

Other Production 9.54 - - 9.54

Production of Halocarbons and SF6 -

-

-

-

Consumption of Halocarbons and SF6

-

-

-

-

Other 1 132.41 NO NO 1 132.41

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3. Solvent and Other Product Use 635.67 - 124.00 759.67

4. Agriculture 11 461.57 25 192.29 36 653.86

Enteric Fermentation 8 977.07 - 8 977.07

Manure Management 2 465.98 4 869.94 7 335.93

Rice Cultivation NA, NO - NA, NO

Agricultural Soils(3) NA 20 311.34 20 311.34

Prescribed Burning of Savannas NA NA NA

Field Burning of Agricultural Residues

18.52 11.01 29.53

Other NA NA NA

5. Land Use, Land-Use Change and Forestry

-34 672.39 2 272.42 545.33 -31 854.64

Forest Land -39 573.27 31.31 330.07 -39 211.89

Cropland 1 307.56 NO 209.09 1 516.65

Grassland 377.82 1.37 0.31 379.51

Wetlands 3 102.17 2 239.73 5.86 5 347.76

Settlements 113.34 NA, NO NA, NO 113.34

Other Land NA, NO NA, NO NA, NO NA, NO

6. Waste 278.74 13 835.48 1 124.33 15 238.55

Solid waste Disposal on Land NA, NO 8 560.37 - 8 560.37

Waste-water Handling -

5 275.12

1 108.31

6 383.42

Waste Incineration 278.74 NA 16.02 294.76

Other NO NO NO NO

7. Other NO NO NO NO

CO2 emissions from Biomass 35 066.24 - - 35 066.24

Source: National Center of Emission Balancing and Management

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Table 20. Greenhouse gas emissions (CO2, CH4, N2O) for Poland in 2012

Greenhouse gas emissions CO2 equivalent (Gg)

CO2 emissions including net CO2 from LULUCF 286 198.28

CO2 emissions excluding net CO2 from LULUCF 320 861.67

CH4 emissions including CH4from LULUCF 43 305.05

CH4 emissions excluding CH4from LULUCF 41 032.63

N2O emissions including N2O from LULUCF 30 134.92

N2O emissions excluding N2O from LULUCF 29 589.58

Total (including LULUCF) 359 629.25

Total (excluding LULUCF) 391 483.88


Table 21. Greenhouse gas emissions (CO2, CH4, N2O) for different categories for Poland in 2012

Greenhouse gas source and sink categories CO2 equivalent (Gg)

Energy 319 657.56

Industrial Processes 26 958.32

Solvent and Other Product Use 759.67

Agriculture 36 653.86

Land Use, Land – Use Change and Forestry -31 854.64

Waste 15 238.55

Other NO

Total (including LULUCF) 367 416.33


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Table 22. Greenhouse gas emissions (CO2, CH4, N2O) for fuel combustion in residential sector for Poland in 2012

Residential CO2 CH4 N2O

t/TJ kg/TJ

Liquid Fuels 63.98 5.71 0.17

Solid Fuels 94.46 299.95 1.50

Gaseous Fuels 55.82 5.00 0.10

Biomass 109.76 300.00 4.00

Other Fuels NO NO NO


Table 23. Greenhouse gas emissions (CO2, CH4, N2O) for fuel combustion in manufacturing industries and construction for Poland in 2012

Manufacturing Industries and Construction

CO2 CH4 N2O

t/TJ kg/TJ

Liquid Fuels 70.71 2.20 0.40

Solid Fuels 103.28 10.23 1.53

Gaseous Fuels 55.82 5.00 0.10

Biomass 109.02 29.81 3.97

Other Fuels 131.96 30.00 4.00

Source: National Center of Emission Balancing and Ma

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