Company activities
Industry and markets
Heat market
The Poland’s heat market is a well-developed sector of the economy. The heat market is a local market, as the transport of heat media is quite limited, unlike the transport of electricity or natural gas, which may be transmitted over long distances. Poland is among the top European countries where heat supply from existing heating systems constitutes a major share in the total heat supply.
In the city of Wrocław there is a potential for a stable demand for district heat. Despite increasingly better insulation of buildings and passive construction, in the long-term the demand should not fall. In fact, it is expected to grow on account of development of construction.
On 11 January 2024, KOGENERACJA S.A. obtained a decision of the President of the Energy Regulatory Authority amending the existing concession for heat generation, granted for the period from 12 November 1998 to 31 December 2025, to a decision on a concession for heat generation with a total installed thermal capacity of 1 332 MWt.
The potential for maintaining the demand results from:
Changes in the volume of heat sales are affected by external temperatures in heating seasons.
In KOGENERACJA S.A., network heat was produced simultaneously with electricity in the process of high-efficiency cogeneration at four plants: two CHP plants in Wrocław (EC Wrocław and EC Zawidawie) and a CHP plant in Siechnice (EC Czechnica and EC Czechnica 2). In November 2023, as part of the construction of Czechnica 2 heat and power plant in Siechnice, four gas boilers were put into operation, together forming a pumped-storage boiler plant with a thermal power of 152 MWt. The target thermal power of the new heat and power plant will be 315 MWt.
As of 30 June 2024, the generation and production of electricity for the system of the National Power Grid (KSE) from Czechnica CHP plant was discontinued, and the K2 biomass boiler constitutes a reserve for the increased demand for heat during the start-up period of the CC Gas Unit.
 |  |  |  |
| EC Wrocław | EC Czechnica | EC Czechnica 2 | EC Zawidawie |
|---|---|---|---|
Coal unit | Unit with a fluidised bed (biomass) boiler | Gas unit with 4 pumped-storage boilers | Gas unit, Solar unit |
812 MWt 305 MWe | 76 MWt | 152 MWt | 24 MWt , 5 MWe |
The network of the local heat distributor (Fortum) and 1.7 km of own network supplying heat to customers in Wroclaw | Heating network: network of the local heat distributor (Fortum) and 46.8 km of own network supplying heat to customers in the municipality of Siechnice | The network of the local heat distributor (Fortum) and 13.1 km of own on the premises of EC Zawidawie | |
Development of the heat market is mainly the effect of new connections related to the construction of new buildings and decommissioning of local boiler plants and individual furnaces as part of the programmes toreduce “low emissions”, conducted in cooperation with local authorities.
Liquidation of stoves was to a large degree accelerated by adoption of the “anti-smog resolutions” for the Lower Silesian Voivodship, and support programmes for the residents who decide to change heat sources in their buildings. In particular, the company actively supported housing communities which decided to have their buildings connected to the heating network.
Demand for heat
In the long-term perspective, the demand for heat is expected to increase due to the development of construction, in particular residential construction, and due to the existing buildings (heated with furnaces) being connected to the heating network. The limitation of local emission sources is supported by environmental protection regulations. At the same time, the increase in energy efficiency and limitation of losses in existing buildings and installations are expected to curb growth to a moderate level. Energy efficiency will reduce the use of heat in the primary and the secondary markets, but on the other hand it will be an opportunity for developing a centralized heating network with heat supplied by CHP plants using high-efficiency cogeneration.
Support for high-efficiency cogeneration
On 25 January 2019, the Act on promoting electricity from high-efficiency cogeneration of 14 December 2018 entered into force. It introduced new support systems for cogeneration units, replacing the previous mechanism based on certificates of origin. The act is intended to limit adverse environmental impact while ensuring security of heat and electricity supplies, as well as to improve the efficiency of use of energy media through the development of high-efficiency cogeneration. These objectives are to be achieved by means of support in the form of premiums paid to generating units to the price of electricity (guaranteed premiums and cogeneration premiums).
In 2019, the Company applied for participation in the system of support for high-efficiency cogeneration (in the form of the so-called guaranteed bonus) for the generating unit EC Zawidawie, which uses gas fuel. On 20 April 2020, the ERA President issued a decision allowing the unit to apply for the payment of the guaranteed premium.
On 20 November 2020, the Company applied for admitting its newly built EC Czechnica 2 unit to participate in the recruitment for the individual cogeneration bonus. On 11 December 2020, the ERA President issued a decision allowing the unit to participate in the recruitment “NCHP/1/2020”, which was carried out on December 14–16 December 2020. In accordance with the Notice of the ERA President of 12 March 2021, the offer submitted by KOGENERACJA S.A. won the recruitment.
On 29 April 2022, the Company applied to the Energy Regulatory Authority for admission of the newly built cogeneration units ‑ AK2 Zawidawie and AK3 Zawidawie ‑ to participate in the auction for cogeneration bonus no. ACHP/2/2022. On 26 May 2022, the ERA President issued a decision on admission to participate in the auction, which was held on 7-9 June 2022. According to the Information of the ERA President of 10 June 2022, both offers of KOGENERACJA S.A. won the auction. Auctions held in 2022 reached a record level since the beginning of the system’s operation in terms of cogeneration bonuses obtained. On 19 December 2023, the AK2 Zawidawie and AK3 Zawidawie cogeneration units were put into operation. On 12 March 2024, the ERA President issued decisions confirming the generator’s right to pay the cogeneration bonus in respect of both units. The support end date is set for 10 January 2039.
In September 2024, the Company applied to the Energy Regulatory Authority for permission for a new cogeneration unit in Wrocław to participate in the auction for the cogeneration bonus. On 12 November 2024, the ERA President issued a positive decision in this matter.
Electricity market
Annual electricity consumption in Poland in 2024 increased by 1% (169 TWh) compared to 2023. (167.5 TWh). In previous years, electricity consumption reached: 2022: 173.5 TWh; 2021: 174.4 TWh, and 2020: 165.5 TWh
Electricity production in Poland is mainly based on hard coal and lignite, which makes the Polish electricity sector sensitive to changes in prices of CO2 emission allowances and coal prices. The year 2024 was characterised by an unstable situation on the energy fuel market related to the armed conflict in Ukraine. Electricity prices were also influenced by the persistently high costs of purchasing CO2 emission allowances, the price of which on individual days in 2024 ranged from EUR 54 to EUR 77 per tonne of CO2 (in 2023 the price ranged from EUR 65.99 to EUR 98.43 per tonne of CO2).
In 2024, the country saw a large decline in the share of electricity generated using hard coal by 6.6 TWh, which was a record low share of coal in total energy generation in the national energy mix. The share of coal sources accounted for 57% of electricity production. The dynamic growth of gas fuel by 11.6% was related, among others, to the commissioning of new units for this fuel, as well as to dynamic changes in raw material prices on the markets: gas costs stabilsed after the energy crisis. In 2024, electricity production from photovoltaics also increased by 4.9 TWh, due to the dynamic development of new capacities, including prosumer micro‑installations (up 1.3 TWh).
Capacity market
The Capacity Market was introduced in Poland by the Act of 8 December 2017. According to the Act, capacity is a commodity that can be bought and sold. Generating units will receive compensation for their readiness to supply electrical power to the system at the rates set during an auction. On 27 July 2018, an intragroup Capacity Market Agreement was signed by PGE Group companies, including KOGENERACJA S.A. and EC Zielona Góra S.A. Under the agreement, all activities related to the capacity market are integrated and managed centrally by PGE S.A. The Group companies achieve additional revenues in exchange for their commitment to provide capacity to the system that will help support implementation of the Group's business strategy and carry out investment programmes.
Equipment submitted for capacity market auctions at KOGENERACJA S.A.
| 2023 | Capacity Offered [MW] | Contract term [years] |
|---|---|---|
| Wrocław B1 | 21,878 | 1 |
| Wrocław B2 | 66 | 1 |
| 2024 | Capacity Offered [MW] | Contract term [years] |
|---|---|---|
| Wrocław B1 | 21,878 | 7 |
| Wrocław B2 | 66 | 7 |
| 2026 | Capacity Offered [MW] | Contract term [years] |
|---|---|---|
| EC Czechnica 2 | 140 | 17 |
EC Czechnica did not participate in the auction for 2023 due to its replacement with a new production unit. In the auction for 2024, units B1 and B2 won a contract for 7 years.
The equipment from EC Zawidawie did not participate in any of the auctions, as this unit is intended to be used in the system of support for high-efficiency cogeneration.
The generating units of KOGENERACJA S.A. which did not qualify for the capacity market in the subsequent years, will be directly settled as part of PGE Group for the supply of reservation services.
In the auction for 2026, EC Czechnica 2 won a contract for 17 years.
In December 2020, a capacity market auction was held for supplies from 2025. The contracted capacity obligation resulting from the Capacity Market auction for 2025 applies to the subsidiary EC Zielona Góra S.A.
Electricity producers
KOGENERACJA SA is the largest producer of electricity in Wrocław. EC Wrocław has a license to generate electricity with a capacity of 305 MWe and EC Zawidawie with a capacity of 5 MWe as of 31 December 2024.
As of 30 June 2024, the generation and production of electricity for the national system of the National Power Grid (KSE) from the EC Czechnica plant was discontinued due to the liquidation of the overhead power station infrastructure by Tauron Dystrybucja S.A. in connection with the construction of a new generating unit, EC Czechnica 2.
Electricity produced by KOGENERACJA S.A. is generated together with heat in the high-efficiency cogeneration process. A part of it is generated using renewable energy sources (RES). Biomass is combusted in dedicated installations replacing coal and thus reducing CO2 emissions.
In 2024, EC Czechnica 2 completed the process of commissioning the technological systems, which were steam-cleaned. Performed the first synchronization as part of the tests and trials of the CC Gas Unit. This will ensure full availability of electricity generation and secure heat supplies in the 2024-2025 heating season.