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Civic energy

Intelligent energy

sector

grids

Microgrids

Micro-scale

energy sector

Microgeneration

The Development Plan for

Microgeneration for Poland

based on

Renewable Energy Sources until 2020

A Synthesis

Institute for Renewable Energy

in collaboration with

the members and partners of

the Association of Employers of the Renewable Energy Forum

Warsaw, April 2013

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This report was made possible owing to the support of the members and partners of the Association

of Employers of the Renewable Energy Forum (ZP FEO). The fol owing companies representing the

producers and manufacturers of appliances for the renewable energy prosumer sector,

predominantly smal and medium size enterprises, took part in its development:

The authors would like to thank the Heinrich Böl Foundation for its assistance in the preparation of

the English translation of the report synthesis as well as the graphic design and print-out of the report.

This document has been prepared by the team of the Institute for Renewable Energy headed by

Grzegorz Wiśniewski and including:

Andrzej Curkowski

Piotr Dziamski

Grzegorz Kunikowski

Katarzyna Michałowska-KNREAP

Anna Oniszk-Popławska

Anna Santorska

Konrad Rosołek

Aneta Więcka

and the members of the consortium:

Katarzyna Motak – Caldoris

Krzysztof Brzozowki – Free Entrepreneurship Association

Michał Burkiewicz – Hoven

Aneta Gocek - W4e

Andrzej Kaczmarczyk – Opa Labor

Romuald Kalyciok – Sunex

Przemysław Kowalski – Ren Ventures

Monika Krawczyk-Rudnicka – Polskie Centrum Solarne

Zenon Laszuk – Rapid

Marcin Rożko – POLBUD

Robert Wichłacz – NMG

Paweł Wyszyński – Optima Polska

The Institute for Renewable Energy is based at the fol owing address:

Instytut Energetyki Odnawialnej (IEO): 00-641 Warszawa, ul. Mokotowska 4/6, tel./fax: (0-22) 825 45

52, e-mail: biuro@ieo.pl

© Copyright by Instytut Energetyki Odnawialnej

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Contents:

Foreword

1. Introduction

2. Microgeneration based on renewable energy sources as key prosumer

technologies

3. The scenario for utilizing microgeneration based on renewable energy

sources in Poland until 2020

4. Socio-economic benefits of the development of microgeneration based on

renewable energy sources

5. The implementation of the prosumer scenario

6. The summary of analyses and fundamental conclusions

7. Recommendations

Declaration of the microgeneration sector companies with production and

instal ation potential

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Foreword

Prof. Maciej Nowicki

A few years back, the future of the Polish energy sector would not be a topic of any

major discussions. It was obvious that Poland had vast coal deposits ensuring its self-

sufficiency with regard to power and heat generation for many decades to come.

Any kind of renewable sources energy were treated only as a fringe, with no

chance of any broader application. At present, this simple strategy is, by and large,

no longer valid. It turns out that by 20-30 years al lignite deposits and most of the so-

cal ed operative (i.e. extractable) hard coal deposits wil have been exhausted.

Moreover, the exploitation of Polish coal is becoming increasingly more expensive,

hence less competitive. Additional y, there are no funds available to develop new

mines.

The situation of the power generation sector is not any better. A large proportion of

power plants, heat and power plants and thermal power plants rely on appliances

that are 40 or more years old. In the coming years they wil have to be excluded

from exploitation because of wear and tear. Thus, the question that arises is the

fol owing: what wil happen to the main energy carrier in our country in the coming

decades? The government has decided to have the first nuclear power plant built,

with the capacity of 3 000 MW, but its ability to diversify power sources will be

insignificant (below 10%) while the costs horrendous. Information about large

resources of shale gas in Poland has also revived hopes but it will be long before we

find out about the scale of its profitable exploitation. It is also not clear whether this

gas could be used in large power stations or in small systems dispersed across the

country. The third element of the new energy strategy that is being developed is

Poland’s obligation towards the EU to obtain as much as 15% of end-user energy

from renewable sources by 2020, which is already a large proportion.

Al the aspects mentioned above make the current situation especial y difficult

because now is the moment to take key investment and financial decisions whose

effects wil be felt for several decades to come. This should be done bearing in

mind the variety of imponderables, both with regard to the kind of energy carriers

available in our country and international technological, economic and even

political trends in the energy sector. Wrong decisions are likely to reduce the

competitiveness of Poland’s entire economy and the living standard of its citizens

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for many decades while good decisions may bring nothing but benefits in this

respect. The greatest difficulty in choosing the right path is caused by two,

completely different, energy system models that are in place in Poland at present:

- the 20th century model, extremely centralised and based on large power

plants, heat and power plants and thermal power plants fuel ed with coal,

- the nascent 21st century model, highly decentralised, based on renewable

energy sources and many small intelligent energy systems.

The main problem is the right choice. What is better: to continue to support, above

al , large power stations fuelled with coal, increasingly imported, and strengthen

even more this centralised system by building a nuclear power plant or rather

promote diffused, small and intelligent systems ensuring energy security on the local

and national level to a much greater extent and providing tens of thousands of jobs

as wel as an opportunity to develop new industry sectors with a great export

potential?

It is evident that both models wil continue to co-exist for a long time to come. The

proportions, however, are important. Now, it is necessary to create good conditions

for the development of diffused energy generation. The first important step in this

respect wil be to adopt the act on renewable energy sources that will stimulate the

development of such conditions in our country. The draft act mentioned gives

prominence to the promotion of microgeneration and prosumer energy. These are

relatively new notions in the public debate about the future of Poland’s energy

sector. So far, reliable information concerning this important topic has been missing.

This study fills in the gap providing a comprehensive description of the potential

hidden in microgeneration based on renewable energy sources as wel as the

requirements that have to be met to tap into this potential. I do hope that it wil be

useful in taking political, economic and legal decisions that stimulating the fast

development of microgeneration and prosumer energy in our country.

Prof. dr hab. inż. Maciej Nowicki, Minister of the Environment in 1989–1991 and 2007-2009.

Founder of EcoFund, a foundation established to manage the eco-conversion of the Polish debt. In 1994–1995 he was Deputy Head of the UN’s Commission on Sustainable

Development and in 2008–2009 Deputy Head of the UN Framework Convention on Climate

Change. Winner of "Der Deutsche Umweltpreis" (the so-cal ed "Environmental Nobel Prize").

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Senator Norbert Obrycki

The time of the publication of this study coincides with an increasingly more vocal

postulate of many groups cal ing for the urgent adoption of the act on renewable

energy sources. An additional incentive for the implementation of this task is

definitely Poland’s need to fulfil the provisions of the EU directive on RES by 2020.

The prosumer energy sector seems to cause little controversy among legislators in

this context. On the one hand, we have to fulfil the obligation towards our citizens

so that they are able to make as independent decisions as possible about the

energy mix in their own households. On the other, our job is the ensure the right

balance of regulations so that the citizen that generates electricity in his or her

microgeneration is not treated in the same way as a power plant. Regulations

should enable the implementation of tasks limiting conditions and executive

provisions to the lowest extent possible. The key question seems to be to what

extent the producer will be a consumer and to what extent the producer will be a

sel er of surplus energy to the grid?

Recent conferences and debates about diffuse energy, both within the industry

and political circles, including the ones organised at the Polish Senate by the

Senate Committee for Renewable Energy and at the Office of the President of

Poland, have demonstrated that the prosumer energy sector may play an

important role in the context of our country’s energy security.

Above al , we have to realise that the simple model involving few active producers

of energy connected to the grid supplying many passive consumers will become

history. The 21st century wil see many producers, many interconnected intelligent

distribution networks and many consumers who, at the same time, will have the

technological capacity to generate energy for their own needs. Future solutions

also include storage of the surplus energy produced.

Taking the above into consideration, in my opinion, a better term to describe the

prosumer, or diffuse energy sector, is the civic energy sector, i.e. one based on the

citizen’s freedom of choice and the universality of energy generation technologies

applied in home energy systems.

The Plan for the Development of Microgeneration for Poland based on Renewable

Energy Sources until 2020 prepared by the Institute for Renewable Energy shows

clearly that this sector is the near future and a great socio-economic challenge

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facing our country. I am convinced that this study wil assist us, politicians, in taking

the right decisions to create good legislative environment stimulating the

development of the civic energy sector in Poland.

Norbert Obrycki, Senator of the Republic of Poland, Head of the Senate Committee

on Renewable Energy, Marshall of the Zachodniopomorskie Province in 2006-2008.

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1.

Introduction

Relatively recently, the notion of a microgeneration in the renewable energy sector

and the definition of a prosumer, inseparably linked with it, have become an

element of a public debate in Poland. The catalyst for the discussion was the first

draft act on renewable energy sources1 published in December 2011. It soon turned

out that citizens are becoming increasingly more aware of these new notions.

Fol owing the draft act, a microgeneration is a renewable source of energy whose

total power capacity instal ed does not exceed 40 KW or total heat capacity

instal ed does not exceed 70 kW. A prosumer is a natural or legal person or an

organisational unit which is not a legal entity producing energy in a

microgeneration in order to use it for its own needs or to sell it, but, fol owing the

legislator’s intent, the prosumer’s activity is not a business activity. Because of these

breakthrough concepts introduced to the Polish energy system by the draft act, it is

also called “the prosumer act”.

The idea of the prosumer energy system is extremely popular. But if it is to be

developed and enjoy a significant support among the society and politicians,

which is necessary for a new act, a broader strategy for the development of the

micro energy system (based on microgeneration and the prosumer concept) as an

element of both the renewable energy system and the diffused power generation

system must be developed. This study is the first attempt at a more precise

specification of the plan for the development of the “national roadmap” for

microgeneration based on renewable energy sources, including power and heat

sources, in households. It is also an attempt to include microgeneration in the

broader trends of the development of micro energy, prosumer energy and civic

energy systems, which have already been developed for a number of years

abroad. These ideas have led to a breakthrough in the world’s energy system and

a revolution that is happening before our very eyes and will not bypass Poland,

either. The fundamental principles for the development of the prosumer energy

system and microgeneration were introduced as early as in 1980 by Alvin Toffler, an

author and a futurist, in his book “The Third Wave” where in the chapter entitled

“The Sun and Beyond” he accurately presented the vision of a breakthrough in the

energy system, which is currently being verified by reality, also in Poland. He

indicated the stages and the inevitability of changes as wel as pointed out the fact

that these processes would not be simple or devoid of conflict.

1 Source: Draft act on renewable energy sources of 20 December 2011.

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In this war of ideas and money that is already raging in al the high-technology nations, it

is possible to discern (…) antagonists. To begin with, there are those with vested interests

in the old, Second Wave energy base. They call for conventional energy sources and

technologies — coal, oil, gas, nuclear power, and their various permutations. They fight,

in effect, for an extension of the Second Wave status quo.

(…) In short, though nuclear reactors or coal gasification or liquefaction plants and other

such technologies may seem to be advanced or futuristic and therefore progressive,

they are, in fact, artifacts of a Second Wave past caught in its own deadly

contradictions. (…)

By contrast, those who favor the advance to a Third Wave energy base—a combination

of consumers, environmentalists, scientists, and entrepreneurs [Toffler also includes

prosumers in this group] in the leading-edge industries, along with their various al ies —

seem scattered, underfinanced, and (…) Second Wave propagandists regularly picture

them as naive, unconcerned with dol ar realities (…).

Source: Alvin Toffler. The Third Wave. Bantam Books. United States of America,1981.

The trends presented by Toffler have materialised because they lower the costs of

energy provision and ensure fairer benefit division. However, they required a

technological breakthrough as wel as an act that does not restrain grassroots

initiatives and a certain level of maturity among the civil society. A renowned Polish

sociologist and philosopher, the key representative of the so-cal ed “Post-modern

School”, Professor Zygmunt Bauman, emphasizes that local initiatives with truly

global ambitions, e.g. environmental or consumer movements, which definitely

include the prosumer energy system, are very important in a civil society. Professor

Bauman, however, warns that “similar initiatives are difficult because while the tasks

are global, their contractors are local and it is difficult to organise them.” But

currently, thanks to the enormous technological progress in the area of renewable

energy sources, telecommunications, intelligent networks and expected new

regulations, beneficial for energy consumers, the energy users who have been

passive so far may become active prosumers in practice. As early as in 2002, the

authors of a wel -known publication Small Is Profitable 2 counted as many as 207

benefits brought by diffused energy generation to consumers and citizens. A large

proportion of these benefits is directly or indirectly related to the increase of the

individual, local and national level of energy security.

An increasing number of citizens in Poland keep looking for ways to increase their

independence and security of energy supply. For a long time now, such options

have been provided by small-scale energy technologies. The search for alternatives

becomes more intense as costs rise and power supply quality deteriorates (power

outages, lower voltage incidents, etc.), which affects some groups of consumers

connected to low voltage grids, most often in rural and suburban areas. But in this

situation the consumer finds it difficult to take up remedial measures and supply the

missing energy by him or herself. Roman Kluska, a wel -known Polish entrepreneur

active in the IT industry in the past and a farm owner at present, decided to have a

microgeneration (a PV system) instal ed in his household. Having an extensive and

2 Amory B. Lovins (ed.) et al : „Smal is profitable. The hidden economic benefits of making electrical

resources at right size”. Rocky Mountain Institute, Snowmass, 2002.

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unique experience in industry, he did not expect that the construction and

connection of a micro power plant to the grid would be such a difficult endeavour

lasting five years.

My solar power plant (…) on sunny days generates much more energy than I can use. At

the same time I am not allowed to feed this power to the national grid, even for free. To do

that, I would need to have a concession and obtaining one is a long administrative

process starting with a certificate confirming the absence of criminal record. This is why in a

moment the automatic system wil switch on enormous immersion heaters that wil return

surplus energy [produced for one’s own needs but not used] to the atmosphere. After the

assembly of the system the German supplier could not understand why Kluska told him to

immediately disconnect the system he had just built from the grid. All appliances meet the

EU standards that can be automatical y connected to the European network with no need

of adjustment or fine-tuning. When I explained it to him that by feeding power to the grid I

would become a criminal, he answered that they had instal ed this kind of power plants in

18 countries across the world and nowhere else had they encountered an equal y absurd

law.

Source: Roman Kluska, Tygodnik Powszechny 20-12-2010.

The prosumer energy system requires an incubation period and is introduced to

energy systems in stages, which inevitably lead to a true energy revolution.

Microgeneration based on renewable energy sources and their promotion is the

first necessary and extremely important step without which the energy system may

not undergo further changes. Although the national energy system is changing

slowly, there are more and more groups advocating new paradigms and practical

actions. The strength of and the basis for the prosumer energy system involves

microgeneration technologies, already available and developed in our country

(but more often exported than sold here so far) such as solar col ectors, pellet

boilers, biomass briquettes, smal wind farms and a number of other appliances and

green industry components. There are also companies that instal , design and build

more and more microgeneration in Poland and the entire construction sector. But

the greatest strength lies in numerous home owners, farmers and small enterprises

that, fol owing the consecutive steps of the energy market liberalisation process

and the increasingly smaller ability of the centralised energy system to meet the

needs of diffused energy consumers, have been actively looking for energy

alternatives. Microgeneration based on renewable energy sources are not just “the

technology of tomorrow” but already the technology that is in place now. Over 230

thousand active citizens have decided to invest in microgeneration based on

renewable energy sources.

This plan, the “roadmap”, focuses on the presentation of the current situation of

microgeneration based on renewable energy sources in households and the real

path for their development until 2020 as the first and key, according to its authors,

pil ar of the prosumer energy system construction in Poland. A complex

presentation of the current state of microgeneration and possible options for their

development has been quite a chal enge. The results of analyses obtained may

include a smal margin of uncertainty. Ultimately, these are the prosumers, their

location and individual preferences and choices that wil determine the directions

of development. In a special public opinion survey the authors asked citizens about

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their preferences in this respect. But at the current level of the market development

the government’s initiative is indispensable. This is why the most important starting

point for analyses was “The National Renewable Energy Action Plan” (the so-cal ed

NREAP) that wil be supported by “The Roadmap of Intelligent Networks” prepared

by the Energy Regulatory Office. The most important condition of and guarantee

for the implementation of the plan for the development of microgeneration and

prosumer activity is the removal of legal barriers and the adoption of the act on

renewable energy sources. The recommendations developed as a result of

analyses and presented at the end of this work focus on this very aspect.

The authors hope that this publication, combining the idea of the prosumer system

with renewable energy, will become an impulse for a wider debate on the subject

supporting the actions already undertaken by the government (but not finished)

and the initiatives of a number of non-governmental centres aiming to tap into a

huge but still unused national potential of microgeneration based on renewable

energy sources. It is also our intention that this publication will contribute to the

overcoming of the current deadlock in the prosumer energy market development

that began in Poland.

2. Microgeneration based on renewable energy sources as key

prosumer technologies

The National Renewable Energy Action Plan and the draft act on renewable

energy sources provide a list of key microgeneration:

1. Solar col ectors,

2. Biomass boilers,

3. Small wind farms (micro wind turbines),

4. Photovoltaic microgeneration,

5. Cogeneration microgeneration fuelled with biogas and bioliquids (powering

electricity generators with various internal combustion engines),

6. Heat pumps,

7. Small hydropower plants.

The chart below includes a brief characteristics of prosumer microgeneration based

on renewable energy sources. The microgeneration listed include three “home”

technologies for heat production (solar col ectors, biomass boilers and heat pumps)

and three technologies for the generation of electricity, including cogeneration (PV

systems, micro wind mills and micro biogas plants).

PV modules3

Appliances changing solar energy from radiation into electricity.

The fundamental module element is a photovoltaic cell made of

thin layers of semiconductors, most often silicon. The amount of

energy produced by a PV module depends on the level of

insolation, the location of the PV system and the output of its

modules. The appliances may be easily assembled and integrated

3 Photo: Euro Com Project Sp. J

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with other buildings.

Small wind farms

These appliances change the energy of air mass movement into

the kinetic energy of the wind farm rotor rotation. Next, the rotor

connected to the generator produces electricity. The amount of

energy produced by a wind farm depends on its size, the

effectiveness of the turbine and the wind speed. This, in turn, is

mainly determined by the location and weather conditions.

Solar collectors

Solar col ectors change solar radiation into heat that may be used

to obtain hot domestic water and support the heating system. The

main element of the col ector is an absorber that intercepts solar

radiation and changes it into heat absorbed by the heating

factor, for example the aqueous glycol solution circulating in the

system. The amount of energy obtained depends on the total

radiation per hour or per season reaching the absorber as well as

the location of collectors and the output of appliances.

Heat pumps4

Appliances using heat circulation for heating. Thanks to

thermodynamic changes, just like in a fridge, heat from a low

temperature area flows to a high temperature area. The upper

source that supplies heat is water (rarely air), heated by a pump,

which circulates in the heating system. The pump does not

generate heat but transfers it from the lower to the upper source.

Biomass boilers5

Biomass boilers are designed to burn low calorie, high-volume and

long burning fuels such as wood waste, branches, wooden

briquettes, straw briquettes and other plant waste. Energy

obtained from plant biomass incineration is used for central

heating and domestic hot water preparation. Fuel may be

supplied automatical y by means of fuel containers with feeders.

Micro biogas plants6

Micro biogas plants are used to produce electricity and heat.

Smal biogas plants as an element of a production line for a plant

or animal production process are especial y profitable in the

dispersed model of agriculture present, among others, in

Germany, Austria and Poland.

Fig. 1. A synthesis presenting various kinds of microgeneration based on renewable

energy sources

The Institute for Renewable Energy (IEO) estimates that there are 3200 smal wind

farms in Poland. What is characteristic for Poland is not just a very smal number of

4 Photo: www.zielonedomy.pl

5 Photo: Przedsiębiorstwo Produkcyjno Handlowe KOSTRZEWA®

6 Photo: Abrys

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power-generating microgeneration based on renewable energy sources, but also

the fact that a relatively large proportion of these sources is not connected to the

grid ( off-grid). This is a rare situation in Europe. According to the 2010 studies

conducted by IEO as little as 6% of the total number of small turbines sold were the

appliances designed to be connected to the grid. At the end of 2012 there were 32

agricultural biogas plants exploited in Poland, including 2 off-grid micro biogas

plants with the capacity of 30 kW. Out of about 130 PV systems in Poland over 120

are the “home” systems (of the total capacity of about 1.8 MW) not connected to

the grid. This is confirmed by the latest data on microgeneration of the lower

capacity than 40 kW (included in the definition of microgeneration as provided by

the draft act on renewable energy sources7) provided by the Energy Regulatory

Office. Overal , the segment of microgeneration in Poland at the end of 2012

included 270 systems instal ed with concessions and certificates of origin for

renewable sources of energy. The average capacity in this segment is 25kW and

the total capacity equals 6.7 MW. This is an especial y untypical situation in the EU,

both with regard to the low off-grid capacity and a very high proportion of systems

not connected to the grid. It may indicate huge and difficult to overcome barriers

to the owners of microgeneration based on RES in the access to the grid and

certificates of origin available in the national support scheme for green energy.

In 2008 in the UK there were 98 thousand power and heat-generating microgeneration

based on RES. Starting from 2008, when the new act on renewable energy sources

providing for the support scheme of fixed feed-in tariffs (FiT) entered into force, this

number has been quickly rising. At the end of 2011 there were 283.5 thousand electricity

generating microgeneration based on RES and at the end of February next year the

number reached the level of 358.3 thousand and the total capacity of 1.66 GW (average

capacity – 4.6 kW). The market of microgeneration is dominated by home systems whose

number equals 346.1 thousand (12.2 thousand are not related to buildings) and the PV

systems integrated with buildings are beginning to take the prominent role (almost 86%

among the new sources on the market).

Source: Department of Energy & Climate Change, Central Feed-in Tariff register statistics, May 2013.

Many more microgeneration are developed in the “green heat” sector (biomass

boilers, heat pumps and solar collectors). Investors are not discouraged by an

excessive number of administrative barriers and absurdly high barriers in the access

to the grid. Table 1 shows the estimated number of prosumer microgeneration

based on RES in Poland at the end of 2012, fol owing the IEO data.

Table 1. Power and heat generation microgeneration in Poland ( on-grid and off-

grid) as of the end of 2012. Source: IEO’s study results and estimates.

Small

systems

and Average

Average

Average

Total

microgeneration based on RES power [kW]

unit

cost cost of the estimated

in 2012

2012

entire

capacity of

[PLN/kW]

system [PLN] power

7 Letter sent by the Head of the Energy Regulatory Forum to the Head of the Association of

Employers of the Renewable Energy Forum. February 2013.

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systems

Solar col ectors

7.0

3 200

22 400

120 000

Small furnaces and biomass

20.0

900

18 000

90 000

boilers (dedicated)

Heat pumps (geothermal)

10.0

2 500

25 000

10 000

Small wind farms

3.0

9 000

27 000

3 000

( on and off-grid)

PV systems

3.0

8 000

24 000

139

( on and off-grid)

Average / Total

9

4 720

23 280

223 139

The level of investment (about PLN 6-7 billion) made by natural persons and

entrepreneurs in the past 10-12 years led to the establishment of the foundations for

the prosumer and civic energy system in Poland. It includes over 230 thousand

systems in total. This impressive investment effort, almost on a mass scale, shows that

investments into micro energy systems in households and farms may amount to a

few dozen thousand zlotys, a sum corresponding to the price of a city car, and thus

affordable for an average household.

In the recent decade about 230 thousand of households and other entities have

invested the total amount of PLN 6-7 bil ion in the purchase and instal ation of

microgeneration based on RES, thus establishing the foundations for the prosumer

and civic energy system in Poland.

The EU leader in microgeneration is Germany where as early as in 2010 there were over 4

mil ion producers of electricity based on RES. Most of them owned smal systems (average

capacity of about 20 kW). The chart below presents the structure of German investors in the

entire RES sector and in the sector of photovoltaics, just as an example.

About 11% of al RES investors (share of the capacity instal ed) are farmers and in the PV sector

their share reaches the level of 22%. Farmers only invested over EUR 14 bil ion in the PV sector.

Natural persons (households) in Germany are the major investors in RES (about 40 %) while the

share of traditional energy concerns is 13% and in the PV segment just 3% of the capacity

instal ed.

The structure of the prosumer micro energy segment reflects the fact that investors

took into account not just energy production and sale but also its use by specific

end consumers. Prosumer microgeneration based on RES, aiming to meet the

demand and limit energy losses in the external chain of supply, have excel ently

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fitted in with the idea of intelligent energy networks (iEN), including micro networks.

The elements of iEN and micro networks also include the systems of decentralised

energy storage (close to the consumer and close to the microgeneration) and the

elements coupling prosumers and household systems with the home network

(energy and IT network).

The wide range of technological solutions available means that practical y there is

no household, farm or smal service company that would be unable to use at least

one microgeneration based on RES. The development of microgeneration and

prosumer energy is inseparably linked with buildings that become not only green

thermal power plants but also power and heat plants and green power plants in

the new model of diffused energy. The construction sector is the largest industrial

employer in the EU responsible for 20% of its GDP and 40% of the end-user energy

consumed, according to the Eurostat. In the entire EU area there are over 190

million buildings which may be turned into micro power stations. As indicated by

Jeremy Rifkin8, the third industrial revolution involves the transformation of almost

every building into a two-function facility: a place of residency and a micro power

plant. The analyses conducted by, e.g. the PV industry, show that PV cells and

modules may be put up on 15% of building roofs and facades in the EU. As a result

of this kind of investments, the capacity of the PV systems instal ed on buildings in

the EU would amount to 1.5 TW and make it possible to meet 40% of the EU’s total

electricity demand. The al iance of the construction business with microgeneration

is especial y evident in Japan where flats with their own sources of energy are

sought after and obtain much higher prices. In consequence, developers have

expanded their offer to include an option of individual energy generation by the

user in the standard offer, which would make consumers independent of corporate

and local energy suppliers.

According to the Chief Statistical Office at the end of 2020 there were 5 215 328

buildings in Poland, which included 83% of single-family houses, 7% of two-family

houses, 6% of houses with 3 to 9 flats and 4% of houses including 10 flats and more.

Single-family and two-family buildings, so 90% of al of them, are in particular in a

privileged position when it comes to using various kinds of microgeneration based

on RES and even combining them into hybrid systems including many sources in

one building. Chart 2 shows typical areas of application for microgeneration in

buildings with special emphasis on locations in the areas that differ in terms of

development. The application of microgeneration in rural areas (marked in green)

will differ from the application in urban areas.

Table 2. General segmentation of buildings with regard to the best application of

different microgeneration based on RES.

8 Jeremy Rifkin: The Third Industrial Revolution. Palgrave Macmil an 2011.

P a g e | 16

Power

Power and heat Heat generation

generation

cogeneration

MEWi

PV

mB

mCHP

KS

gPC

KB

Residential Single-family

W,P

W,P,M

W

W

W,P, M W,P,M W,P,M

buildings

Multi-family

W,P

W,P,M

W

W,P

W,P,M

W,P

W,P,M

Factories

W,P

W,P,M

W

W,P

W,P

W,P

W,P

Offices

Tourist services

W,P

W,P,M

W

W,P

W,P,M

W,P

W,P

and

Offices

P

P,M

P,M

P,M

P

P

factories

Trade and services

P

P,M

P,M

P,M

P

P

Storage

W,P

W,P,M

P

P

Public utility buildings

P

P,M

P,M

P,M

P

P

Legend: W - rural areas, P- suburban areas, M - urban areas, MEWi – smal wind farms, PV-

photovoltaic systems, mB- micro biogas plants, mCHP- cogeneration systems fuelled with bioliquids,

KS- solar col ectors, gPC- geothermal heat pumps, KB- biomass boilers

The most universal microgeneration based on RES with the widest spectrum of

application are the PV systems and solar col ectors, i.e. convertors of solar energy.

Micro biogas plants, which, in fact, may only be used in rural areas, have the lowest

potential of application in the construction sector because of the type and

location of buildings.

A wide range of commonly available types and technological solutions with regard

to microgeneration based on RES means that any owner or user of a household,

farm or smal service company is able to become a prosumer.

There are about 3 million prosumers with access to buildings and facilities where

microgeneration based on RES may be instal ed according to estimates, which

take into account the capacity of the building related to its type and location. It

should be noted that by 2020 there wil be about 700 thousand new residential and

public utility buildings. Fol owing the directive on the promotion of the use of energy

from renewable sources, starting from 2015 each new building should have at least

one microgeneration based on a renewable source of energy.

3. The scenario for utilizing microgeneration based on renewable

energy sources in Poland until 2020

Microgeneration based on RES are the starting point of and the basis for the

development of micro networks, intelligent networks and the prosumer energy

system in its broadest sense. The prosumer energy system requires a period of

incubation and is introduced to energy systems in stages. The best definition of

these stages, taking into consideration the role of RES and microgeneration, has

P a g e | 17

been provided by Jeremy Rifkin in his latest book “The Third Industrial Revolution”9.

He cal ed them the “five pillars of revolution”, which included: 1) the development

of technologies and transfer to renewable sources of energy, 2) the transformation

of building owners into prosumers and buildings into micro power plants with

microgeneration, 3) the application of energy storage technologies in combination

with microgeneration, 3) the application of the Internet technologies, the so-called

“energy Internet” to exchange information between prosumers (buildings) and

share surplus energy, 5) the introduction of electric cars and intel igent networks.

Because of a short time perspective (2020), the scenario analysed in this study is

limited to the first 2-3 pillars, which, just like the entire revolution in the energy sector,

cannot be imagined or implemented without microgeneration based on

renewable energy sources.

Figure 2 shows the role of a microgeneration based on RES in a broader

technological and market environment. Without these systems, it is very difficult to

imagine the creation and development of intelligent energy systems and prosumer

energy. On the other hand, most microgeneration may not be developed on a

large scale or go beyond niche (individual) applications without the friendly social

environment (civic energy), technological progress in the area of energy networks

and the right energy market model with space for prosumer energy.

9 Jeremy Rifkin: The Third Industrial Revolution. Palgrave and Macmil an 2011.

P a g e | 18

Fig. 2. Microgeneration based on RES as a basis for the transformation of the

consumer-based model into the prosumer model of the energy system based on

sharing surplus energy.

Microgeneration based on RES as a separate segment of the renewable energy

market have become an element of the national energy strategy with the

adoption of the “The National Renewable Energy Action Plan”10 (NREAP) by the

government. NREAP includes a technological path for the development of

renewable sources of energy by 2020. Until now, it has been the only formal basis

for the planning of the development of the microgeneration market as part of the

renewable energy system in Poland. NREAP provides that in 2020 the share of RES in

the gross end-user energy consumed in Poland should increase by at least 15%11.

This document also defines the interim and industry targets for the electricity sector

(19%), heating and cooling sector (17%) and transport (11%).

Figure 3 presents the target structure of power and heat generation in 2020

according to NREAP. It also includes the micro energy system and microgeneration.

According to this document, in order to implement the directive objective, it is

necessary to develop smal systems and microgeneration to generate power, such

as small hydropower plants, smal wind farms (micro wind mills), PV systems,

cogeneration microgeneration fuelled with biogas and bioliquids and solar

col ectors, biomass boilers and heat pumps.

10 NREAP approved by the Council of Ministers on 9.12.2010 r.: http://www.mg.gov.pl/files/upload/12326/KPD_RM.pdf

11 This target was set on a moderate level taking into consideration the fact that Poland had a lower GDP per

capita as compared with the EU average. As there is an urgent need to install new power in the energy system

and diversify energy sources and, at the same time, there are enormous and diversified resources of RES in Poland, it is considered as a minimum for our country. Following IEO’s analysis of the possibilities of using RES in

Poland (report for the Ministry of the Economy in 2007), the quantitative target of 17-18 % in 2020 in

economically justified.

P a g e | 19

100%

12,4%

11,5%

7,7%

90%

80%

31,5%

29,3%

Biogas

70%

Solid biomass

60%

1,6%

Small windfarms

1,7%

4,3%

4,6%

78,3%

50%

Offshore wind power

Onshore wind power

40%

Solar energy

37,8%

30%

40,6%

Heat pumps

Geothermal energy

20%

Hydropower

7,0%

10%

8,5%

9,2%

8,5%

2,5%

3,0%

0%

Electricity, NDP basic

Electricity, PV

Heat

scenario

maximum scenario

Fig. 3. The structure of power and heat generation based on RES in 2020 fol owing

NREAP.

The figure also includes the scenario with the increased share of photovoltaics. Its

implementation was provided for in the document only on the condition that the

system of guaranteed feed-in tariffs is introduced to support the PV sector.

Fol owing the NREAP assumptions, in 2020 modern microgeneration are to achieve

at least 1/3 of the main target in the area of renewable energy. Prosumers’

investment outlay will exceed PLN 26 million according to IEO’s estimates.

NREAP describes in quite extensive detail the paths for the development and share

of individual kinds of RES in the green energy balance by 2020. But a further analysis

of microgeneration (up to 40 kW of power capacity and up to 70 kW of heat

capacity) requires an adoption of specific assumptions, especial y with regard to

their average capacity, output and share in the NREAP implementation.

Table 2. Target capacity for microgeneration in 2020 on the basis of NREAP and

the assumptions adopted, including the role of microgeneration in individual groups

of RES technologies. Source: IEO’s study based on NREAP.

Capacity

Share of Average

Energy

Microgenera

instal ed in microge capacity consump

tion

2020

neration in 2020

tion

capacity in

indicator 2020

[MW]

[h]

[%]

[kW]

[MW]

Hydropower stations

142 10%

30

3000

14

P a g e | 20

PV systems

1 800 80%

5

900

1 440

Small wind farms

550 70%

5

800

385

Biogas and bioliquids (CHP) 980 10%

10

5000

98

Solar col ectors

9 341 80%

7

630

7 473

Biomass boilers

26 958 54%

20

2000

14 579

Heat pumps

782 100%

10

2200

782

With the assumptions presented above, the total capacity (heat and power) of

microgeneration in 2020 would reach 24.7 GW, which includes 1.9 GW of electric

capacity. The average power factor would equal 2100 h/year and the average

capacity of a home energy microgeneration – 12 kW. Figure 4 presents the paths

for the development of power and heat-generating microgeneration.

Fig. 4. Development options for power and heat generation microgeneration

based on RES in 2013-2020. Source: IEO’s study on the basis of NREAP.

The comparison of the NREAP scenario and the actual situation as of 2013 leads to

the conclusion that the development of heat production is not far from the NREAP

assumptions while the development level of power-generating microgeneration is

below expectations.

The capacity of microgeneration based on RES in 2020 will be 24.7 GW, including

1.9 GW in new microsources for electricity generation. The total energy output

obtained from microgeneration in 2020 wil amount to 38.5 TWh, which includes 2.9

TWh of electricity.

Figure 5 shows power obtained from microgeneration in 2020 and figure 6 presents

the role of microgeneration in the achievement of NREAP’s general goal.

P a g e | 21

Fig. 5. Power (heat and electricity) obtained from microgeneration in 2020. Source:

IEO’s study on the basis of NREAP.

Total energy produced from microgeneration in 2020 would amount to 38.5 TWh,

including 2.9 TWh of electricity. The leading prosumer technology in the green heat

sector in 2020 would be biomass boilers (82%) fol owed by solar col ectors (13%).

Fol owing the assumptions, the greatest share in the microgeneration of green

electricity (648 thousand microgeneration) would belong to PV systems (85%)

fol owed by wind farms (13%).

Fig. 6. Share of microgeneration based on RES in the achievement of NREAP

targets. Source: IEO’s study on the basis of NREAP

The implementation of the scenario for the development of microgeneration based

on RES presented here would enable the achievement of NREAP’s general goal in

40 %, which would result in supplying 6.8 % of energy on a nationwide scale if the

activities for the improvement of energy effectiveness were successful or 5.8 % if the

consumption of gross end-user energy remained at the level forecast in the

reference scenario of NREAP. The share of electricity generated by

microgeneration in power generation based on RES in 2020 would slightly exceed

9%.

The results of analyses lead to the conclusion that already in 2020 the total capacity

(power and heat) instal ed in microgeneration based on RES will reach almost 25

GW and the number of systems (and prosumers if the assumption is that one

P a g e | 22

prosumer uses only one system of the average capacity of 10 kW) will exceed 2.5

million. As the significance of prosumer energy is stil commonly underappreciated

in Poland, the results obtained should become a subject of a debate and

comparison with other countries as well as the technological potential for the

development of microgeneration in Poland.

Micropower Europe in its “moderate” scenario12 forecasts that in 2020 there wil be

about 50 million microgeneration in operation in the EU. The current number of

consumers in Germany is almost double the number predicted for Poland for 2020,

as estimated above. Experts working for the UK government predict13 that until then

there might be over 13 million microgeneration on the British Isles.

Poland is a large country where a significant proportion of the population (almost

40%) lives in rural and peripheral areas, thus such a numerous group of prosumers is

thoroughly justified. The potential for the development of microgeneration based

on RES is definitely not limited by access to renewable sources of energy on a

national scale. Because of its location in temperate climate and a large proportion

of rural areas, Poland has enormous and diversified sources of renewable energy,

yet untapped to a large extent. The Institute for Renewable Energy in its expert’s

opinions for the Ministry of the Economy14 and the Ministry of Regional

Development15 determined the real economic potential of renewable energy

sources until 2020. Poland uses less that 18% of the resources (including a fraction of

one per cent of the energy from the sun, wind and geothermal sources) that it

could be using at the current level of technology, taking into consideration al

limitations related to the environment and infrastructure. Even the most extensive

exploitation of renewable energy sources until 2020 will not exceed 50-60% of their

current economic potential. At the same time, limitations are greater for larger

investments in RES and do not involve any barriers to microgeneration at present.

The forecasts available for Poland say that in the long term, together with the

technology development and infrastructure upgrade, the total share of energy

obtained from RES in energy consumption in Poland will go up to 60% in 205016 and

it is hard to imagine it stopping until it reaches the level of 100%.

The analysis of availability for the buildings with the relatively best location

demonstrated that it will be possible to instal at least one microgeneration based

on RES in 3.7 mil ion buildings, which indicated an enormous potential with regard to

location. It should also be noted that according to the Chief Statistical Office in

12 Bethan Fox, Micropower Europe - a European Perspective. Al Energy Conference

May 19 -20, 2010 r., Aberdeen, UK

13 Element Energy Limited. The growth potential for microgeneration in England, Wales and Scotland.

2008 r., Cambridge

14 Institute for Renewable Energy. Options for Utilizing Renewable Sources of Energy in Poland until

2020. An Expert’s Opinion prepared for the Ministry of the Economy, Warsaw 2007.

15 Institute for Renewable Energy. Determining the Energy Potential of Poland’s Regions with Respect

to Renewable Sources of Energy. An Expert’s Opinion prepared for the Ministry of Regional

Development, Warsaw 2012.

16 Institute for Renewable Energy and Institute for Applied Thermodynamics DLR: The Scenario for

Supplying Poland with Clean Energy Carriers in the Long Term. Greenpeace Poland, Warsaw 2008.

P a g e | 23

2011 there were 14.3 million consumers in total connected to the low voltage grid,

which included 4.8 million in the countryside with just a few thousand power-

generating microgeneration based on RES. Here, the potential is in fact not utilised

in 100%.

3.7 mil ion buildings in Poland have the technical conditions necessary for the

instal ation of at least one microgeneration based on RES.

The determination of the microgeneration development limitations is far more

complex as they may result from the necessity to balance power supply in the

situation when most microgeneration based on RES belong to the “unstable” group

(i.e. dependent on atmospheric conditions). This especial y applies to PV systems

and smal wind farms. It may be safely assumed that “unstable” capacity already

has a 50% share in the total capacity instal ed by a given operator. This is confirmed

by a few current power supply systems in the EU. The capacity of unstable sources

(1825 MW) is not a constraint for the implementation of the prosumer scenario in the

power section as even after taking into consideration the capacity of al RES and

limiting their total share to 50%, the connection potential in this respect would be

used only in 18%. In practice, the issues of balancing capacity should be dealt with

at the level of the distribution network operator taking into consideration its

production profiles and needs as well as the number and distribution of

microgeneration connected to the grid in a given area that needs balancing. This

kind of analyses have been prepared on the basis of the calculations performed by

the ENERGA group17 (currently it is the area with proportional y the largest

technological limitations for microgeneration based on RES) and the results

extrapolated to the entire country. With conservative calculations (16

microgeneration of the average capacity of 12.6 kW per one circuit) the proportion

of consumers served by the ENERGA operator that may connect a microsource to

the grid is 11%. With these assumptions, over 1.5 million power-generating prosumer

systems based on RES might be connected to the grid in the entire country (this is

also a conservative assumption because of ENERGA’s specific nature). If the

capacity of a single microgeneration is on the level of 5 kW, this number goes up to

almost 4 mil ion.

No limitations related to the technology, the grid or the access to renewable

energy sources or the number of “prosumer” buildings using energy are a barrier to

the implementation of the bold scenario for the development of microgeneration

based on RES until 2020 and meeting 6% of Poland’s end-consumer demand for

fuel and energy in this way.

In this way technological potential exceeds manyfold the number of 648 thousand

of power-generating microgeneration based on RES.

17 Rafał Czyżewski. Energa operator: Development of diffused energy sources from the perspective

of the distribution system operator. Expert’s seminar “Development of diffused energy sources”.

Warsaw, the Office of the President of Poland, 18 April 2013.

P a g e | 24

In the light of the data above, the scenario for the development of

microgeneration presented in the Roadmap will be fully feasible, also taking into

consideration the technical limitations in the field of construction, the network and

balancing. The microgeneration scenario proposed until 2020 takes into account al

technical limitations of the location potential (buildings – 34%, energy needs of

prosumers – 10%) with a large margin, including the grid connection potential, at

absolutely safe levels of balancing capacity (current grid potential would be used

in just 16-18%)

4. Socio-economic benefits of the development of microgeneration

based on renewable energy sources

The implementation of the scenario for the development of microgeneration based

on RES brings benefits not just in the form of clean energy generation as part of the

obligations related to RES that must be fulfilled by Poland as a member state, but

also a number of socio-economic benefits that may be estimated or evaluated in

many ways. They are related both to the growth of business activity across the

country and the stimulation of private investment (including households) into the

energy sector, which may be expressed by the value of the turnover on the market,

the number of jobs and pol ution emission reduction with special emphasis on CO2.

These benefits are not reflected by typical macroeconomic gains but play an

enormous role for sustainable development, both economic and social.

According to IEO’s annual studies, published in a col ective report for the entire

EU18, concerning employment and business activity in the sector of renewable

energy in Poland, turnover on the RES market in Poland in 2011 amounted to EUR

3 055 mil ion and employment was at the level of 34 600 (calculated as full-time

jobs). The actual share of Poland in the financial turnover and employment in the

RES sector in the EU as compared with its potential is moderate and amounts to,

respectively, 2.2% and 2.9%. Thus the model for RES development applied so far

does not make it possible to maximise benefits in the country. The development of

microgeneration based on RES is related to the social, economic and

environmental added value, much greater than so far. It may improve the

measurable indicators of the results of the policy implemented (direct results of the

support policy) and have a positive impact on the image of the entire sector of

renewable energy. The prosumer energy system development is related to a

considerably more democratic division of the benefits of the support policy, fairly

distributed among an extensively larger group of beneficiaries. It wil also involve

millions of active citizens into the development of the country and build sustainable

social support for further changes.

Prosumers

The implementation of the microgeneration scenario would mean activating many

small and dispersed investors across the country and thus achieving a significant

number of prosumers in 2020 – see fig. 7.

18 The state of renewable energies in Europe, EurObservER Report 2012.

P a g e | 25

Fig. 7. Number of prosumers on the market of microgeneration based on RES until

2020.

Fol owing the scenario analysed, the number of prosumers will grow by over tenfold,

from 223 thousand at present to 2 523 thousand. The largest changes in the

structure of the microgeneration owners in 2013-2020 focus on the fast increase of

solar col ector users (growing by almost 948 thousand of systems and achieving 38%

of the market share).

Number of prosumers using microgeneration based on RES will increase over

tenfold, from 223 thousand at present to 2 523 thousand in 2020.

Workplaces

An extremely important consequence of the development of microgeneration is

new workplaces in micro-, smal and medium-size enterprises. These jobs are

created in the area of production, installation and operation of appliances as wel

as in fuel supply. Fig. 8 presents aggregate results for the entire microgeneration

sector calculated for full-time jobs over the entire period provided for in the

scenario. As a result of the NREAP scenario implementation in the area of

microgeneration and taking into consideration the assumptions adopted, by 2020

there should be almost 53 thousand new jobs created, including 32.8 thousand in

the sector of biomass boilers (including fuel preparation), which is the largest

proportion, and over 12.4 thousand in the sector of solar col ectors. But the

condition for the creation of such a large number of workplaces in the sector of

small biomass boilers is departure from supporting the co-firing of biomass with coal

in power plants. Excessive aid for this technology, without supporting smal boilers,

P a g e | 26

caused a deficit in the biomass market and, as a result, an almost double increase

of its prices19. This, in turn, became a barrier to the development of the market of

small, automatic biomass boilers. The removal from supporting co-firing, planned by

the government in the draft act on RES, and the prospect of losing unstable jobs in

the sector supplying power plants with biomass provide an additional social

argument for supporting the development of smal automatic boilers fuel ed with

pel ets and briquettes and creating an alternative for national suppliers of biomass

and its processors.

Fig. 8. Illustration of the forecast for the creation of jobs in microgeneration based

on RES – aggregate results divided into types of microgeneration in 2020.

Legend: mB – micro biogas plants, mCHP – cogeneration systems fuelled with biofuels, KS –

solar col ectors, gPC- geothermal heat pumps, KB – biomass boilers.

In 2020 over 50% of the new jobs created will be in the microgeneration production

and instal ation, including: 14.6 thousand in equipment production and 13.9

thousand in instal ation. Production and fuel supply for biomass boilers only created

the demand for over 10 thousand jobs and the workplaces created by 2020 will

remain on the market at least until 2032 (taking the 20-year period of the

equipment life span).

The total of almost 53 thousand of new jobs will be created by 2020, a large share of

them in the production (14.6 thousand) and instal ation (13.9 thousand ) of

microgeneration.

CO2 emission reduction

RES technologies, including microgeneration, are an effective method of CO2

emission reduction. This applies both to the situations when a microgeneration

19 http://www.ieo.pl/pl/aktualnosci/525-wspospalanie-patologia-rozpoznana-ale-w-polsce-

bagatelizowana-i-nie-leczona-raport-ieo.html

P a g e | 27

based on RES replaces electricity from the national grid generated in almost 90% in

high-emission coal-fired power plants and the ones where a microgeneration

based on RES replaces a local, coal- or gas-fired source of energy (usually heat).

As part of the microgeneration scenario implemented, CO2 emission reduction

would grow from 2 million tons per year in 2013 to 18.8 million tons per year in 2020.

In the entire period it would exceed 75 million tons of CO2. The annual emission

reduction amounting to 18.8 mil ion tons of CO2 amounts to 5.8% of fossil fuel

emissions in Poland in 2010 (325 mil ion tons of CO2). This level would be maintained

over several years in the period after 2020 and contribute, almost entirely, to

emission reduction in 2030. Fig. 9 shows the aggregate forecast of CO2 emission

reduction achieved until 2020 thanks to microgeneration based on RES.

Fig. 9. Forecast of CO2 emission reduction [t/year] for microgeneration based on

RES as a result of the implementation of the programme for the development of

micro energy sector fol owing NREAP until 2020.

Legend: mB - micro biogas plants, mCHP – cogeneration systems based on bioliquids, K S –

solar col ectors, gPC – geothermal heat pumps, KB - biomass boilers.

The largest share in CO2 emission reduction thanks to the implementation of the

microgeneration scenario belongs to biomass boilers (66%) and solar col ectors

(20%) fol owed by heat pumps and PV systems (about 6-7% each).

The implementation of the plan for the development of microgeneration based on

RES would bring an increase in annual CO2 emission reduction from 2 million tons in

2013 to 18.8 mil ion tons in 2020 (the equivalent of 5.8% of emissions from burning

fossil fuels in Poland in 2010).

Turnover on the market of microgeneration based on RES

The turnover on the market of microgeneration based on RES was assessed on the

basis of the value of investment outlay (taking into account the division into the

equipment produced in Poland and imported from abroad), exploitation costs and

P a g e | 28

the energy costs calculated (the assumption was that the cost equals the price of

energy on the market).

Fig. 10 presents the turnover on the construction and instal ation market in the RES

sector from 2013 to 2020. It takes into account only domestic production of

equipment (on average, 50%, the largest proportion for solar col ectors – 70%,

biomass boilers – 65%, heat pumps – 60% and micro wind mills – 50%) and the entire

cost of their instal ation. This turnover grows from PLN 4.5 mil ion in 2013 to PLN 2.6

million in 2020 (excluding imports). The largest share belongs to solar col ectors (47%)

and biomass boilers (24%). In general, the share of investment into heat production

reaches the level of 80% of the total investment outlay. Total turnover on the

investment market (PLN 44 billion) accounts for just about 5% of the funds available

to Polish households, i.e. target investors.

Fig. 10. Turnover on the construction and assembly market [in PLN million] in the

sector of microgeneration based on RES until 2020.

Figure 11 shows similar results of turnover analyses for the period of the

microgeneration exploitation. Exploitation costs are lower and amount to just over

PLN 7.5 billion in 2020 but wil stimulate the economy and become an impulse for

the labour market in the long run, also after 2020.

P a g e | 29

Fig. 11. Turnover on the RES microgeneration exploitation market in 2020.

A large majority of heat wil be used by households and farms, thus lowering their

demand for the energy purchased from the outside and achieving savings. The

situation on the electricity market is different as when it is possible to sell energy

(surplus or al ) to the grid, households and other prosumers will not only achieve

savings on the energy purchased from the national distributor but also acquire an

additional source of income. The aggregate value of the power generated by

microgeneration in 2013-2020 wil exceed PLN 3 billion and in 2020 alone - PLN 864

million.

5. The implementation of the prosumer scenario

The scenario for the development of microgeneration is based on the country’s

potential and provided for in the fundamental document formulating the platform

for renewable energy in Poland, i.e. “The National Renewable Energy Action Plan”

(NREAP). It is also ful y in line with the objectives of the EU legislation (directive

2009/28/EC on the promotion of the use of energy from renewable sources). This

does not mean, however, that it will be automatical y implemented. Access to the

market of prosumer energy is blocked by legal barriers and the policy of the state

which is insufficiently explicit for prosumers, especial y with regard to energy.

P a g e | 30

Fig. 12. The market and the regulatory environment and channels for the

development of microgeneration based on renewable energy sources.

Out of many elements of the implementation environment surrounding the scenario

for the development of microgeneration (see: fig. 12), these are the legal

regulations (plus, possibly, the support scheme) that seem to be the least

unambiguous at present and thus become a barrier to prosumers.

Overcoming regulatory barriers

Directive 2009/28/WE on the promotion of the use of energy from renewable

sources establishes the fundamental framework for the development of

microgeneration based on RES and prosumer energy. By introducing obligatory

quantitative targets for the renewable energy share in 2020, the directive also

creates space for the sustainable development of microgeneration. For a number

of reasons (technical, economic and environmental) the obligations imposed by

the directive may not be implemented just and only by means of generating

energy by large renewable sources.

The directive preamble includes the statement directly addressing prosumers:

„(…)In order to stimulate the contribution by individual citizens to the objectives set

out in this Directive, the relevant authorities should consider the possibility of

replacing authorisations by simple notifications to the competent body when

installing small decentralised devices for producing energy from renewable

sources”. Moreover, the directive recommends the promotion of small, local

systems based on RES as in „(…) promoting the security of energy supply, promoting

P a g e | 31

technological development and innovation and providing opportunities for

employment and regional development, especially in rural and isolated areas” ,

emphasises „(…) taking particular account of all the costs (…) associated with the

connection of those producers to the grid and of the particular circumstances of

producers located in peripheral regions and in regions of low population density”

and obliges member states to establish „ (…) minimum requirements for the use of

energy from renewable sources in new and renovated buildings” . Thus, the

message and nature of directive 2009/28/EC is remarkably prosumer. In the first

place, it indicates the need to introduce administrative simplifications and facilitate

access to the grid.

The thesis concerning investment barriers, including access to the grid for prosumer

systems, is confirmed by surveys conducted starting from 2012 by the Energy

Regulatory Office (URE) 20. A number of conclusions drawn from these studies may

be directly applied to microgeneration.

They provide that an important hindrance to the development of smal scale power

generation involves problems with the location of sources, especial y no indication

of areas where such sources could be located in local development plans. Another

barrier is also the character and duration of administrative procedures related to

spatial planning and development in terms of land purpose or change in the

purpose of land used for their location. This is important because, fol owing art. 7

paragraph 8d of the Energy Law, the producer requesting connection to the grid

must attach the excerpt and map extract from the local development plan or, if

there is no such plan, a decision on the conditions of development for the property

specified in the application to the application concerning the conditions for the

connection to the grid.

The study results undermine the grounds for the need of extensive obligations

related to concessions and business activity in the legal system, a condition for

using the support scheme regardless of the source capacity. Moreover, it should be

noted that in the light of the law in force it is forbidden to conduct production

activity (including energy production) in the area where, according to the local

development plan, there should only be residential developments or services.

One of the key conclusions of URE studies is the absence of an adequate

procedure, compliant with legal provisions, for examining applications for the

issuing of grid connection conditions. Additional y, the distribution network operator

(DNO) may arbitrarily design the agreement on the connection to the grid. It has

been confirmed by studies that DNO may engage in illegal activities towards

power generation sources that apply for the connection to the distribution network.

They especial y focus on transferring more obligations upon the entity connected to

the grid than is even required by the current provisions of the law.

20 Energy Regulatory Office: Barriers to the Development of Smal -Scale Generation – an interim

report for the Lubelskie Province, 2012.

P a g e | 32

The prosumer energy environment confirms the results of studies conducted by URE.

On the basis of the analysis of the position of distribution network operators, the

Association of Employers of the Forum for Renewable Energy (ZP FEO)21 emphasizes

the existence of bad practice in law making where some operators acquire

excessive competencies to make arbitrary decisions about connection to the grid

and control ing the development of microgeneration according to unclear criteria,

determined only by them.

The government has noticed these problems during its work. By adopting the NREAP

resolution in 2010, it decided that the fundamental part of directive 2009/28/EC will

be implemented by passing a comprehensive act on renewable energy sources. In

October 2012, the Ministry of the Economy submitted the draft act22, prepared after

extensive consultations, to the Committee of the Council of Ministers in order to

forward it to the Parliament. The draft proposes solutions that may radically improve

the attractiveness and scale of the prosumers’ investment in RES. It makes an effort

to tackle real problems of those who invest in smal sources and microsources

based on RES.

The breakthrough elements of the regulation are new support instruments for micro-

and small systems based on RES, including administrative simplifications, lower costs

of connection to the grid and the system of fixed feed-in tariffs (guaranteed for 15

years), proposed too late although for the first time in Poland, as well as an adjusted

and well-balanced support scheme including certificates of origin. Technological

differentiation of support is used to obtain an economical y optimal and balanced

energy mix. As the intensity of support is made dependent of the system size, it also

excel ently fits in with the capabilities of the energy system and provides

opportunities for those who are currently the most exposed to the increase of

energy prices, i.e. households, farms, smal business, etc. The solutions proposed in

the project may unblock the prosumer market development and enable the

creation of the key elements of intelligent networks (e.g. microgeneration, hybrid

systems). They may also activate mil ions of citizens – investors and stimulate the

development of peripheral areas, especial y rural areas. What is more, regulations

will enable the rationalisation (elimination of excessive support) and optimisation of

the costs of the support scheme.

The draft act on RES differentiates between the systems based on renewable

energy sources on the basis of the size - microgeneration with the capacity of up to

40kW, smal systems with the capacity of 200 kW and other (large) systems. It also

introduces administrative simplifications based on capacity, especial y with regard

to the smal est microgeneration based on RES.

21 Text available at ZP FEO website: http://zpfeo.org.pl/stanowiska-i-dokumenty/205-opinia-zwizku-

pracodawcow-forum-energetyki-odnawianej-do-uwag-polskiego-towarzystwa-przesyu-i-rozdziau-

energii-elektrycznej-w-sprawie-przyczania-mikroinstalacji-oze-do-sieci-energetycznych-w-

szczegolnoci-instalacji-fotowoltaicznych

22 Draft act on renewable energy sources, version of 9-10-2012, URL

http://legislacja.rcl.gov.pl/docs//2/19349/69284/69285/dokument51403.pdf?lastUpdateDay=31.12.1

2&lastUpdatheour=3%3A16&userLogged=false&date=wtorek%2C+1+stycze%C5%84+2013

P a g e | 33

Fig. 13. Simplified administrative procedures and incentives for connecting smal

and microsources based on RES to the grid, as proposed in the draft act on RES.

Administrative

Microgeneration

Smal system

RES system ( large)

and operating

50

75

100

200

500

1

5

10

20

50

requirements

10 kW

40 kW

kW

kW

kW

kW

kW

MW

MW

MW

MW

MW

Information sent to

the operator

For smal systems, an entry to

including the

the register of power

Administrative

system description is

generators is required;

Concession required

requirements

sufficient; not a

business activity

business entity

No connection fees

provided that the

microgeneration

operates on lesser

Connection to

power than the

Half of the connection fee is charged

Ful connection fee is

the grid

current connection

charged

conditions issued –

notification of the

operator is sufficient

In practice, PV systems, small wind farms, cogeneration systems fuelled with biogas

and bioliquids and small hydropower plants supported with a system of fixed tariffs

with maximum capacities of 100-200 kW may be connected directly to the low-

voltage grid without expensive investments into the development of network

infrastructure. In terms of the grid connection, the draft act on renewable energy

sources gives preference to microgeneration with lower capacities than the actual

connection capacity available to the specific power consumer (in practice it is the

hook-up in the building) before he expresses his interest in connecting the

microgeneration based on RES to the grid as a future prosumer. In such cases the

legislator not only plans to exempt the investor from the procedures of applying for

the connection conditions but also wants to ensure him the possibility of connecting

the microsource free of charge because the hook-up and the intelligent power

meter are to be instal ed at the cost of the distribution company. There is a strong

justification for it as the costs in the system may be reduced thanks to better and

more extensive use of the existing network infrastructure. Moreover, the costs of

connecting typical prosumer systems to the grid are relatively low.

The draft act on RES also provides for the possibility of taking advantage of

administrative simplifications and exemptions with regard to concessions and

business activity by micro- and small systems based on RES. Exemption from business

activity seems to be the key element in the promotion of microgeneration and

prosumer energy. This solution has so far been especial y well received by farmers

insured in the Agricultural Social Insurance Fund but does not apply to al prosumers

because low revenues from the sale of surplus energy do not justify by any means

disproportional y high administrative costs. The simplifications proposed are ful y in

line with the government’s deregulation policy.

P a g e | 34

The draft act on renewable energy sources provides for the possibility of taking

advantage of administrative simplifications and exemptions with regard to

concessions and business activity by micro- and small systems based on RES.

Exemption from the requirement to conduct business activity is a key element in the

promotion of microgeneration and prosumer energy.

Overcoming economic barriers

At the initial stage, microgeneration based on RES wil have to face the chal enge

of overcoming the economic barrier of entry onto the market. It wil not be

removed immediately, just by the administrative simplifications proposed. Provisions

will only enable access to the market. Before microgeneration based on RES may

indeed enjoy the absence of discrimination and the benefits of the market (the

best instrument for cost reduction), their initial development should be shaped and

supported using economic instruments, just like in other countries. This is directly

provided for by the EU law. The directive on the promotion of the use of energy

from renewable sources recommends that the EU member states, when

implementing their objectives, use various schemes of support, which include,

fol owing art. 2 of the directive: investment aid, tax exemptions or reductions, tax

refunds, renewable energy obligation support schemes including those using green

certificates, and direct price support schemes including feed-in tariffs and premium

payments. The directive recommends that the support scheme should include the

sources for both power and heat generation. It treats large scale and prosumer

microsources as equal, which confirms a balanced approach of the EU to the use

of diffused sources of renewable energy. As there is a large proportion of

spontaneity in the development of the renewable energy system (fast decline of

costs and increase of effectiveness) and especial y the microgeneration

technology, the determination of the required amount of subsidies and the rate of

their decline is a great chal enge.

The analysis of the so-cal ed levelised cost of energy, LCOE23 (in this case

calculated for the period of 15 years), in microgeneration demonstrated that some

microgeneration based on RES are more competitive in the lowest capacity range

(e.g. PV systems) and others in the capacity of 40-50 kW (smal wind farms). But the

costs of energy from al microgeneration used for power generation are still higher

than electricity tariff prices for individual consumers (see: fig. 14). The smal est

energy consumers pay the most indeed, but the smal est microgeneration based

on RES, whose popularity is low, generate energy at the highest cost. The reduction

of the costs of equipment and systems will be accompanied by the paral el

increase of tariffs, especial y in tariff groups G11 and C11 (provided that there will

be an exemption from the obligation of tariff application). The process of energy

liberation for individual consumers, expected already in 2013 or at the start of 2014,

will result in the rise of energy costs for this group of consumers. This will be especially

23 LCOE (Levelised Cost of Energy) is the cost of generating electricity or heat distributed over a

defined number of years, which is directly related to the level of investment outlay, annual

exploitation costs and the capacity of a given system. It enables comparison between various

energy technologies.

P a g e | 35

difficult for households, including rural households, consuming 20% of electricity that

is traded in total.

Fig. 14. Cost calculation results for electricity generated by microgeneration based

on RES as compared with the capacity instal ed (data for 2012). Legend: MEWi – small

wind farms, PV – photovoltaic systems, MB – micro biogas plants, CHP – cogeneration

systems fuel ed with bioliquids. Source: IEO’s study24.

In the draft of the most recent amendment to the Energy Law the Parliament and

the government, expressing its position, are going to support selected energy

consumers: energy-intensive industries (thanks to the transfer of costs upon al

energy consumers) and the poorest energy consumers by means of the so-called

energy bonuses (the ceiling of budget funds for 2014-2020 has been established at

the level of almost PLN 1.2 mil ion) 25. This is definitely a step in the right direction but

by focusing exclusively on this kind of solution the government ignores alternative

options of improving the situation for a large number of households with an

enormous prosumer potential. The needs of the middle class are ignored while this

the group that wil suffer the costs and not get a chance to engage in consumer

activity.

24 The analyses apply the method of the so-cal ed Levelised Cost of Energy (LCOE). The LCOE

method was used in the expert’s opinion prepared for the Ministry of the Economy. Cf. Institute for

Renewable Energy: The Analysis of the Options of Implementing the FEED-IN TARIFF System for Micro

and Smal Systems Based on RES. Warsaw 2012. URL:

http://www.ieo.pl/pl/ekspertyzy/doc_details/619-analiza-moliwoci-wprowadzenia-systemu-feed-in-

tariff-dla-mikro-i-maych-instalacji-oze.html

25 The government’s position regarding the Parliament’s draft act on the amendment of the Energy

Law and other specified acts (document no 946). The so-cal ed smal energy three-pack, the

authors’ note.

P a g e | 36

The energy policy targeting the use of coal, shale gas or uranium does not bring

significant effects in terms of investment. Moreover, as it has been proven by the

experiences so far, it seldom leads to taking a “final investment decision” by

concerns. If this kind of decision is taken by concerns and improves the general

situation in terms of new capacities, it wil translate into supply for large industrial

agglomerations, above al . Implementing the energy strategy only in this way would

result in the weakening of the socio-economic policy cohesion and combating

energy exclusion and “energy poverty”. Thus, it is indispensible to build a grassroots

pil ar of prosumer energy.

Before the decision on investing into microgeneration is made, the interested

parties rightly assume that the prices of fuels and energy wil rise and calculate the

period of return for the outlay. The life span of a microgeneration is usual y

estimated as 20 years but it is difficult to predict the scale of energy increase for the

smallest consumers for the period of, e.g., the next 10 years. But on the basis of the

recent experiences only, the annual energy price increase by about 7%, including

inflation, seems a conservative solution. Table 3 shows the return of investment

outlay into power and heat-generating microgeneration when this solution is

applied.

Table 3. Simple periods of return for investment into microgeneration and smal

systems based on RES.

Microgeneration based on RES / capacity

above 40

below 10 kW

10 - 40 kW

range

kW

Microgeneration based on RES – power generation

Period of return with net-metering (without energy storage, 30% of own consumption)

PV systems

18,3

14.9

14.2

Small wind farms

> 20

19.0

13.5

No data

Micro biogas plants

available

> 20

13.9

Cogeneration systems using bioliquids

> 20

14.5

11.8

Microgeneration based on RES – heat generation

Period of return as compared with a gas boiler

Geothermal heat pumps

> 20

17.9

16.8

Systems of solar collectors

17,2

15.2

13.2

Small, automatic biogas boilers

11,2

11.1

10.2

Analyses lead to the conclusion that microgeneration based on RES, especial y the

smallest ones with the capacity of less than 10kW, tend to pay for themselves after

over 10 years and sometimes over 20 years. In the second case it is impossible to

obtain a full return on investment over the life span of the microgeneration without

any support. But public opinion surveys and consumer preferences26 show that

26 The survey entitled “The Attitudes Among Poles to Smal , Domestic Renewable Sources of Energy”

was conducted by TNS OBOP as commissioned by the Institute for Renewable Energy in March 2013.

P a g e | 37

individual investors expect return periods of below 10 years and, by and large,

below 5 years.

How much time, in your opinion, would people who invested in

small domestic renewable energy sources be willing to wait the

most for the return on their investment?

Hard to say

39

More than 10 years

3

9-10 years

5

7-8 years

3

5-6 years

10

3-4 years

16

%

No longer than 2 years

24

Fig. 8. Willingness among Poles to invest into microgeneration based on RES

depending on the return on investment. Source: TNS OBOP survey for IEO.

This is why a well-designed support scheme is necessary to initiate investments into

microgeneration, especial y the ones in households with the capacity of below 10

kW. This is the area where the EU prefers state intervention. Active policy in this

respect, effectively implementing social and environmental objectives, ultimately

leads to cost reduction and puts technologies on the market basis. It may also be

an effective instrument stimulating investment in construction, which is the driving

force for the entire economy, as wel as a way of meeting important social needs

and expectations of citizens, especial y the most active ones. According to public

opinion surveys, the largest number of people expressing willingness to invest into

small household sources of renewable energy were among: farmers (56%), young

people (57%) and people in active employment (53%), private entrepreneurs (70%)

as wel as managers or specialists (61%). It is them who should have the opportunity

to realise their aspirations in the civil society conditions, especial y that this facilitates

the achievement of general social objectives.

Studies of consumer preferences show that individual investors expect return periods of

below 10 years, usual y below 5 years. Currently, the largest numbers of people

already willing to invest into microgeneration are among farmers (56%), young persons

(57%), those in active employment (53%), private entrepreneurs and

managers/specialists (respectively, 70% and 61%).

Similar solutions are provided for by the draft act on renewable energy sources. It

proposes different intensity (level) of support for power generation using different

RES technologies (see: fig. 9). Forms of support should also be diverse (a system of

certificates of origin for large systems and a separate new system of fixed tariffs for

energy from microgeneration and small systems). In the shape proposed, the act

would be a breakthrough as regards the promotion of power-generating

microgeneration based on RES. The tariffs proposed, guaranteed for 15 years,

would enable the first investors – prosumers a safe entry to the market while the

support instrument itself is a convenient tool to control the development of this

market segment by the government (in terms of costs) in a safe way. The Minister of

P a g e | 38

the Economy, depending on the rate of the technology cost reduction and the

situation of the energy market, could lower the tariffs for each new group of

investors in a flexible way.

Fig. 9. Forms and amounts of aid proposed for various kinds and technologies in the

draft act on RES. Source: IEO’s study.

Fixed price

Microgeneratio

PLN/kWh

n

Smal system

RES system ( large)

Kinds of RES

50

75

100

200

500

1

5

10

20

50

Correction factor

10 kW

40 kW

kW

kW

kW

kW

kW

MW

MW

MW

MW

MW

onshore

0.95

0.65

1,20

0,90

Wind power

offshore

1.80

agriculture

0.70

0.65

1,50

1,45

1.40

waste tips

0.55

1.10

sewage

Biogas

treatment plants

0.45

0.75

co-firing

0.30

0.30

solid biomass

1.30

1.30

1.05

0.95

biomass +CHP

1.70

1.70

1.40

1.15

Biomass

bioliquids

1.15

1.15

Hydropower

0.70

1.60

1,60

2.00

2.30

on buildings

1.30

1.15

2.85

2.45

PV systems

free-standing

1.15

1.10

2.75

Geothermal

energy

1.20

1.20

While the new act would be legal y binding, smal PV systems and small wind farms

in particular would obtain an opportunity to develop under the new system of

tariffs. They could grow not only in market niches as off-grid systems, which is

happening now, but also as on-grid prosumer systems that can sel surplus energy to

the grid. The prosumer act on renewable energy sources would be the most serious

impulse to implement the necessary changes and it would help to make micro

energy generation competitive to the model of a “central power plant” which has

been supported with regulations and subsidies so far.

The prosumer law on renewable energy sources would be the most serious

impulse to implement the necessary changes and it would help to make micro

energy generation competitive to the model of a “central power plant”

supported with regulations and subsidies so far.

The costs of the renewable energy system are openly available, just like the

objectives and costs of RES support, which cannot be said about the traditional

energy sector. The draft act, a kind of declaration and constitution of prosumer

energy, spurred unprecedented interest in microgeneration and prosumer energy.

Quickly, it raised social awareness and became an inspiration to look for business

opportunities in this field, unknown so far. Unfortunately, as this is a complex issue, it

encourages stereotypes used for misinformation and attacks at the idea of

prosumer energy itself. Typically, it is done through a direct comparison of the costs

of energy production from the sources that have already paid for themselves and

new sources and suggesting that costs equal prices while withholding information

that the latter are stil , by and large, shaped by the state and not related to the

actual costs. This kind of doubts are seldom verified by a reliable cost analysis. But

reporting them together with overwhelming controversies around the directions for

P a g e | 39

the development of the national energy sector is one of the reasons why the act

adoption process is being delayed.

It is a mistake to wait until one day microgeneration wil become profitable. The

costs of introducing new technologies into the market or any new investment in the

sector of energy always initial y involve higher energy prices, especial y in the

situation when the legal system supports old technologies and blocks access of the

new technologies to the market raising their relative costs. Apart from the costs of

the appliances alone, the high costs are mainly transaction costs. They may be

constantly discouraging investments. LBNL27, an American institute, analysed why

the prices of home PV systems with the capacity of 10 kW in the USA are twice as

expensive as in Germany despite the fact that the costs of equipment are not

much different. It turns out that Americans pay about 10 times more than Germans

for the system design and the service marketing and the costs of permits and the

grid connection are as much as 7 times higher in the USA. The costs of

microgeneration based on RES in Poland will not go down unless specific actions

are taken soon. In the initial stage the act on RES is indispensible but insufficient.

Pilot and bridging programmes of subsidies for microgeneration based on RES and

for macro networks and energy storage systems (National Fund for Environment

Protection and Water Management, Regional Operational Programmes for 2014-

2020) are also needed, especial y that the act adoption is being delayed. When

they are developed, the good experiences of the first, nationwide programmes of

subsidies, i.e. the National Fund for Environment Protection and Water

Management programme of subsidies for solar col ectors, should be applied. It is

also recommended to use the experience of ROP 2007-2014 related to the

implementation of the so-cal ed collective projects for the co-financing of

microgeneration. Prosumers and the market will optimise the selection of

technologies but it is the government’s role to shape the market of

microgeneration. Only through its coordinated and consistent activities may it fully

unleash the potential of prosumer energy, implement the NREAP objectives for 2020

and achieve a true change in the energy sector. The period after 2020 should be

reserved for the total phasing out of the support instruments for microgeneration

with the exception of support for new technologies at the stage of research and

development.

Complementariness and coherence of activities for microgeneration and prosumer

energy

The promotion of prosumer energy development should be examined in the larger

context of solving infrastructure problems and, even more, structural problems in

the national energy sector. The problems have been growing and will continue to

do so, just because grids are 50 years old and the average age of boilers in coal-

27 Seel, Joachim, Barbose, Galen L, and Wiser, Ryan H. “Why Are Residential PV Prices in Germany

So Much Lower Than in the United States? A Scoping Analysis”, Lawrence Berkley National Laboratory 2013.

P a g e | 40

fired power plants is 35 years28 while no significant investments have been made

into grids and new capacities. Poland is one of the few EU countries where large

investments into conventional blocks are still planned, focusing especial y on coal-

fired ones, although increasingly fewer of them arrive at the stage of

implementation. This is confirmed by energy corporations’ withdrawals from

investment projects, ready to be implemented and worth over PLN 20 billion,

concerning four coal blocks of the capacity of 900 MW each (two in Elektrownia

Opole, one in Elektrownia Rybnik and one in Elektrownia Ostrołęka) at the turn of

2012/2013. Professor Jan Popoczyk, commenting not just on these plans but also on

the general situation in the energy sector regarding its capacity to ensure energy

security, said29: “If preparing these projects for implementation cost just 3% of the

investment outlay, then over PLN 600 was wasted. And this money could have been

used to build thousands of solar, gas and biogas micro power plants.” Meanwhile,

as a result of coal-fired power plant closedowns until the end of 2015, the system is

likely to lose 5-6 GW of capacity. Additional y, the upgrade of the energy

transmission and distribution sector, especial y of the low voltage distribution grids in

rural areas is delayed, which has direct consequences for the security of energy

supply30.

The so-cal ed SAIDI index of outage duration (planned and unplanned, including

disasters) in power supplies in Poland published each year by distribution network

operators was, depending on the distributor, from 76 minutes (RWE) to over 530

minutes (PGE) per consumer per year. This index, describing the time of the

absence of power supply, is almost 10 times higher than in European countries. It is

difficult to evaluate the exact costs of the failure to supply power on a nationwide

scale, but they are extremely annoying for each consumer. For example,

according to the American analysis, 1 minute of power outage for Sun

Microgeneration costs one million dollars31. The problem concerns, e.g., large

commercial farms whose production value is growing and becoming more and

more dependent on electricity-powered appliances (for milk or poultry production).

The USA32 implements a comprehensive programme for the development of

microgeneration based on RES in rural areas and the modernisation of rural grids as

part of the development of intelligent networks. The programme has been in place

since 2007 and in 2012 received the financing of USD 6.1 billion from the budget of

the US Department of Agriculture33. Out of this amount, USD 4 billion were

28 Institute for Renewable Energy: The Evaluation of the Economic Effects of Maintaining the Aid for

the Technologies of Coal and Biomass Co-firing. Warsaw, 2013. URL:

http://www.ieo.pl/pl/biomasa.html

29 Jan Popczyk: Jak zapewnić bezpieczeństwo energetyczne Polski [How to Ensure Poland’s Energy

Security], Zielone Wiadomości, nr 5/2013.

30 Zygmunt Maciejewski: Potrzeby inwestycyjne sieci elektroenergetycznych[Power Grid Investment

Needs]. Materiały z konferencji: Finansowanie inwestycji energetycznych” [Materials from the

conference on funding energy investments]. Procesy Inwestycyjne, Warsaw, 31 March 2010.

31 Report prepared for the U.S. Department of Energy by Litos Strategic Communication under

contract No. DE-AC26-04NT41817, Subtask 560.01.04

32 National Science and Technology Council: A Policy Framework for the 21st Century Grid: Enabling

Our Secure Energy Future. Washington DC, June 2011.

33 2012 budget for the U.S. Department of Agriculture (USDA)

P a g e | 41

earmarked for the construction of smal systems based on RES in rural areas (wind

farms and PV systems mainly). The cost of the necessary grid development for

microgeneration based on RES at its “ends” is much lower that of the development

of large energy sources (both RES and e.g. nuclear). In Germany as many as 97 %

of RES need a high voltage line34. Thus, the energy revolution does not mean just

and only the need to expand transmission networks but also to open up to local

alternatives available.

The liberalisation of the market, which is advancing despite resistance, should

improve the quality of energy supply. But it wil be linked with enormous costs for

consumers in the areas where demand for energy is dispersed. Conventional

energy costs for end users cannot be maintained at the acceptable level despite

the absence of new investments and the cross-financing of tariffs for individual

consumers connected to the low voltage grid that is in place. In 2010, so before the

coal-based energy could feel the costs of the climate package, the two EU

countries with the highest prices of energy for households were the Czech Republic

and Poland35. The annual cost was over EUR 2000 (while in the UE-27 it was on

average EUR 1500 per year). The energy costs in Poland accounted for 9% of an

average household income.

Many foreign solutions may be applied in a creative way. For example, in Germany,

which has successfully implemented the scenario of prosumer energy, there are 4

million prosumers and over 60% of systems based on RES supply power for

households. Home systems based on RES just outside our western border have

already reached grid parity, which means that the power produced by the

household’s own power plant will be cheaper than the power from the grid. This

applies especial y to photovoltaics. A German prosumer pays 25 eurocents/kWh

from the grid while power generation in PV microgeneration costs 13-15

eurocents/kWh.

Meanwhile, technological backwardness and the discrepancies between the

needs of increasingly larger numbers of active citizens (potential prosumers) and

legal regulations, still oppressive, continue to grow. This may have negative effects,

both social y and economical y. Instead of cooperation mechanisms for prosumer

sharing of surplus energy, the trends that arise focus on the activity outside the grid.

As noticed by professor Krzysztof Żmijewski36, if the state does not regulate the entire

sphere of prosumers (producers and consumers of energy, both at the same time),

it wil spontaneously develop outside its control and not necessarily in the desired

direction. The absence of regulations and state support will not prevent people

34Dieter Rosenwirth and Kai Strubbe; Integrating Variable Renewables as Germany Expands Its Grid .

RenewableEnergyWorld No3/2013

http://www.renewableenergyworld.com/rea/news/article/2013/03/germanys-grid-

expansion?page=all

35 ENERDATA: What is the future for housing energy expenditures? 2012 http://www.leonardo-

energy.org/what-future-housing-energy-expenditures

36 Materials from the conference “SMART GRIDS - the chal enges for the distribution system

operators”. Procesy Inwestycyjne, 15 April 2013.

P a g e | 42

from setting up microgeneration. This kind of activities, when implemented without

any broader plan, would not reduce the costs in the system in any significant way.

This is why “prosumer proposals” prepared by the Ministry of the Economy in the

draft act on RES are necessary and appear at the right moment as constructive

solutions. The project of a new programme of the National Fund for Environment

Protection and Water Management called “Prosumer” fits in very wel with this

scheme. It wil be a microfinancing instrument until 2016 for al home systems based

on RES, including heat production. It should be noted that these proposals ensure

the “legislative minimum” required from the perspective of prosumer energy.

The developed market of dispersed heat is not regulated by the state to the same

extent as the electricity market. Nor is it supported by the provisions of the act on

renewable energy sources, which means that heat is more susceptible to the rule of

value and individual activities. Prosumer energy built on good experiences related

to microgeneration for heat generation is thus the best experimenting field.

Fol owing good market models, using increasingly better and more intelligent

microgeneration (such as smart grid ready equipped systems with heat storage

facilities and control ing systems), they may be treated as learning tools for the

entire groups of prosumers, instal ers and technology providers. It may be easily

assumed that green heat prosumers will also become the pioneers of electricity-

generating microgeneration based on RES. Along with the interest and involvement

of a sufficiently large group of prosumers, access to technologies and qualified

instal ers, activities in the field of power-generating microgeneration based on RES

require complementary actions from network operators and the application of IT

technologies to manage local energy sources cooperating with the grid.

Investments wil be necessary here. They may not, however, be excessively

expensive or as arduous as investments in the construction of power lines. The ones

primarily considered are the investments in security infrastructure and

telecommunications. According to the operator’s representatives, technological

aspects may still be tackled by distribution companies37. Legal regulations should

only ensure the complementariness of actions and the effect of synergy.

This Roadmap for microgeneration based on RES shows the direction and the

necessary sequence of activities, also indicating the need of departure from

business-as-usual activities in the energy sector. It is becoming increasingly more

obvious that RES are prosumer energy and prosumer energy is a breakthrough.

When promoting strategic activities to improve the competitiveness of the

economy, Professor Jerzy Hausner38 cal ed for the “trajectory of development” that

should be applied instead of single interventions. He believes that the energy

sector, which is a bottleneck, instead of “more of the same” needs a different

37 P. Zalewski, J. Ziobrowski: Energetyka obywatelska – aspekty techniczne, sieciowe i prawne [Civic

Energy Sector – technical and legal aspects of the grid]. Forum Debaty Publicznej „Nowe źródła

energii" [Public Debate Forum “New Sources of Energy”], 12.12.2012 at the Presidential Palace.

38 Jerzy Hausner: thesis to the report on the competiveness of Poland’s economy. Materials from the

Public Debate Forum entitled “Competitiveness and Poland’s Economic Development”. The Office

of the President of Poland, 23 January 2013.

P a g e | 43

approach, just because of the exhaustion of traditional resources and sources of

development.

6. The summary of analyses and fundamental conclusions

Roadmap – “The Plan for the Development of Microgeneration for Poland based

on Renewable Energy Sources until 2020” is not an entirely new document. Nor is it

a study that ignores the current trends, energy technologies present on the market

(across the world, in the EU and in Poland) or commonly accepted development

concepts. The study is based on two fundamental documents developed at the

Ministry of the Economy. The first one is “The National Renewable Energy Action

Plan” (NREAP) adopted by the government in 2010 that determined the

technological paths of development for the renewable energy sector until 2020.

The other one is the draft act on renewable energy sources (version from October

2012) that should help to implement NREAP in Poland and directive 28/2009/UE on

the promotion of the use of energy from renewable sources. These documents

make the foundations for the prosumer energy system where microgeneration

based on RES play the key role.

Both microgeneration based on RES and prosumers already exist and confirm that

the entire concept is real. The study presents the level of development for home

microgeneration based on renewable energy sources and the real path for their

development until 2020, based on solid technological and economic foundations.

Microgeneration are the first and key, according to the authors, “pillar” of the

prosumer energy system in Poland. Attention has also been drawn to other pillars

transforming building owners into prosumers (and buildings into micro power plants)

and

using

temporary

energy

storage

technologies

integrated

with

microgeneration. The key conditions for the development of microgeneration

based on RES and the most important development activities include: 1) the

promotion of prosumer attitudes among consumers, 2) the removal of legal barriers

to investments, including access to the grid, 3) an al iance with the construction

and housing sector and 4) synergy with the activities for the implementation of

intelligent energy networks in Poland.

The key conditions for the development of microgeneration based on RES and the

most indispensible development activities include: 1) the promotion of prosumer

attitudes, 2) the removal of legal barriers, including access to the grid, 3) an al iance

with the sector of construction and housing, 4) synergy with the activities for the

development of intelligent energy networks in Poland.

The Roadmap, with the existing methodology limitations, shows the potential for the

development of microgeneration based on RES through the potential of prosumer

investments and the increasing number of prosumers producing energy in

microgeneration in order to use it for their own purposes or sel it. A large group of

prosumers, a wide range of available microgeneration solutions and favourable

legal conditions wil make the prosumer energy system based on microgeneration

P a g e | 44

using RES a common phenomenon in the coming years and a mass scale trend by

2020. Growth dynamics for prosumers/investors, from the current situation (as of

2012) to 2020 has been shown in figure 10.

Heat pumps

Biomass boilers

Solar collectors

Micro CHP biogas and

2020

bioliquids

2012

Small wind farms

PV systems

Fig. 10. The number of prosumers – users of microgeneration based on RES in 2012

and in 2020 (logarithmic scale). Source: IEO’s statistics and estimates for 2012 and

the results of analyses prepared for NREAP for 2020.

If NREAP is consistently implemented over the period of 7 years, by the end of this

decade the number of RES prosumers and the number of microgeneration based

on RES should go up from 223 thousand (including 220 thousand of heat-generating

microgeneration based on RES, primarily solar col ectors and biomass boilers) to

2523 thousand, i.e. by 2.3 mil ion. Fol owing the analyses conducted, the

advantage of green heat prosumers (about 1875 thousand systems) over the new

prosumers of green power (about 650 thousand systems) will remain in place until

2020 but the growth rate for the latter wil be higher. To compare, the number of

microgeneration in the EU is estimated at the level of 10 million items, with the

largest share of solar col ectors fol owed by PV systems and smal wind farms. In

2020 the number of microgeneration based on RES should reach the level of 50

million in the EU.

Table 5 presents a synthesis of the microgeneration scenario implementation results

divided into microgeneration for heat and power generation (fol owing the

assumptions provided for in NREAP and the draft act on RES).

Table 5. The prosumer energy sector development effects based on the

development of microgeneration based on RES in Poland. Situation in 2020. Source:

IEO’s study.

CO

Number Capacity Energy Share in

2 emission

reduction 2013-

NREAP

2020 [mil ion

[items]

[MW]

[GWh]

[%]

tons]

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Heat-generating

microgeneration

1 875 000

22 834

35 586

51.7

69 777

Power-generating

microgeneration

648 000

1 923

2 931

9.0

5 690

TOTAL

2 523 000

24 757

38 517

38.0

75 467

The results of analyses for 2020, conducted on the basis of the real assumptions

fol owing from the government documents, are impressive indeed: 2.5 mil ion

prosumers, 25 GW of the capacity instal ed (including almost 2 GW in power-

generating sources), CO2 emission reduction by 75 mil ion tons per year, almost 38%

share in the implementation of NREAP targets. It should be emphasised that the

annual CO2 emission reduction at the level of 18.8 mil ion in 2020 only accounts for

5.8% of fossil fuel emissions in Poland in 2010.

There are other, extremely valuable, effects of the prosumer scenario

implementation. By 2020 there should be almost 53 thousand work places, including

32.8 thousand in the sector of biomass boilers (together with fuel preparation) and

12.4 thousand in the sector of solar col ectors. Over half of the new jobs in 2020 wil

be created in the microgeneration production and installation, including: 14.6

thousand in equipment production in Poland and 13.9 thousand in the system

instal ation performed by local companies.

The development of microgeneration also provides a strong, nationwide economic

impulse. The turnover on the market of microgeneration based on RES will increase

from PLN 4.5 billion in 2013 to PLN 26.5 billion in 2020 (including imports amounting to

PLN 44 billion). The largest share in financial turnover belongs to solar col ectors –

47% and biomass boilers – 24%. The total turnover on the investment market wil be

PLN 44 billion. By and large, these wil be the investments made by households and

farms as target investors. These investments would make it possible to modernise

home energy systems, reduce emissions and make a large proportion of

households independent of the fuel and energy price hike for dispersed consumers.

Microgeneration based on RES in 2020:

Number of prosumers – owners of microgeneration based on RES – about 2.5 mil ion;

Capacity instal ed in microgeneration: about 25 GW;

Energy generation: about 40 TWh/year;

Share of microgeneration based on RES in the implementation of the national target

for RES for 2020: about 40%;

CO2 emission reduction in 2020: about 19 mil ion tons (6% of the energy sector

emissions in 2010)

Jobs in 2013-2020: about 54 thousand, including about 15 thousand in equipment

production.

Currently, it is hard to find another sector in Poland that could have such a

significant, common and sustainable contribution to the country’s socio-economic

development. Thanks to prosumer energy, Poland would have a chance to

P a g e | 46

implement the EU climate policy, which is considered expensive, and make good

use of the EU’s green budget in 2014-2020.

In order to implement a comprehensive programme for the modernisation of home

energy systems and turn houses into environment-friendly thermal heating plants,

heat and power plants and power stations, it is necessary to adjust the support

scheme to this objective. The instruments of active market shaping are needed

now, at the start of the process. The analyses conducted for the purpose of this

work indicate that the anticipated cost reduction for the technologies and

instal ation of microgeneration based on RES as well as the optimisation of their

selection, together with improved effectiveness, should lead to the reduction of the

costs of energy obtained from microgeneration in 2020 by 10-15%. Taking into

account the trends of rising prices for energy from fossil fuels, the above-mentioned

processes should lead to the quick reduction of any need for the microgeneration

support after 2020 until its total elimination.

The fundamental step towards sustainable and effective development of prosumer

energy, which does not require any new obligations, is to ensure the conditions for

the development of microgeneration based on RES, fol owing NREAP and the

requirements of the directive on the promotion of the use of energy from

renewable sources. The implementation of this scenario depends on the adoption

of the act on renewable energy sources in the version similar to the draft prepared

by the Ministry of the Economy last year and additional support with micro subsidies

for the development of off-grid microgeneration based on RES, especial y the

systems for heat generation. Further postponement of the implementation of NREAP

becomes dangerous for the energy system and the entire country. The absence of

the act on renewable energy wil be felt by consumers as the prospects of energy

cost reduction wil be moved into more distant future. Bearing in mind the energy

crisis and the economic slowdown when increasingly greater numbers of energy

consumers are becoming “sensitive users” expanding the area of energy poverty,

can postponing beneficial changes and blocking the development of the

prosumer market be considered economical y sensible and social y desirable?

A fundamental step towards ensuring sustainable and effective development of the

prosumer energy system is conscientious implementation of NREAP adopted by the

government, fol owing the requirements of the directive on the promotion of the use

of energy from renewable sources. It requires the adoption of the act on RES in the

version similar to the draft prepared by the Ministry of the Economy. Because of

l egislative delay, legal barriers and the need to shape the mass market, it is

indispensible to launch a strategic nationwide “bridging” programme of micro

subsidies for the purchase and installation of microgeneration based on RES,

especial y those not connected to the grid.

The authors hope that this publication, combining the idea of prosumer energy with

renewable energy, will become an impulse for a wider debate on the subject and

a reflection of administration, decision-makers and politicians, which will support the

activities aiming to tap into the enormous unused potential of microgeneration

P a g e | 47

based on renewable energy sources, launched but not completed, and wil create

the foundations for the development of the prosumer energy market in Poland.

P a g e | 48

7. Recommendations

In the light of the analyses conducted and the results obtained, the

recommendations that may be formulated should, above al , be targeted at the

authors of the energy policy and the administration responsible for its

implementation. The activities proposed below aim to unleash the opportunities for

the development of microgeneration based on RES used for power generation and

especial y on-grid systems. They should also become a new impulse for the

development of al microgeneration based on RES, especial y those used for heat

production, presented in “The National Renewable Energy Action Plan.”

Legal recommendations:

A joint recommendation for both heat and power-generating microgeneration

based on RES (regardless of whether the energy produced is to be used to meet

the producer’s own needs or sold to the grid, entirely or partial y) is as fol ows:

 Exemption from the obligation to obtain a building permit for a

microgeneration based on RES and the infrastructure related to it.

For power-generating microgeneration based on RES it is indispensable to eliminate

“artificial” legal barriers related to administrative procedures and the grid

connection procedure, including:

 Exemption from the need to obtain a concession and entry to the regulated

business activity register;

 Exemption from the need to register business activity in order to sel surplus

energy to the grid;

 Imposing al duties related to the registration of the system in the registers

and records as required on the distribution system operator;

 Ensuring the option of connecting buildings and facilities with an electricity

hook-up to the grid on the basis of a notification.

The other group of recommendations, paral el and coherent with the first, concerns

the launch of the support scheme for microgeneration, fol owing the requirements

of the directive on the promotion of the use of energy from renewable sources.

They include:

 Exempting prosumers from the fees for the connection to the grid and the

instal ation of the measurement systems by the network operator, free of

charge;

 Ensuring adequate support with a system of guaranteed (for a given

investment) fixed feed-in tariffs, phased out with time for new investors (to

zero in 2020), which wil make the cost of energy from a microgeneration

(LCOE) equal to the cost of energy from a low-voltage network in a given

tariff;

 Ensuring the long-term support (at least to 2016) of investment microsubsidies

from environment funds (The National Fund for the Environment Protection

P a g e | 49

and Water Management) with an option to use bank microloans for the

amount enabling prosumers to obtain a simple return period at the level of 6-

8 years. Energy storage systems (especial y heat storage), the costs of the

microgeneration integration with hybrid systems and the costs of measuring

the functional effect should be fully eligible;

 Determining a separate thematic priority in Regional Operational

Programmes related to the financing of the purchase and instal ation of

microgeneration based on RES by natural persons and small and medium-

size enterprises. There should be separate cal s for proposals related to the

production of equipment and components for microgeneration based on

RES and the subcategory of complex projects, rewarded in the evaluation

system of proposals for the economic effects of the integration with energy

storage systems (without “automatic” rewards for, e.g., a greater number of

RES technologies and a greater number of partners).

Strategic activities:

It is necessary to ensure the framework conditions for the development of systems

based on RES, following the NREAP scenario specified in more detail in this

Roadmap. Whether the scenario is ful y and consistently implemented depends on:

 Full implementation of directive 2009/28/EC on the promotion of the use of energy

from renewable sources by adopting a act on RES, not later than by the end of

2013, in the version similar to the draft prepared by the Ministry of the Economy in

October 2013;

 Departure from the “apparent” implementation of NREAP by means of the

promotion of large-scale biomass and coal co-firing in power plants and

hydropower stations that have already paid for themselves, which does not bring

Poland closer to the implementation of RES targets for 2020. Instead, it is important to

channel the funds saved into investments bringing sustainable economic, social and

environmental effects, especial y the development of microgeneration based on

RES;

 Full implementation of NREAP, including the most delayed component, which is the

plan for the development of microgeneration based on RES presented in this

roadmap.

 Full integration of NREAP and the scenario for the development of microgeneration

based on RES by 2020, together with the perspective after 2020, with the new

“Energy Policy of Poland until 2035” and the timetable of executive activities;

 Providing for the needs and conditions of independent energy producers and

prosumers in al legal solutions developed in order to unblock the access of

microgeneration based on RES to the energy market and improve their

competitiveness. At the same time, limiting the practice of developing legal

solutions that strengthen the position of the traditional large scale energy system and

energy concerns.

P a g e | 50

Supporting activities:

 Launching, from the start of 2014 the latest, the national educational and awareness

campaign targeting al citizens, which wil enable prosumers to find out about the

potential and broad range of microgeneration based on RES to choose from as wel

as make it easier to take practical activities and balance the impact on social

awareness by other governmental campaigns, launched earlier, promoting nuclear

policy and shale gas;

 Establishing, by the end of 2013 the latest, a strategic research programme focusing

on the development of the technologies of microgeneration based on RES and their

integration with hybrid systems and micro networks together with the options of

energy storage in power and heat storage facilities. The funds available in this

programme should not be less than the funds in the programme for the national

shale gas potential, i.e. about PLN 1 billion. It should include a dispersed but

integrated and coordinated programme of activities targeting real threats, which

wil involve many public and private centres of research and development and

cooperate, in particular, with innovative small and medium-size enterprises from the

green economy sector that produce equipment and develop advanced design

technologies. It should also include the programme for the home energy

microgeneration assembly;

 Active involvement of Poland into the works of the EU on new technology standards

for microgeneration based on RES (e.g. as part of CEN/CENELEC Committee) and

immediate application of these regulations in Poland (e.g. the translation of

standards). Assigning all fundamental microgeneration based on RES adequate

symbols of the Polish Classification of Business Activity, which is often the requirement

before this sector may be monitored or noticed by public administration. In order to

support high-quality equipment and instal ation services, public administration

should start a register of microgeneration based on RES and appliances with

certificates admitting it to the market, just like the list of microgeneration installers

provided for in directive 2009/28/EC;

 On-going promotion of the export of equipment and microgeneration based on RES

by supporting the participation of companies in foreign fairs and trade missions and

formal inclusion of the RES microgeneration sector in the programme promoting

“sectors with a high export potential”. Aid for national companies should be

supported with a list of requirements applicable to RES equipment which are in force

in the countries with a large export potential. This list should also include concise and

up-to-date information concerning the support scheme for RES in these countries

and its extent with regard to individual RES technologies.

If the implementation of the above recommendations is abandoned and the

situation when directive 2008/29/EC, NREAP and the above mentioned activities for

prosumer energy have not been fully implemented continues, Poland, despite high

costs, will not achieve the EU targets set for 2020 with respect to RES or any socio-

P a g e | 51

economic targets that accompany the development of the renewable energy

sector such as greater local and national energy security, new and sustainable

work places, development of smal and medium-size enterprises, stimulation of

private investment, development of innovation and green economy, reduction of

emissions to the atmosphere. Moreover, it may freeze and deform the strategy for

the development of the national energy sector and, as a result, have no alternative

to the use of outdated technologies with growing energy costs over the long term.

P a g e | 52

Declaration of the companies representing the green economy and the

prosumer energy sector

Having in consideration that:

Directive 2009/28/EC on the use of the energy from renewable sources is a chal enge

for Poland as well as a unique opportunity for increasing the role of microgeneration

based on RES in the achievement of environmental and energy targets for Poland for

2020 and wil make it possible to obtain a number of additional socio-economic

benefits;

Despite the absence of a systemic and comprehensive support for prosumer energy,

citizens and prosumers have spent almost PLN 7 billion on the purchase and instal ation

of 230 thousand microgeneration based on RES in the past decade;

The report entitled “The Plan for the Development of Microgeneration for Poland based

on Renewable Energy Sources until 2020”, which is a social and industrial roadmap for

the development of the prosumer energy system in Poland, confirms the thesis of “The

National Renewable Energy Action Plan” prepared by the government that there are

rational premises and justified forecasts that in 2020 the capacity of the

microgeneration based on RES instal ed should reach 2 GW for power generation and

23 GW for green heat generation and the number of prosumers wil grow to 2.5 mil ion

making the prosumer energy sector a key component of renewable energy and an

important element of energy, economic and social policy;

The implementation of the above mentioned investment plan estimated at the level of

PLN 44 billion of “green investment” (including, by and large , the investments made by

households and farms as target investors) wil make it possible to obtain almost 40 TWh

of green power and heat in 2020 (almost 40% share in the NREAP target achievement)

and CO2 emission reduction by 75 mil ion tons/year (about 6% of emissions from fossil fuel

combustion in Poland in 2010).

We, undersigned below, representatives of the green economy businesses involved

in the development of the prosumer energy sector, declare that:

 Poland has the necessary manufacturing and organisation capacity to produce,

supply to the Polish market and instal the required number of microgeneration

based on RES that may achieve the total capacity of 26 GW in 2020, which wil

provide jobs for over 23 thousand Poles;

 We have the resources, knowledge and skil s necessary to develop national

technologies for the production of microgeneration based on RES in order to

systematical y optimise costs and increase their effectiveness as well as meet the

expectations of their buyers and prosumers – who wil use microgeneration based on

RES to the fullest extent possible.

 We have the export potential and we are competitive on foreign markets; our

contribution to the improvement of the national trade balance and the

competitiveness of the Polish economy continues to grow.

Signatures of persons [name and surname] representing the companies and organisations

that are members of the coalition [list of names of companies]

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