Economic aspects of the use of deep geothermal heat in district heating in Poland

Abstract

The paper analyzes the economic aspects of geothermal heating plants in Poland—selected plant operating costs, prices of geothermal heat, and economic efficiency of geothermal heating plants. All six geothermal heating plants operating in Poland are analyzed including the oldest plant established in 1994 and the newest plant established in 2013. The cost structure of geothermal heating plants tends to significantly; however, amortization is the principal operating cost at close to 55% in some cases. Other key costs include use of materials and energy. A comparison of the net price of 1GJ of heat produced by selected heating plants shows that heat produced by brown coal (lignite) plants is the least expensive, while that produced by black coal (anthracite) plants is more expensive. The prices of heat produced by geothermal heating plants are less competitive, but still more competitive than those of heat produced using natural gas, biomass, and fuel oil. An analysis of the economic efficiency of geothermal heating plants shows that this source of heat has significant potential for profitability, which is also shown by its positive EBITDA. A notable part of the revenue of geothermal heat companies comes from various types of subsidies and grants. A large number of difficulties of estimate risks and high start-up costs along with a low rate of return have thus far discouraged private entrepreneurs from pursuing this line of investment. As a result, virtually every geothermal heating plant in Poland is owned by the government at the local or national level.