Henning von Zanthier, LL.M, Founding Partner of VON ZANTHIER & SCHULZ
Iceland Geothermal Conference 2018 - Breaking the Barriers
24 - 27 April, 2018, Harpa, Reykjavík
A4 - Heating market and the legal framework of the geothermal sector in Poland
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Heating market and the legal framework of the geothermal sector in Poland
Henning von Zanthier LL.M. – Rechtsanwalt / radca prawny (Polish and German attorney at law)
Reykjavík, 26. April 2018
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VON ZANTHIER & SCHULZ
The first German law firm in Poznań (Poland)
•Our law firm was established in 1992 in Berlin
•1995 we opened a branch office in Poznań
Services in Germany and Poland
•We offer integrated services of lawyers, tax consultants, bookkeeping
and financial auditor in both Germany and Poland
•Consultancy in German, Polish and English
Cross-border. Interdisciplinary. Goal-oriented.
•Services for enterprise – from founding to expanding a company
•We focus on management of cross-border investment and legal issues such as corporate law,
tax law, labor law, renewable energy sector, wind energy and newly geothermal sector.
Motto: Your success is our goal
Reykjavík, 26. April 2018
3. 33
I. Energy market in Poland
1. Sources of heat and electricity
2. Sales volume of heat and electricity
II. Heating market – how does it work?
1. District heating market
2. Price & production costs
3. Consuments: industry and households
III. Geothermal sector in Poland – a tender little plant
1. Polish geothermal potential – temperatures, economic efficiency, existing geothermal plants
2. Subsidies for geothermal projects
3. Economic efficiency
4. Legal mile steps
5. Future of geothermal sector in Poland
IV. Conclusion
V. What can VON ZANTHIER & SCHULZ offer?
Presentation overview
Reykjavík, 26. April 2018
4. 4
Source: reports of URE (Polish Energy Regulatory Office) and GUS (Polish Central Statistical Office) for 2016
I. Energy market in Poland
1. Sources of heat and electricity
Reykjavík, 26. April 2018
*Renewable
sources:
biofuel, biogas,
geothermal
sources
Total installed electricity capacity in 2016: approx. 41.000 MW
Total electricity sold in 2016: approx. 179 TWh
Total installed heat capacity in 2016: approx. 54.000 MW
Total heat sold in 2016: approx. 370 PJ (= approx. 102 TWh)
Electricity sources
Heat sources
5. 5
I. Energy market in Poland
2. Sales volume of heat and energy
Reykjavík, 26. April 2018
Source: reports of URE (Polish Energy Regulatory Office) and GUS (Polish Central Statistical Office) for 2016
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II. Heating market – how does it work?
1. District heating market
• Poland is one of the largest markets for district heating in Europe
• 41 % of the 38 million inhabitants are served by district heating, reaching 60 % in the urban areas (to compare: 10 % in former
West Germany, 32 % in former East German, 15 % in Hungary, 92% in Iceland)*
District heating
• one of the longest pipelines network in the European Union (up to 21.000 km)
District heating network
• Two sectors of the heating market: heat production and network operation
• Out of 437 enterprises licensed for selling heat and production:
- 129 are 100 % private companies;
- 216 are 100 % state companies, where 203 of them are owned by the communities;
- 57 companies are of mixed ownership, with the dominance of the private ownership and
- 35 are of mixed ownership with dominance of state ownership.
Market structure
Reykjavík, 26. April 2018
*Sources: reports of URE (Polish Energy Regulatory Office) and GUS (Polish Central Statistical Office) for 2016; BDEW Energiemarkt
Deutschland 2017; EuroHeat Country by Country 2015 Survey)
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II. Heating market – how does it work?
2. Price & production costs
Reykjavík, 26. April 2018
Average heat sale price in 2017 to the end
customer
Heat source Price in PLN/GJ
As an example: geothermal
plant in Pyrzyce
38,76 ca. 9 EUR
Coal fuels 39,65 ca. 9,25 EUR
Renewable sources 43,11 ca. 10,50 EUR
Gas fuels 66,87 ca. 16 EUR
Heating oil 84,87 ca. 20,50 EUR
Source: Information of URE President No. 25/2018, dated 28.03.2018;
URE Raport Energetyka cieplna w liczbach - 2016, Warszawa 2017
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II. Heating market – how does it work?
3. Consuments: industry and households
Reykjavík, 26. April 2018
Source: report GUS (Polish Central Statistical Office) for 2016
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III. Geothermal sector – a tender little plant
1. Polish geothermal potential - temperatures in °Celsius
Reykjavík, 26. April 2018
Depth of 2 km Depth of 3,5 km
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III. Geothermal sector– a tender little plant
2. Polish geothermal potential - economic efficiency
• Minimal thermal water temperature for profitable
• heat production: 50 – 60 ℃,
• heat production in the cities: 90℃
• electricity production: 120 ℃; Swedish company Climeon: 80 ℃
• Payback time of the investment:
• Heat sell: approx. 5 – 7 years
• Power sell: approx. 7 – 9 years
• Combined heat and power sell: approx. 5 – 6 years
• Project length by small investment (10-15 Mio. EUR): approx. 20 – 40 months:
• 1. project preparation: 3 months
• 2. design, licensing, engineering services: 6 – 12 months
• 3. drilling: 2 - 3 months
• 4. surface installation: 4 – 10 months
• 5. power plant facilities: 5 – 12 months
Price: mostly 10 - 30 % lower than any alternative price
Source: Information provided by Mannvit Consulting Engineers
Reykjavík, 26. April 2018
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Existing geothermal plants and MWt from geothermal source:
1.Pyrzyce 61°C, 14,8 MWt, approx. 1,7 km deep
2.Stargard 86,9 °C, 10 MWt, approx. 3 km deep
3.Uniejów 68 °C, 3,2 MWt, approx. 2 km deep
4.Poddębice 71 °C, 10 MWt approx. 2 km deep
5.Mszczonów, 42 °C , 2,7 MWt, approx. 1,7 km deep
6.Bańska Niżna 86 °C, 40 MWt, approx. 3,4 km deep
Local self supplying geothermal plants (without selling of heat):
7. Kleszczów, heating of a sport complex
8. Cudzynowice, heating of a school complex
9. Karpniki, heating of a hotel complex
Planned for 2019: Toruń, 61°C, 25 MWt approx. 2,5 km deep,
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III. Geothermal sector – a tender little plant
4. Polish geothermal potential - existing geothermal plants
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III. Geothermal sector – a tender little plant
5. Subsidies for geothermal projects
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National Fond for Environment Protection and Water
Management
“Geology and mining: broadeningof the geological
knowledge about Poland“ - 200 Mio. PLN
(ca 50 Mio €) as grants
Communities: up to 100%, private investors up to 50
– 70 %
“Increasing of the air condition. Energetic
management of the geothermal sources” - up to
500 Mio. PLN ( = ca 125 Mio €) as loan
European Subventions: Operational Program
Infrastructure and Environment for the years 2014 – 2020
Projects aimed at building or rebuilding of a
geothermal plant with a power over 2 MWt
210 Million PLN (ca 50 Mio €) in form of
grants
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III. Geothermal sector – a tender little plant
6. Legal mile steps
Reykjavík, 26. April 2018
Investment phase Required legal permission Required documents to obtain the
legal permission
Competent office Proceeding
duration and fees
1. Project preparation -
costs 1-2% of the total
investment:
prospecting or exploring of
thermal waters
1. approval for prospecting
or exploring works
1. design for geological works,
prepared by a certified geologist;
2. current extract from the land-use
register;
3. information on the applicant
4. proof of the right to the real estate,
on which the works are going to
take place;
5. if the real estate is within an
enviromental protection area,
there is a obligation to obtain a
decision on environmental
conditions
Voivodeship marshal Approx. 1 month,
administrative fee
10 PLN (= 2,5 EUR)
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III. Geothermal sector – a tender little plant
6. Legal mile steps
Reykjavík, 26. April 2018
Investment phase Required legal
permission
Required documents to obtain the legal permission Competent office Proceeding duration and
fees
2. design,
licensing,
engineering
services - costs 6-
8% of the total
investment: 6 – 12
months
1. decision on
environmental
conditions
1. project information sheet or the report on the
environmental impact (upon the decision of State
County Sanitary Inspectorate)
2. certified copy of the map of the site from the land
register as well as detailed project maps
3. excerpt from the zoning plan
4. information on areas, on which the tree removal would
be necessary for the project performance
5. excerpt from the building register for the area, showing
the area, on which the project would impact.
Regional Director of the
Environment Protection
Approx. 6 months,
administrative fee 205 PLN
(=50 EUR)
2. building
permission
1. information on the rights to the real estate and the
applicant
2. construction project
3. decision on land development and management
conditions or the excerpt from the zoning plan
Head the second-level of
local government
Approx. 1 – 2 months,
administrative fee
depending on the type of
building and used area
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III. Geothermal sector – a tender little plant
6. Legal mile steps
Reykjavík, 26. April 2018
Investment
phase
Required legal
permission
Required documents to obtain the legal permission Competent
office
Proceeding
duration and
fees
3. drilling - usually
30% of the
investment cost
1. concession for
extracting
1. information on:
- the applicant and the site of extracting, time, for which the concession
shall be issued,
- funds possessed by the applicant in order to perform the activity,
- geological and hydrological conditions of extracting of the thermal
waters
2. decision on environmental conditions (issued by the head of the first-
level of local government) (see phase 2.1.)
3. current extract from the land-use register;
4. proof of the right of the applicant to the geological documentation of
the site
5. proof of the right of the applicant to the real estate, on which the works
are going to take place
6. deposit management plan
Voivodeship
marshal (the head
of the provincial-
level government)
Approx. 1
month,
administrative
fee 616 PLN (=
145 EUR)
2. contract with
the State
Treasure of
Poland for
mining usufruct
Thermal waters with temperature of over 20 ℃ are considered minerals
and as such are owned by the state; after applying for the concession, the
Voivodeship marshal, entitled to sign the contract in the name of the State
Treasure, sends the contract to the applicant
Voivodeship
marshal
Thermal waters
fee: 0 PLN/m3
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III. Geothermal sector – a tender little plant
6. Legal mile steps
Investment
phase
Required legal
permission
Required documents to obtain the legal permission Competent office Proceeding duration and
fees
4. surface
installation -
costs
approximately
25-30% of the
total investment
1. permit for use
of the buildings
permit for use is issued after the control of the building site
and analysis of the building documentation
Inspectorate of Building
Supervision
The control shall take place
within 7 days after
application: administrative
fee depending on the type
of building and used area
2. approval of the
plan of
geothermal mine
1. plan of the geothermal mine
2. approval of the plan of the geothermal mine issued by the
head of the local government
3. decision on environmental conditions
Director of the Regional
Mining Office
Approx. 1 month,
administrative fee 1005 PLN
(=250 EUR)
3. water permit
1. water supply, usage and sewage effluent disposal
statement
2. description of the planned activity
3. decision on environmental conditions
4. decision on land development and management
conditions or excerpt from the zoning plan
5. hydrogeological documentation of the site
Director of the Regional
Water Management
Board Polish Waters
Approx. 1 month,
administrative fee 217 PLN
(=50 EUR) for each permit
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III. Geothermal sector – a tender little plant
6. Legal mile steps
Investment
phase
Required legal
permission
Required documents to obtain the legal permission Competent
office
Proceeding
duration and fees
5. power plant
facilities
1. concession for sale
and production of
heat
1. application for the concession
2. document proving the right to existing buildings and installations
3. document proving the sufficient financial means to perform the activity
4. description of end users, who will be accessed to the network
5. decision on land development and management conditions or excerpt
from the zoning plan
6. positive decision of the Office of Technical Inspection on the installation
7. information on the applicant
8. building permission and permit for use (see phase 2 and 4)
9. financial report of applicant
10. technical conditions of planned network connection
11. declarations on no arrears in payments for public institutions
12. information on planned heat production within 3 years
13. information on planned costs and incomes occurring within 3 years
Polish Energy
Regulatory Office
(URE)
Approx. 2 – 3
months,
administrative fee
616 PLN (= 145
EUR)
Reykjavík, 26. April 2018
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III. Geothermal sector – a tender little plant
6. Legal mile steps
Investment phase Required legal
permission
Required documents to
obtain the legal
permission
Competent office Proceeding duration
and fees
6. Access to the district
heating network
1. Contract with the local
network operator, if
needed
The Energy law contains
so called third party
access principle,
according to which each
enterprise, which has the
concession for producing
and selling heat, has the
right to connect the
produced heat to the
district heating network.
Operator of the local heat
network
Negotiation period.
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III. Geothermal sector – a tender little plant
7. Future of geothermal sector in Poland
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DEVELOPMENT
10 communities are already developing
geothermal projects on different stages – from
exploring to increase of the power
GOAL 2030
The National renewable energy action
plan from 2010 sets a geothermal goal
for 2030: the amount of heat from
geothermal sources shall increase from
930TJ in 2016 to 5.130 TJ in 2030*
SUPPORT
Next to the existing grants and loan programms, the Ministry
of Energy is promoting the geothermal energy through
conferences and publications
*Source: Krajowy Plan Działania w zakresie Energii ze Źrodeł Odnawialnych – Natonial Action Plan concerning Renewable Energy Sources
European Technical Development:
- Climeon: electricity production starting from 80 ℃
- South Hungarian EGS: development of Hot Dry
Rock Technology
20. 2020
IV. Conclusion
natural conditions district heating
system and network!
rule of law
subsidies!
special government
support!
Reykjavík, 26. April 2018
Why is Poland a good destination for geothermal investment?
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V. What can VON ZANTHIER & SCHULZ offer?
Reykjavík, 26. April 2018
What can VON ZANTHIER & SCHULZ offer?
Network in Poland
• Hint to natural conditions with partners
• Door opener for contact with communities
• Proposition for various cooperating partners (also experienced): investors, operators, subsidies helpers, etc.;
Core competence: helping you in the legal jungle
• Providing legal structure of your Polish company,
• Getting your permits, concessions and legal assistance by contracts with cooperating partners
• Resolving other legal issues
• All tax issues services
• Bookkeeping
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Thank you for your attention!
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Reykjavík, 26. April 2018