Geothermal Energy

Anne-Marie Trevelyan Excerpts

Wednesday 15th September 2021 Westminster Hall

[The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)]

Let me begin by congratulating the hon. Member for Midlothian (Owen Thompson) on securing this very important debate. It is so important that we focus on making the best use of all our renewable resources in the enormous challenge of achieving net zero by 2050. That is our contribution to the global challenge of reducing the climate change shocks that are affecting not only the most vulnerable countries around the world, but all of us in our own communities.

The Government are committed to decarbonising our energy system, while supporting our economic recovery from covid-19, with investment in existing, emerging and new low-carbon technologies and the creation of new green jobs. We have made significant progress on decarbonising electricity, and we continue to take action to decarbonise our transportation need. However, as highlighted by the Climate Change Committee, decarbonising our heat requirements is a significant challenge ahead of us.

With that in mind, we are supporting the development of low-carbon heat networks and looking at the best ways to harness low-carbon heat through developing capacity and capabilities in new sources, one of which could be geothermal energy—although, as the hon. Member for Southampton, Test (Dr Whitehead) said, geothermal energy is not new and is already proving its worth in Southampton. That said, the UK has limited access at the moment to the large naturally occurring geothermal resources that other countries, like Iceland, have tapped into much more intensively in order to decarbonise. There are challenges to overcome to exploit our geothermal energy to the degree that some other countries have.

Opportunities in the UK are perhaps more local and regional in nature. I thank the hon. Member for Southampton, as ever, for the science lesson. I enjoyed the geology lesson. That is new in our repartee over the last few months, so I thank him for that. It is a really important point: there are very clear regional and geological areas in which geothermal could be considered as one of a range of technologies that we might deploy to meet our climate change targets. A number of hon. Members have, of course, set out how that might be achieved in their own areas.

The Government support the development of geothermal projects, provided that it can be done at an acceptable cost and, of course, in an environmentally appropriate manner. It is always very helpful for me to understand where the best opportunities are to realise that potential and what creative things the industry might be doing to tackle the barriers and be innovative in the right environment.

One of the main barriers to deploying deep geothermal, of course, is the high capital cost needed to drill safely. There are also uncertainties around costs and revenues because of the inherent geological risk. As a result, many of the UK’s geothermal projects have so far had difficulty securing competitive financing, because investors lack experience of UK geothermal energy. The projects are therefore often seen as high risk compared to other technologies that are more established in the UK. This is a similar challenge to that seen with other technologies, such as solar energy or offshore wind, in their earlier years, so perhaps that should give succour and comfort to those championing this area of potential development.

My officials in the Department for Business, Energy and Industrial Strategy are engaging very closely with industry leaders to assess what options there are for reducing deep drilling and development costs and the methods of reducing and allocating risks so as to make best use of this energy source. Based on our experience of supporting local authorities to develop heat networks, through our heat network delivery unit, and on advice from the British Geological Survey and the Coal Authority, there is clear evidence that geothermal has really good potential as a renewable heat source for heat networks in many parts of the country.

Geothermal heating schemes are, however, all different. As we have heard this afternoon, they extract heat from rocks or water at different depths and hence different temperatures. This is not an entirely straightforward industry. It is not a uniform system; it is not a wind turbine or a solar panel. There are two broad approaches: deep geothermal schemes, where water is sent down to be heated by hot layers of rock before being extracted at high enough temperatures for use in district heating systems directly; and shallow geothermal, where the temperature of the water extracted needs to be boosted by a heat pump before it can be used for heating. Given the different nature of the technologies, there is no one-size-fits-all solution to bringing this technology forward, which is why my officials are working closely with industry partners.

The Government must balance their support for renewable heat sources with the reality that not all of these schemes will be economically viable with the technology available at the moment, given that the quantity and temperature of the extracted water can vary considerably from scheme to scheme, and there may be alternative renewable heat sources that are better suited to a specific community’s needs. Having said that, I recognise the potential role in supporting our heat decarbonisation objectives, and that is why geothermal heat projects are eligible for the Government’s heat network support.

The heat networks investment project has already supported two shallow geothermal projects in Gateshead and County Durham, with a total of £9.7 million of funding. These schemes will use geothermal heat from mine water to heat homes and non-domestic buildings. Geothermal power projects are also eligible to apply under the newly launched auction round four of our contracts for difference scheme for generation, which will open in December this year.

The Government have also invested £31 million in UK Geoenergy Observatories, which will provide a world-class infrastructure for a wide range of geoenergy-related research. Publicly run, owned and funded, each observatory will contribute to world-class science that puts the UK at the forefront of delivering clean energy at the scale required to help us achieve the net zero target that we have set ourselves by 2050.

I thank all Members who have spoken today and who continue to bring their enthusiasm and passion to the debate. Stoke-on-Trent is extremely well represented by amazing advocates in my hon. Friends the Members for Stoke-on-Trent North (Jonathan Gullis) and for Stoke-on-Trent Central (Jo Gideon)—the latter is a fantastic saleswoman who sees Stoke as the potential centre for the new geothermal revolution that is coming. We were hard-pressed not to know her passion, and I thank her for that.

I also want to thank the hon. Member for Strangford (Jim Shannon). It is always a pleasure to hear him in a debate. It was lovely to discover him in an arena where he is not as knowledgeable as many others in the room, but his longevity in the House usually gives him an advantage. I hope that he goes away with the challenge set by the hon. Member for Southampton, Test to see how he too can take up and champion geothermal across Northern Ireland and bring the opportunities there as we look to invest in them.

In answer to the question from my hon. Friend the Member for Stoke-on-Trent Central, geothermal heat projects are expected to be in scope for the £270 million green heat network fund that will open in April next year. I hope that that helps those who are looking to bid in that space to get going now.

The debate has been really helpful. I find potential solutions exciting, and my officials are working hard to see how we can progress. It is always incredibly helpful to hear from colleagues. The enthusiasm of colleagues this afternoon in making a strong and passionate case for the future progress of the technology is inspiring. I look forward to working with them all in the weeks and months to come.