Investment in renewable sources Geothermal Investments in Poland – New Opportunities!
Investments in geothermal projects in Poland are supported by various financial programs funded by national resources from the National Fund for Environmental Protection and Water Management (NFOŚiGW) and EU funds. These initiatives aim to decarbonize heating systems and increase the use of renewable energy sources. Projects are being implemented in numerous Polish cities and municipalities that benefit from grants and loans to realize these investments.
Particularly important for domestic and international investors are aspects such as the positive investment climate (support from local and national authorities), geothermal potential (favorable hydrogeological conditions in almost the entire country), and financial support provided through cyclical funding programs from national and international resources.
1. Financing Geothermal Investments
Both at the EU and national levels, support mechanisms exist that enable the financing or co-financing of various stages of geothermal investments, which is particularly important given the high costs associated with implementing such projects.
National Funds:
The "Thermal Water Availability in Poland" program, implemented and supervised by NFOŚiGW, offers full financial support for exploration and reconnaissance activities. A total of EUR 165 million has been allocated for this program for 2020–2028, with EUR 153 million designated for grants and EUR 12 million for supplementary loans.
The new “RES – Heat Source for Heating Systems” program:
Clean energy in heating is a goal of the Ministry of Climate and Environment and NFOŚiGW. Under the “RES – Heat Source for Heating Systems” program, launched on April 16, 2024, EUR 465 million has been allocated to support investments in renewable heating technologies such as heat pumps, solar collectors, geothermal systems, as well as heating network connections and heat storage facilities. The budget includes EUR 332 million for non-repayable funding and EUR 133 million for loans. According to the Ministry of Climate and Environment, the program aims to reduce CO2 emissions by at least 387,062 Mg annually and create at least 325 renewable energy installations with a combined thermal capacity of at least 898 MWt.
EU Funds – FEnIKS:
The European Funds for Infrastructure, Climate, and Environment (FEnIKS) 2021–2027 program is another significant source of funding for geothermal investments in Poland. With EUR 538 million allocated under Objective 2.2, the program supports the development and expansion of renewable energy sources for electricity or heat generation, including energy storage and necessary infrastructure. Geothermal energy is among the prioritized sources, along with water, biogas, biomethane, and biomass.
2. Who Can Benefit from Funding?
Municipalities, local government units, and water and sewage companies are the primary beneficiaries of financial support programs. Examples of funded projects include long-term support for municipalities conducting geothermal drilling. During the first call for proposals, completed in 2022, 15 agreements were signed with municipalities. The second call saw funding awarded to 28 projects, highlighting growing interest and investment potential in this field.
3. Examples of Projects:
• Września: Nearly EUR 2,55 million grant under the "Thermal Water Availability in Poland" program.
• Włocławek: EUR 4,65 million grant for geothermal investments.
• Kruszwica: Over EUR 5,81 million in funding.
• Barlinek: Over EUR 2,32 million for projects.
• Police: Over EUR 4,18 million for geothermal drilling.
• Kalisz: Start of geothermal drilling near a local aquapark with a grant of nearly EUR 3,48 million.
• Kazimierz Biskupi: The municipality received nearly EUR 3,72 million for a 2.6 km deep geothermal borehole.
The city of Łódź, Veolia Energia Polska, and Veolia Energia Łódź, together with the Danish company #Innargi, have recently signed a letter of intent, marking the first step toward implementing a project in Łódź to construct a geothermal installation with a capacity of up to 200 MW. The project's goal is to provide geothermal heat to supply the district heating network managed by Veolia Energia Łódź.
It is worth noting that Innargi has already signed a similar letter of intent with Veolia Energia Polska and Veolia Energia Poznań to implement a geothermal project in Poznań with a capacity of 100 MW.
4. The Future of Geothermal Energy in Poland
Geothermal investments are a strategic step towards Poland’s green energy transition. Geothermal water temperatures can reach up to 150°C at depths of 7 km, offering vast potential for heat production and, theoretically, electricity generation. A notable project is the Szaflary drilling, reaching a depth of 7 km and costing approximately EUR 30,7 million, fully funded by NFOŚiGW.
5. Challenges
Despite its significant potential, geothermal development faces several challenges. Technical issues such as low injectivity of reinjection wells and equipment corrosion can lead to delays and increased costs. Additionally, drilling costs are high, reaching up to EUR 4 651 per meter of depth.
Summary:
Geothermal investments in Poland aim to decarbonize heating systems and increase the use of renewable energy sources, supported by various national and European financial programs.
VON ZANTHIER&DACHOWSKI Law Firm offers expertise in legal advisory for geothermal projects, assisting clients in obtaining funding and executing projects. We help investors establish networks with local authorities and heating companies, support the licensing and implementation process, and collaborate with experts to develop effective business models.
