The district heating company of the future
Heat in Poland becomes more expensive. This is a result of an outdated business model in district heating, which rewards the company for as much heat production as possible and does not encourage to modernize the infrastructure. Meanwhile, consumers want to pay as little as possible for energy and heat. One of the key elements of the game for lower bills and lower CO2 emissions is becoming energy efficiency of heating systems and buildings. This completely changes the market conditions in which heating companies have to find themselves. If we do not want them to collapse - it is necessary to implement a new business model in district heating. Forum Energii writes about how it could look like in its latest report.
The model we propose in the analysis "The district heating company of the future" combines key challenges: providing heat to consumers, helping to keep district heating companies in business and supporting the reduction of emissions from the sector. The analysis proposes technological, financial, legal and legislative solutions that would help to transform the current heating companies into companies that will find themselves in new market conditions.
The fundamental change is that heating companies must be rewarded not for the production of heat itself, but for providing thermal comfort at a reasonable cost and with respect for the environment. This is a complete change in the philosophy of operation. Instead of maximising profit by increasing production, heating companies should be rewarded for decreasing it. They should increase the scope of their activities and take over the management of the whole process. This is no longer just the production and transmission of heat, but also the improvement of energy efficiency in buildings connected to the network, energy management at their customers, as well as cooperation with banks and other financing institutions that will provide access to money for necessary investments. A modern heating company is a centre of competence", explains Andrzej Rubczyński, Director for Heat Strategy in Forum Energii.
Changing the operating model of heating companies is the key to cost-effective transformation of the sector. It is not possible to switch to more environmentally friendly, emission-free heat sources while maintaining the current level of heat production, because it will be too costly. Replacement of heat sources must be accompanied by thermal upgrading of buildings, which will significantly reduce heat demand. Only then will the household budget not be burdened additionally with the costs of modernization of the sector. It is important to plan the actions well and to synchronize them both with respect to heat sources and buildings. Close cooperation is therefore needed between building owners and local authorities responsible for energy planning and the heating company.
Implementation of a new business model in the heating sector requires a huge change, including mental change, and will not succeed without strong support from the state. The sector cannot be left on its own. The government should set new goals for the sector and provide full support for the transformation - by preparing appropriate legal and financial regulations: from debt relief for heating companies to increasing the availability of credits and dedicated financial instruments.
Huge capital is needed for all necessary investments - however, it is worth remembering that in the new financial perspective of the EU a large amount of money has been reserved for clean heat. In order to reach for it, it is necessary to have a vision - what the heating sector is to be like and what tasks are to be set for it, e.g. when coal burning in the district heating system is to be stopped. Meanwhile there is still no governmental strategy for district heating - its draft will be consulted in the nearest weeks. The second expected document is the strategy for buildings, because without defining the path for improvement of energy efficiency of buildings it is difficult to rationally plan investments in district heating, summarizes Andrzej Rubczyński.
- 67% of the heat energy of small district heating systems may come from RES as a result of modernization of inefficient district heating systems and replacement of coal boilers with heat pumps supplying separated low-temperature district heating systems.
- 73% of the total heat energy savings will be achieved by well insulated buildings and by district heating networks converted to low temperature microgrids.
- PLN 1 billion - this is how much the annual cost of purchasing CO2 emission allowances will drop from 2030 thanks to conversion of all the inefficient national heating systems into low-temperature systems fuelled by heat pumps.
- Ultimately, a household operating in a modernized building powered by a zero-emission heat source will pay 60% (PLN 2,000 per year) less for heat than households operating in uninsulated buildings powered by inefficient heating systems.
The analysis is now available only in Polish.