Cogeneration bonus – what is it and who can apply for it?

Types of Cogeneration Units by Power

When discussing cogeneration units in the context of the support system, their power is a key factor that determines their size. Specifically, we distinguish the following types:

• Small cogeneration units (up to 1 MW) – These are micro- and small cogeneration installations often used in facilities such as hotels, hospitals, shopping centers, industrial plants, or housing estates.
• Medium-power units (from 1 MW to 50 MW) – Commonly used in larger industrial plants, municipal heating plants, and commercial or business complexes.
• Large cogeneration units (over 50 MW) – Installations used in large combined heat and power plants that supply both electricity and heat on an industrial scale and to entire cities. These are often key sources of energy in energy systems, ensuring stability and reliability of supply.

A new trend gaining popularity is hybrid units and installations equipped with energy storage systems. They combine traditional cogeneration technologies with energy storage, enabling optimal use of the energy produced and increasing the stability of supply. Energy storage is particularly useful when electricity production and demand are not synchronized.

According to Directive 2012/27/EU on energy efficiency, each installation applying for support through the cogeneration premium must demonstrate high efficiency and contribute to a significant reduction in CO₂ emissions. The European Union continues to set increasingly stringent targets for reducing greenhouse gas emissions, impacting national policies.

Technical criteria for cogeneration installations

Cogeneration allows for more efficient use of fuels, as the energy that would be lost in traditional processes (e.g., in the form of waste heat) is utilized for heating buildings, providing hot water, or in industrial processes.

To register for the cogeneration bonus system, an installation must meet specific technical criteria aimed at ensuring high efficiency and reducing environmental impact. The most important requirements include:

• High efficiency of cogeneration – The installation must demonstrate a high efficiency index, meaning the combined production of electricity and heat uses less fuel compared to producing these outputs separately. According to regulations, the energy efficiency of the installation must be at least:
  • 75% for cogeneration units with devices such as back-pressure steam turbines, gas turbines with heat recovery, combustion engines, microturbines, Stirling engines, or fuel cells.
  • 80% for cogeneration units with gas-steam systems with heat recovery or extraction-condensing steam turbines.
• Reduction of CO₂ emissions – Cogeneration must contribute to reducing greenhouse gas emissions compared to traditional energy production methods, with the unit's emission level not exceeding 450 kg/MWh.
• Power source – For installations using fossil fuels, specific standards regarding emissions and efficiency must be met. Installations based on renewable sources, such as biogas or biomass, may receive additional benefits under the cogeneration premium.
• Unit certification – The cogeneration installation must be certified as high-efficiency in accordance with EU regulations (Directive 2012/27/EU on energy efficiency) and Polish regulations. This process includes an efficiency audit, confirming compliance with energy standards.
• Storage capacity (optional) – Installations equipped with energy storage systems may receive additional support, as these systems enable better management of the energy produced and its consumption during peak periods.

Support for Cogeneration Units

The Act on the promotion of electricity from high-efficiency cogeneration specifies the following forms of support for CHP:

1. A guaranteed premium, which is a subsidy for:

• Electricity from high-efficiency cogeneration that is generated, introduced to the grid, and sold by the producer in a modernized cogeneration unit with an installed electrical capacity of at least 1 MW but less than 50 MW or an existing cogeneration unit with the same capacity range.
• Electricity from high-efficiency cogeneration generated by the producer in:
  • A new small cogeneration unit.
  • A significantly modernized small cogeneration unit.
  • An existing small cogeneration unit.
  • An existing cogeneration unit with an installed electrical capacity of at least 1 MW but less than 50 MW, fired with methane released during underground mining operations in active or liquidated hard coal mines.
  • A modernized cogeneration unit with the same capacity range and methane-fueled.

2. An individual guaranteed premium in the form of a surcharge for electricity generated, introduced to the grid, and sold from high-efficiency cogeneration by the producer in:

• An existing cogeneration unit with an installed electrical capacity of at least 50 MW.
• A modernized cogeneration unit with the same capacity range.

3. Cogeneration premium, as a surcharge for electricity generated, introduced to the grid, and sold from high-efficiency cogeneration by the producer who won the auction, in:

• A new cogeneration unit with an installed electrical capacity of at least 1 MW but less than 50 MW.
• A significantly modernized cogeneration unit within the same capacity range.

4. Individual cogeneration premium as a surcharge for electricity generated, introduced to the grid, and sold from high-efficiency cogeneration by the producer who won the recruitment, in:

• A new cogeneration unit with an installed electrical capacity of at least 50 MW.
• A significantly modernized cogeneration unit within the same capacity range.

Authorities Responsible for Supervision

In Poland, the following institutions are responsible for supervising the cogeneration bonus system:

• Energy Regulatory Office (URE) – The main authority responsible for registering installations, organizing auctions, and granting support under the cogeneration bonus system. URE also monitors the efficiency of operating installations and verifies submitted reports.
• National Centre for Emissions Balancing and Management (KOBiZE) – Responsible for overseeing CO₂ emissions and other greenhouse gases. Cogeneration installations applying for the bonus must regularly report their emissions to KOBiZE:
  • Annual emission reports – Installations must provide data on emissions in accordance with specific regulations, and KOBiZE verifies whether the installation meets CO₂ emission limits.
  • Verification of compliance with the limit – If the limits are exceeded, the installation may lose the right to the cogeneration bonus, forcing companies to maintain low emissions.
• Ministry of Climate and Environment – Supervises general climate and energy policies, including the cogeneration support system. Within its competencies, the Ministry issues regulations and legislative changes regarding the system's functioning.

New or modernized cogeneration units can be reported to the cogeneration bonus system implemented by URE. A necessary condition is meeting strict standards regarding energy efficiency and CO₂ emissions, as well as regularly reporting operating results.

Cogeneration based on renewable energy sources and hybrid systems can benefit from additional incentives, as they contribute to climate goals and sustainable development.