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Gas heating? Thank you, I will wait

The number of applications for gas network connection conditions has dropped by half this year. Will this be the beginning of big changes on the Polish heating market?
hand setting the temperature of the gas heating thermostat
hand setting the temperature of the gas heating thermostat

After coal, gas is the most popular fuel for providing heat in Poland – it is used to heat over 2.3 million buildings and new ones are still being connected to the network. However, there are fewer people willing to make such investments than a year ago, and for the first time in years, sellers of gas boilers have recorded a drop in the sales in recent months.

At the same time, gas boilers are no longer the most popular appliances chosen by Poles when replacing a black-smoke-belching stove with funding from the Clean Air Program. Their place has been taken by heat pumps.

The boom for gas connections is slowly dying out

The beginning of this year was marked with problems with connections to the gas network. For over a month, the Polish Gas Company suspended the conclusion of contracts for new connections due to a lack of funds, and only political intervention and extra money from the PGNiG Capital Group helped to solve the problem. The difficulties with connecting to the network were compounded by record gas prices on world markets, which the largest consumers of this fuel are observing with fear. When Ukraine was attacked by Russia, gas prices shot up and are now four times higher than a year ago.

Poland was one of the first countries to have its gas supplies halted by Russia and, although storage facilities are full, the most difficult winter season is yet to come. High gas prices are causing industry to reduce or even stop production. Households are in the group of customers protected against excessive increases, as are other socially sensitive customers (including housing cooperatives and associations, hospitals, schools, nurseries), for whom tariffs will not change until the end of the year.

However, the question hanging in the air is what will happen next, whether there will be enough gas and at what price. All of this has an impact on current consumer mood.

– We had such a connection boom last year, there was a lot of interest in connecting gas. At the moment this interest has dropped a bit due to the instability of gas prices, people are afraid that they will pay sky-high bills, and this is also happening a little.  This is certainly not the fault of the state, but of global gas prices,” said Robert Więckowski, President of the Management Board of the Polish Gas Company, during the GAZTERM conference in May. As he added, if a user is determined and wants to use gas, they will bear the cost of the connection fee increased slightly by the company. – We won’t see the situations in which someone connects to the gas network and then calculates that they have a forest and will burn wood instead – said the President.

Throughout last year, the company examined nearly 300,000 applications for connection to the gas network. It issued over 260,000 conditions for connection, concluding connection agreements covering the construction of 135,000 connections in the years to come. This year, until the end of July, the Polish Gas Company considered more than 100,000 applications for the conditions for connection and concluded more than 36,000 connection agreements. The number of applications considered, conditions issued and agreements concluded in 2022 is approximately 50% lower than in the same period of 2021 – the Polish Gas Company informed

Boiler vendors report worse results

Lower interest in gas heating is also reported by gas boiler vendors. This is still the primary heating appliance sold on the Polish market today – around 410,000 gas boilers were sold last year, which accounts for 59% of the market share, according to the Association of Manufacturers and Importers of Heating Equipment (SPIUG).

Gas condensing boilers are currently sold mainly to replace old heating equipment, in buildings connected to the gas network. Heat pumps accounted for 15% last year, but this year it will be significantly more. In Q2 of this year, the sales of gas boilers fell by around 8% and the sales of heat pumps doubled.

Gas boiler sales can be expected to exceed 300,000 pieces this year, while heat pump sales will be around 180,000 pieces.

For the first time in several years, there was a decline in the sales of gas boilers. Several reasons contributed to this situation. Certainly one of them was supply problems faced by manufacturers due to a shortage of certain production components. Another very important reason was the increasing uncertainty about the availability of gas since the beginning of the year” – explains SPIUG. The association points to another reason: the emerging information about a ban on the installation of gas boilers in the European Union, which SPIUG believes is far from a realistic scenario in the coming years.

The European Commission is proposing new regulations on the Energy Performance of Buildings, Ecodesign and Energy Labelling Directive. The idea is to establish stricter ecodesign limits for heating systems at EU level, which would mean that 2029 will be an end date for marketing “stand-alone” fossil fuel boilers, including gas boilers. Parallel changes to the energy labelling scale (by 2025/2026) would result in boilers and other fossil fuel appliances receiving a lower energy efficiency class. These proposals were put forward by the Commission in the RePowerEU package in May

How about further grants for gas boiler?

Another proposal is for grants for fossil fuel boilers to be phased out by 2025, which would affect grants provided under the Clean Air Program. For the time being, there are no such plans on the Polish side.

– At present, we have no plans to move away from grants for gas condensing boilers, as we believe that these are environmentally friendly heat sources and fit perfectly into the scope of subsidised low-carbon and efficient heat sources, despite the currently increasing (for reasons entirely unrelated to us) prices of energy carriers, directly affecting the operating costs of these sources. The use of gas condensing boilers is environmentally friendly, if only because of the trace amounts of dust produced by burning gas, which is the main contributor to smog, informs Ewelina Steczkowska, spokeswoman for the National Fund for Environmental Protection and Water Management.

Grants for the replacement of heating shape the heating equipment market in Poland to a large extent. Since the beginning of the Clean Air Program, i.e. in the recent four years, almost half a million applications have been submitted for grants for replacing black-smoke-belching stoves and for thermo-modernisation of buildings. Gas boilers account for a total of 41% of the applications submitted since the beginning of the program, but this year it is heat pumps that are the most popular source when replacing a black-smoke-belching stove with a Clean Air program grant.

In April, the number of applications submitted for the purchase and installation of gas condensing boilers fell by around 16% compared to March, from 3,800 to 3,200, and is currently at around 3,000 per month, reports National Fund for Environmental Protection and Water Management. – At the same time, it is an important fact that gas condensing boilers have been partially replaced with other heat sources. Since the beginning of April this year, there has been an increase of approx. 20% in the number of applications submitted for the purchase and installation of air-to-water heat pumps, the spokeswoman for the National Fund for Environmental Protection and Water Management points out.

In May, 7,700 applications were submitted for the co-financing of air and ground source heat pumps. SPIUG estimates that investors planning to replace old heating equipment with new gas condensing boilers have started to hold back. 

The EU will cut off grants for gas

In the coming years, however, Poles have to be prepared for the fact that grants for gas boilers will end. Right now, the Clean Air Program is funded from national funds, but this will change. It is to receive around €2 billion from EU funds under the 2021-2017 EU program. As we found out unofficially, a limit of approx. 300 million euro is to be established for the replacement of gas boilers in this budget. Final decisions have not been made yet. However, there will be no EU funding for gas networks.

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