Geothermal provides great heating potential for Poland – as proven by the Stargard success

Inside of geothermal heating plant of G-Term Geotermia Stargard (source: company)

Alexander Richter 6 Jan 2020

In an interview published locally, Arkadiusz Biedulski, president of the board of G-Term Geotermia Stargard, and Vice President of the Polish Geothermal Association shares how geothermal energy is a great opportunity for Poland. Geothermal Stargard is the second largest geothermal heating plant in Poland, one of two selling only geothermal heat. The annual heat production is about 200 thousand. GJ and covers over 30 percent urban network demand. In the future it will be 70 percent.

According to Biedulski, “Geothermal energy is an effective source of heat production and a real way to achieve energy independence for self-governments that have adequate geothermal resources and sufficiently large heating networks to ensure energy reception. To be successful though it also needs development support. In 2020 and subsequent years, we count primarily on improving the functioning of the Geotermia Plus program and maintaining and accelerating the support program for the first research wells.”

The interview in Polish can be read here.

The government has high hopes for heat energy. The question is if geothermal energy in Poland has the right to exist without that support?

Arkadiusz Biedulski: Based on our many years of experience, it can be concluded that the profitability of geothermal installations even under moderate geological conditions is indisputable, and the installations themselves are very competitive in relation to other renewable energy sources. Of course, state support is required for this, but it is completely sufficient at the level corresponding to the support of other renewable energy (RES) installations.

When operating the heating plant in Stargard, we currently cover approximately one third of the city’s heat demand, and after completing the currently implemented geothermal expansion program, this share will reach nearly 70 percent. Most importantly, the price at which we currently deliver and we will provide heat in the future is about PLN 25-27 PLN / GJ (EUR 5.9-6.4/ $6.6-7.1) , i.e. very competitive to coal sources in current market conditions (high prices of coal and CO2 emission allowances).

It is also worth noting that the main part of the installation development process will be carried out with the support of EU subsidies, and therefore without special preferences for geothermal energy. Thanks to the implemented project, the Stargard heating system will become energy efficient, and the entire transformation will take place “painlessly” from the point of view of individual consumers and the costs they incur for heating apartments.

But local governments are still cautious about energy from the earth …

In our opinion, the small interest of municipalities in the use of geothermal energy is related to the lack of knowledge about this technology, concerns about its technical and financial stability and the related reluctance of heating network operators and generation sources to connect this type of installation. An important obstacle is also the relatively high level of investment outlays that must be incurred at the beginning of the project, in particular at the first research hole.

How can one get local governments, companies and enterprises to invest more willingly in geothermal energy? What inhibits its development in our country?

Until now, the main barriers to the development of geothermal energy in Poland were high investment expenditure combined with a high risk of the first exploration wells, the lack of possibility to connect geothermal installations to heating networks with the unwillingness of network operators, as well as the lack of systemic support for heat production in geothermal installations resulting in additional costs being passed on to local recipients.

One of the most important technical obstacles in the development of geothermal energy has been eliminated thanks to the recent legal changes, forcing the connection of geothermal installations on the return of the heating network, i.e. even without meeting the network parameters. It resulted from the fact that geothermal installations in Poland, due to geological conditions, provide medium temperature heat (60-90 degrees C), which means that without additional heat sources (e.g. gas boiler) they do not meet network parameters. As a result, based on previous legal regulations, the heating network operator could easily refuse to connect such an installation to the network.

As for the inability to connect geothermal installations to heating networks with the unwillingness of network operators, like any renewable energy source, geothermal installations require state support for their development either at the stage of construction of the installation or during the exploitation period, i.e. when generating energy. Unfortunately, in Poland there is still no system support for heat production, as is the case with electricity. This is incomprehensible because often the required ecological effect in geothermal installations in the form of CO2 reduction and other pollutants can be achieved with lower state subsidies up to 1 MWh in comparison to other renewable energy sources producing electricity.

In this context, the Geotermia Plus program launched by the NFEPWM should be highly appreciated. It assumes subsidy co-financing of geothermal investments at the level of 50%, which will enable heat production in such installations at comparable prices or even lower than the prices of heat from coal, which is crucial for supporting their construction by local governments.

When analyzing the development of geothermal energy, the issue of investment outlays cannot be ignored.

That’s right. As it is commonly known, such installations operate at very low operating costs, however, initial outlays are very large. For example, the cost of building a 10 MW installation is about PLN 45-50 million (EUR 10.6-11.8 million), so these are expenditures that even at 50 percent. often exceed the financial capabilities of smaller local governments. The solution to this problem could be the creation of a fund that would participate in such investments on market terms without burdening the budgets of municipalities. Alternatively, such a function could also be performed by the NFEPWM or e.g. funds from the PFR group.

Apart from the above, it is absolutely essential to keep the program 100 percent. co-financing for municipalities for the first research holes. Due to the uncertainty as to the geological conditions, no financial institution, local government or private investor is ready to take on the risk associated with the first exploration well. For this reason, many countries take this risk on their own: in the form of direct funding, coverage of insurance costs of work results or other forms of guarantee. In Poland, about 3 years ago, a program for financing research wells was launched and greatly increased interest in geothermal energy from municipalities (nearly 40 applications were submitted).

Unfortunately, the procedures for accepting and selecting projects for implementation are very lengthy and so far only 6 holes have been drilled under the program. With all responsibility it can be said that the improvement of its functioning will contribute to a much faster development of geothermal energy in Poland.

How realistic is that?

Geothermal energy is undoubtedly a very effective source of heat production and a real way to obtain energy independence for local governments that have adequate geothermal resources and sufficiently large heating networks to ensure energy reception. However, one should be aware that the above combination is only fulfilled in some of the municipalities, therefore deep geothermal energy may not be applicable everywhere. In other cases, shallow geothermal energy using tertiary resources providing a medium at a temperature of 10-12 degrees C should be considered.

Based on this temperature, modern heat pumps are able to provide a heating medium at a temperature of 55-60 degrees C, i.e. sufficient for low-temperature networks. Importantly, it is possible to exploit such resources not through depth probes (up to 100 m deep), which are inefficient in terms of heat recovery, but through deeper geothermal doublets (200-400 m deep). The cost of such two holes is only about 500-600 thousand. PLN, and the available power is min. 1-1.5 MW.

So far, no one has used a combination of these technologies, so in 2020 we will implement a pilot installation, and its success would give a chance to virtually all small boiler rooms in the country to switch from coal combustion to ecological geothermal installations in a very short time (the duration of such a project is max. 12 months taking into account environmental issues – editor’s note). The cost of heat production in such installations would be slightly higher than in traditional deep geothermal energy, however, it would still be a competitive solution given current market conditions. At the same time, it is very flexible and easily scalable – it is possible to build installations in a full range from 1 to several MW, depending on the needs.

Does geothermal energy pay off at all?

First of all, it should be remembered that heat production is subject to URE tariffs, so the operator of the generating source, as a rule, in the tariff obtains operating costs and a minimum return on capital. However, the basic issue is whether geothermal energy is able to provide heat at a price acceptable to end users, which allows the liquidation of existing coal sources. The answer to this question is unequivocal – yes, assuming state support at the level that other renewable energy sources receive. Importantly, geothermal energy also pays off from the point of view of the state budget, as the achieved ecological results are often greater in terms of the amount of support granted.

What do you think it will bring for geothermal energy in Poland 2020? What does the industry count on, what does it expect?

In 2020 and subsequent years, we count primarily on improving the functioning of the Geotermia Plus program and maintaining and accelerating the support program for the first research wells. If we additionally successfully finished piloting the installation based on shallow geothermal energy, most Polish heating systems would have a real chance to complete transformation into sources based on geothermal resources in the next few years.

Source: Portal Samorzadowy