According to the draft update of Poland’s National Energy and Climate Plan 2030 (NECP), the country is expected to spend around PLN 1.1 trillion on the energy transition by 2030. The updated plan places greater emphasis on the dynamic electrification of district heating. According to industry estimates, the cost of transforming this sector alone could reach nearly PLN 0.5 trillion. It is precisely in the cooperation between the energy and heating sectors that many transition projects may be based. Experts stress that local governments already have access to funding for transformation, but there are still too few concrete projects.
“Local governments are only beginning their journey with the energy transition. Some are already implementing projects, but most are still at the analysis stage. In general, Poland lacks enough projects, and it would be beneficial if their preparation accelerated so that we could already see funds being deployed and lower amounts spent on ETS and CO2 emission allowances,” Marcin Borek, Director of the Local Government Investment Department at the Polish Development Fund (PFR), told the Newseria news agency. “Grant funding today is distributed mainly through institutions such as the National Fund for Environmental Protection and Water Management, as well as various programs supporting primarily district heating transformation and, in some cases, energy transformation in local governments.”
He emphasized that there is currently more funding available than well-prepared projects at the municipal level. Transformation on a national scale, however, means an undertaking worth many billions.
“Local governments, together with private district heating companies, will need to spend nearly half a trillion zlotys by 2050 on the full heating transition. Roughly three times as much will be needed for building thermal modernization projects. These are enormous sums, comparable to the total value of projects completed during Poland’s first 25 years in the European Union,” the PFR director said.
According to estimates by the Polish Heating Industry Society, Poland may spend as much as PLN 466 billion on transforming the district heating sector by 2050. For this reason, during work on the EU heating and cooling strategy, the organization called, among other things, for increasing the intensity of state aid to 60% and raising notification thresholds for projects in the heating sector to EUR 150 million.
“We are still in the phase of creating a strategy for district heating, in terms of developing a model for heating and energy in Poland. This is certainly not a finished process yet. There is a very active discussion about how these sectors should cooperate in order to generate value. There are many methods of producing heat that also generate electricity, but there are also many ways of producing conventional utility-scale electricity that also generate heat,” Marcin Borek stressed.
According to the report “District Heating in Numbers 2024” by the Energy Regulatory Office, coal-based fuels still dominated the heating sector in 2024, accounting for 57.4% overall, although a downward trend was visible. According to the draft update of the NECP, the share of renewable energy sources (RES) in heating and cooling could reach 36.7% in 2030 and 67.6% in 2040.
“There are periods when the price of electricity in the system turns negative, because there is much more energy available than can be sold at a given moment. Heating companies are talking about solutions that would use this electricity—free or priced below zero—for heating purposes. On the other hand, there are also situations when the utility power system needs additional capacity. Today we mainly secure that capacity through imports from external systems, but one can imagine a model in which district heating companies work intensively to meet the electricity needs of the entire transmission system,” the expert said.
According to the Institute for Renewable Energy report “Green Electrification of District Heating”, the theoretical potential for electrifying district heating with cheap renewable electricity is enormous. Grzegorz Wiśniewski, president of the institute, emphasizes that without investment in the electrification of district heating, Poland will continue to waste cheap and zero-emission renewable electricity, especially from solar and wind farms. Between January and the end of June 2025, grid operators curtailed 879 GWh of solar and wind energy under non-market curtailment mechanisms. That was nearly 20% more than in the whole of 2024 and twelve times more than in 2023. As the expert adds, this wasted energy is equivalent to the electricity demand of 500,000 households.
“We do not yet have a final published strategy for district heating, but we do have the NECP. Many signs suggest that, as a country, we want to pursue a model involving deeper electrification of district heating. This means that electricity available at negative or zero prices will be absorbed by heating systems and converted into heat. Solutions such as thermal storage will become more widespread, which means that—with properly priced investment outlays related to such transformations—heat may not become more expensive in district heating systems, of which we have around 1,400 in Poland. This direction should be taken into account in many transformation activities,” Marcin Borek said.
On 5 March, the Standing Committee of the Council of Ministers adopted a draft deregulation act in the energy sector, which is intended, among other things, to accelerate the electrification of district heating systems. The draft introduces improvements in the area of cogeneration support and provides a definition of heat or cold storage. It also sets out the rules under which heat produced in electric boilers may be recognized as coming from renewable energy sources for the purposes of obtaining the status of an efficient district heating system. As the Ministry of Energy stresses, the aim of the proposed changes is to simplify regulations and create more stable conditions for the development and modernization of the energy sector.
“The second area is greater electricity production by district heating systems. Today, utility power generation is based primarily on unstable sources, which causes the supply and demand curve to be highly imbalanced. There are moments when the national system pays very high prices for electricity generation. Those are also the moments when district heating could produce electricity. Of course, that only makes sense if the heat generated at the same time is stored rather than wasted. The assumptions for synergy between these two systems seem to be a fairly strong foundation on which transformation projects can be built today,” the PFR expert added.
