Dr Kieran Mullan (Crewe and Nantwich) (Con)
It is opportune, on a day when the sun is blazing outside, to raise in this House what is sometimes referred to as the sun underneath our feet, or, to give it its formal term, deep geothermal.
“That must be too good to be true” was my reaction when I was introduced to deep geothermal technology. An environmentally friendly, dependable and cost-effective source of heat and power that can be found right underneath us? Surely not. I have been pleasantly surprised to learn that deep geothermal is, in fact, just as good as it sounds. Deep geothermal technology uses the heat from naturally occurring sources of hot water deep underground to generate a large amount of usable heat and energy. Heat radiates from the earth’s core, which is hotter than the surface of the sun, and although it dissipates as it reaches the surface, the heat remains significant. Where that hot rock overlaps with underground water sources, the combination allows for deep geothermal plants. Think about naturally occurring hot springs such as the famous Roman baths; it is the same principle. In places like that, the water that is being heated has found its way to the surface naturally, but modern technology can allow this hot water to be accessed artificially through drilling into aquifers to access the warm water below. Heat exchangers then transmit the heat to homes and buildings.
I have been introduced to this technology because of its great potential locally in Cheshire, as we sit above the hot underground aquifer known as the Cheshire Basin. The possibility of a deep geothermal plant has been considered a number of times locally but never progressed to firm plans, so I began looking at how we might get there. As I learnt more about it, I saw the potential for not just my area but the whole country. I was therefore delighted to be asked by the then Prime Minister, my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), to produce a review on the potential for making better use of deep geothermal energy as we strive for net zero. I was similarly pleased when the current Prime Minister asked me to continue that work.
The obvious first step was to consider what is happening in other countries with similar geology and thriving deep geothermal industries. Geological experts pointed me towards France and Germany, among others. Deep geothermal energy is heating 250,000 homes in Paris, and across France more than 600 MWh of heat are produced annually, as the Government aim to increase the number of schemes by 40% by 2030. Munich is pouring in €1 billion through to 2035 to develop deep geothermal and make the city’s heating carbon-neutral. More widely, Germany is already producing more than 353 MWh annually, and the Government are targeting at least 100 new geothermal projects.
As part of my review, I was able to visit a deep geothermal plant in Pullach, a suburb of Munich. I got to see for myself how quietly and efficiently this hot water can be utilised. No one would know that the little building I visited next to a park and a school was heating the local swimming pool, businesses, the town hall and hundreds of homes. The obvious question that follows, seeing this success elsewhere, is: why do we not see the same here? I understand that there has been some debate about whether the geology in countries such as France and Germany is more favourable to deep geothermal. The overwhelming feedback I received during my review was that that is not the case. While the greater temperatures needed to generate electricity, rather than just hot water for heating, may be less available, that is far from a reason not to see a flourishing industry here in the UK, for reasons I will go on to talk about.
My understanding is that the biggest difference between the UK and many of our neighbours is that Government support to help to get deep geothermal industries off the ground is widespread there. That consists of a mix of tariff guarantees, insurance support and grants. It is no surprise that investors will favour countries that are supporting an industry when it comes to deciding where to put their money. At one point, we did have a tariff guarantee for renewable heat. It was not taken up, but I think it was a matter of timing. It was ahead of the game—the game being the current huge appetite there is from investors and oil and gas to diversify on the way to net zero.
Of course, we can expect to see some differences between the renewable resources created in each country. We cannot expect to be world leaders in each field. We lead in solar and wind, for example, but we need to balance the disadvantages of the technologies we lead on. We know that solar and wind wax and wane with the weather and need large swathes of land. Deep geothermal does not. It is always on and always there, whatever the weather, and sites usually take no more than 1 or 2 acres. Even if we cannot lead in every technology, we cannot afford to not at least grab the lowest hanging fruit of all the technologies on offer.
That is because getting to net zero by 2050 will require us to pull every possible lever. Transitioning our heating systems is a particular challenge. The UK has more than 28.5 million homes and 1.9 million other buildings—offices, hospitals, shops and warehouses. The majority of those are heated by gas boilers. Nearly a fifth of all the UK’s emissions come from buildings. Transitioning to an electric-based system of heating is expected to do the lion’s share, but while we can of course support the growth of skills and jobs for technologies dependent on electricity, we can see even now that the workforce and manufacturing capacity in this field creates challenges.
Deep geothermal plants would allow us to recruit from an entirely different workforce and existing part of the economy in delivering results, and this is a workforce that we already lead on. Our oil and gas industry is one of the best in the western world, with world-beating companies and workforces with a long history of success not just in the North sea but globally. Deep geothermal provides us with the opportunity to recruit that workforce into drilling for clean heat instead of fossil fuels. That will not only help us get to net zero, but help that industry, with all the jobs it currently holds, to be a positive part of the transition. It is clearly in our interests to ensure that the UK is an internationally competitive environment for deep geothermal.
As with wind and solar at their outset, long-term financial incentives would help to unlock millions in capital investment and kick-start the industry. That transfers all the risk to the private sector instead of using taxpayer grants. This does not need to be a repeat of the open-ended subsidies that drove the wind and solar industries forward. Proposals from industry ask for a capped amount of support, which would still produce the results we need. Grant-based schemes inherently do not provide investor confidence; they involve too much uncertainty. Over time, a number of grants may well total up to a significant amount of investment from Government, but a company taking the decision to invest in drilling rigs and job roles on the chance that it may get some grants is a much trickier prospect than knowing that, if it makes that investment and is successful in delivering, it will be supported.
In a report by the Association for Renewable Energy and Clean Technology and Arup, the ask from industry was for tariff support at £55 per megawatt-hour for 30 initial plants for 20 years. I saw with interest that that was the amount agreed by Government to support the green gas industry. That suggests to me that the Government consider it value for money.
Of course, there are wider considerations beyond just the unit price. I have talked about the valuable role that geothermal could play in helping our oil and gas industry transition, but there are other factors when we reflect on where deep geothermal could be delivered. As part of my report, I commissioned Durham University’s Energy Institute to review data about where we know the best combinations of hot water and rocks are, based on the data available for England. It is important to point out that other places for which we have less data could also be candidates, and I am sure there are opportunities across our family of nations, but the aim was to kick-start local stakeholders and drive forward projects from the ground up. I look forward to working with MPs and councils in those areas.
An unexpected but very stark finding of the review was that six of the 45 sites in England are in the top 10 of the index used by Government to identify areas in need of levelling up. Some 44% of the locations listed as having high potential for deep geothermal fall within the top 100 levelling-up locations. That is three times the amount we would expect to see as a result of chance, and it gives us yet another reason to look closely at that technology. It could help bring jobs and investment into some of the places most in need of it. We can also help secure public support for the energy transition if we are able to ensure that Government investment into it is spread to where it would generate the widest possible benefit. We have seen how some coastal communities have benefited from offshore wind, for example.
That is not to say that the industry is at a standstill; there are green shoots. The United Downs deep geothermal plant in Cornwall was a project initially supported by both the UK Government and EU grant funding, but with a recent private sector investment by Kerogen Capital and Thrive Renewables, it is set to go live next year, providing both heat and electricity. The local council has just received funding from the green heat network fund to enable the heat it generates to be used locally, and as I understand it, the Eden deep geothermal heat plant will go live very shortly, heating the world-famous Eden biomes as well as its offices and greenhouses, and potentially a distillery.
Near to my constituency, in Stoke, there is planning permission and a funding application in for a deep geothermal plant, and I have been supporting Leighton Hospital in discussions about securing a plant to provide the heat that that hospital needs. There is a wider group of NHS trusts exploring that approach, working with the carbon and energy fund and seeking support from the public sector decarbonisation pot. I hope my hon. Friend the Member for Redcar (Jacob Young) can pass on to the Energy Minister that I hope he will look encouragingly at those applications for funding to the Department, because we know that if we drill in some places, it helps us to understand the wider geology in a way that can benefit the whole industry.
As an advocate of this technology, it is important for me to be clear about its challenges. Making use of the heat from deep geothermal requires the building of heat networks. That is not a major issue for large single-use customers such as the hospitals I mentioned, and it is also not an issue for big businesses or civic buildings. It is also uncomplicated if it is included from the outset when building homes, but it is a challenge for existing individual homes. It is certainly not an insurmountable challenge—in Pullach, where I visited, homeowners are choosing to join the network bit by bit—but it does mean that deep geothermal is not an overnight solution for all of our existing housing stock. Thankfully, as I have explained, the challenge is so enormous that deep geothermal can play an important role, even if it is not the entire solution.
We also need to build public support and understanding. Having seen one for myself, I know that having a heat exchanger in a home is really no different from having a boiler, but we need to explain that. I think the best evidence of the environmental credentials of deep geothermal is the support it has received from Greenpeace and the UN, and as I mentioned, one of the first sites due to go live is at Cornwall’s Eden Project, widely recognised as a leading UK environmental charity.
I hope that today I have been able to explain clearly the benefits and opportunities that deep geothermal presents, based on everything I learned in producing the review. I want to take a moment to thank some of those who helped me: I thank IGas Energy and GT Energy for facilitating and funding a visit to Pullach to view their deep geothermal network, and my right hon. Friend the Member for Bournemouth West (Conor Burns) for his advice on the conduct of a review. Thanks are also due to Professor Jon Gluyas and the Durham Energy Institute, the British Geological Survey, the Association for Renewable Energy and Clean Technology, the Coal Authority, the Eden Project, Pullach municipal council, the United Downs Deep Geothermal Power project, the Geothermal Energy Advancement Association, the Geological Society and the House of Commons Library.
I also thank the Secretary of State and the Energy Minister for the support they have given, and officials in the Department who have been open and co-operative and want to do what they can to understand how we can make the most of deep geothermal. Of course, I also thank my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) for asking me to start this review, and the Prime Minister for asking me to continue it.
I hope that my report, and recent efforts by others to highlight the opportunity that deep geothermal presents, will spark the beginning of a renewed effort to kick-start a UK-based industry. If we dig deep on geothermal, we will help level up the UK and reap the rewards that will provide.
Mr Deputy Speaker (Mr Nigel Evans)
Now, for his maiden speech from the Dispatch Box, with his nearest and dearest looking on—so no pressure—I call Jacob Young. Good luck!
Jacob Young (Redcar) (Con)
I am grateful and proud to be making my first appearance at the Dispatch Box—hopefully it will not be my last.
I begin by thanking my hon. Friend the Member for Crewe and Nantwich (Dr Mullan) for securing this important and timely debate. I also thank him for his thorough report into deep geothermal energy and the associated economic opportunities, which was produced at the request of the Government. His report is right in its summation that getting to net zero by 2050 will require us to pull every possible lever, and it is also right that this transition can deliver major economic benefits to our country at the same time. I know that you, Mr Deputy Speaker, and my right hon. Friend the Member for Pendle (Andrew Stephenson) and many others are interested in the potential of this energy source in their areas.
Before I move to the specifics, let me make it clear that this Government remain committed to meeting our net zero ambitions by 2050. Indeed, the Russian invasion of Ukraine and Putin’s weaponisation of hydrocarbons has only hastened our acceleration away from fossil fuels and made energy security even more of an urgent priority. Thankfully, we have made rapid progress on switching to home-grown renewable electricity in recent years, this country is now home to four of the largest operational wind farms in the world, and we are building a cutting-edge new lithium refinery in Teesside, but we need to do more.
We know that we need to keep investing in renewable sources if we are to reduce our dependence on volatile energy markets and support the global fight against climate change. That means continuing to make the most of the opportunities that our geology and geography afford us, including, as my hon. Friend set out so well, the huge potential for geothermal power.
Jacob Young
Like me, my hon. Friend is a keen advocate for green energy, and Teesside can indeed be home to many green energy sources. I thank him for pointing that out.
While geothermal is a relatively new source of energy in the UK, we need only look to Cornwall, as my hon. Friend said, for an idea of its potential to provide clean and secure power for our households and businesses. The UK’s first geothermal plant, operated by Geothermal Engineering Ltd at its United Downs site near Redruth, is set to begin generating next year, with a baseload capacity of 2 MW, rising to a combined power and heat capacity of 25 MW after four years. Geothermal Engineering Ltd has plans to develop other plants across the UK by 2028, producing enough energy to power 70,000 homes.
We recognise that the widespread construction of these plants could help to create thousands of skilled jobs in areas where those are lacking, from Cornwall to Cumbria, but what makes this technology even more exciting is that it enables decarbonisation in many other sectors, too. For example, we see the potential to decarbonise heat through clean heat network schemes or to scale up zero-emission vehicle production through battery-grade lithium extraction. Indeed, the potential for battery-grade lithium extraction from the waters pumped at the United Downs site shows promise, with Geothermal Engineering Ltd predicting that 15,000 tonnes of battery-grade lithium could be produced a year, which is approximately a quarter of domestic demand. The firm has also been successful in its £12 million application to the automotive transformation fund to provide battery-grade lithium.
As my hon. Friend’s report notes, this technology is not without its challenges. Current departmental analysis suggests that its relative price is substantially higher than that of other renewables, largely due to the high cost involved in drilling safely. The potential capacity of geothermal power is significantly smaller in comparison with other renewable technologies, and is currently estimated to be between 170 MW and 2 GW. This means that large-scale deployment is likely to be limited, and there are also uncertainties concerning geological risks that must be taken into account.
The reality is that every renewable energy source has its strengths and its weaknesses. In the months and years ahead, we are going to leave no stone unturned in our quest for the cleanest, most cost-effective energy available. That is why the Prime Minister set up the Department for Energy Security and Net Zero earlier this year. We are working closely with industry to ensure that the right support is in place to develop new technologies, including geothermal, whether that with is the green heat network fund, which has allocated Cornwall council £22 million to work with Geothermal Engineering Ltd to develop the Langarth deep geothermal heat network—the UK’s first heating system to use geothermal energy to heat nearly 4,000 local homes and public facilities in the area, as my hon. Friend mentioned —or with the contracts for difference scheme, which is the Government’s main mechanism for supporting low-carbon electricity generation. Geothermal technologies that generate electricity are eligible for the scheme, and the bidding process is currently under way. We will continue to review the support we provide to ensure that all these technologies can reach their full potential.
I want to finish by reiterating to the House our determination to make the most of every home-grown green technology available in our unprecedented transition to a net zero economy so that we can secure our long- term energy supply, keep bills down for consumers and raise the bar on tackling climate change. The report by my hon. Friend—he is known as Mr Geothermal—will undoubtedly help us consider whether there is a bigger role for deep geothermal energy and how we could support it. I am confident that the geothermal industry will continue to develop across every viable corner of the United Kingdom, and I look forward to seeing the Energy Minister continuing to engage with my hon. Friend on this vitally important issue.
Question put and agreed to.