Geothermal Energy

Debate between James Naish and Kieran Mullan

Thursday 6th March 2025 Commons Chamber

[Dr Mullan]

I agree with the hon. Member. The Government need an entire strategy for deep geothermal that will hopefully draw attention to those different pieces of the puzzle, including planning and licensing, which are so important. Not too far away from his constituency is the Eden Project, which people see as a byword for environmental credentials in this country. It is pioneering this technology, which is a powerful testimony to its environmental benefits.

Since the closure of the non-domestic renewable heat incentive in 2021�unfortunately just as interest was peaking from industry�deep geothermal, unlike solar and wind in their early beginnings, has been without comprehensive Government support to develop the market. There have been encouraging breakthroughs, as was mentioned, and in 2023 the UK�s first operational deep geothermal plant to open in 37 years went online at the Eden Project. Deep geothermal also made its historic debut in allocation round 5 of contracts for difference, with three projects from Geothermal Engineering Ltd securing approval, totalling 12 MW of capacity. At Langarth garden village, green heat network funding is now supporting the development of a geothermal-powered heat network to turn that resource into local supply. Those successes show that, with the right backing, geothermal can become a key player in our transition to clean, sustainable energy.

However, those ad hoc wins are not providing the sort of comprehensive dedicated approach that we need. As it stands, the UK has fallen far behind other countries that have for some time harnessed the potential of deep geothermal. If we look across Europe, as of 2022 there were 74 projects in France, 31 in the Netherlands, and 190 in Germany. Deep geothermal energy heats more than a quarter of a million homes in Paris, and the French 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. In fact, Germany is already producing more than 350 MW annually, and the Government are targeting at least 100 new geothermal projects. Across Europe alone, hot sedimentary aquifers have the potential to provide eight terawatts of heat at 90� C�30 times more than the district heating systems that currently serve 70 million people across the region. The potential is enormous.

[James Naish (Rushcliffe) (Lab)]

I would be looked on badly if I did not briefly mention the British Geological Survey, which is based in my constituency. The hon. Member talks about what is happening in Europe, but does he agree that in the British Geological Survey in this country we have one of the world�s experts in studying geology and geothermal technology, which could help unlock what we are doing in this country with deep geothermal?

[Dr Mullan]

The hon. Member is right, and I join him in paying tribute to the BGS, an organisation I have had the pleasure of working with over recent years. It has done fantastic work in mapping and identifying the potential, and with funding it will have the appetite to go even further, reducing uncertainty by helping developers and investors to understand the resources underneath our feet.

The UK is already a world leader in tackling climate change and clean energy, having been the first major economy to halve our emissions, and renewables now account for more than 50% of our electricity, up from just 7% in 2010. With deep sedimentary basins in east Yorkshire and Cheshire, granites in Cornwall and Scotland, hot sedimentary aquifers in Surrey, Dorset, and Sussex�in my constituency�the UK�s unique geography puts us in an ideal position to exploit the benefits of geothermal energy.

[Dr Mullan]

The hon. Member is completely right�forgive me, she is also a member of the APPG although I did not recognise that at the start of my remarks. One thing we can do through the APPG�we started to do this in the last Parliament, and I am trying to reconstitute it�is to help interested local authorities form a group and support them. This technology is new to them, and they do not necessarily have the expertise and understanding. Again, the hon. Member is right: these are the sorts of things that a comprehensive Government-led strategy could help to address close the gaps.

As I said, the resource in Europe, and the rocks that are being exploited, are essentially exactly the same veins of rock that cross the channel. There is no geological difference and no less potential than with the rocks that are being exploited in Europe.

It is true that the heat and rocks necessary for deep geothermal electricity are rarer here in the UK, with Cornwall leading the field, which is where the projects I mentioned are getting off the ground, but historically the focus on electricity has caused us to overlook the potential for heat.

The Association for Renewable Energy and Clean Technology�REA�worked with Arup to assess the UK�s potential. They estimated that the UK could support 360 geothermal plants, producing 15,000 GW of heat each year, which could supply heating to over 2 million homes through heat networks. Additionally, some of those plants could generate around 400 GW of electricity annually, enough to power a further 150,000 homes.

The Minister will be looking closely at securing the best possible value for money from every penny invested in renewable technologies, but I want to make four points about the way in which this exercise should be undertaken, because too narrow a framework would underestimate the benefits of deep geothermal to our economy overall.

First, as I alluded to earlier, solar and wind are cheaper now, but they did not used to be and we need to think about the potential trend costs. Secondly, as mentioned, deep geothermal is baseload, unlike solar and wind, and that has to be given due consideration. Thirdly, there is the question of where the investment will end up. I had the opportunity to work with the Durham Energy Institute as part of a national review into deep geothermal for the previous Government. We identified that deep geothermal can play a key role in levelling up, with six of the 10 least economically resilient local authorities also having the highest geothermal potential. Some 44% of the list of high potential locations for deep geothermal fall within the top 100 UK local authorities in need of levelling up, three times the amount that we would expect as a result of chance. Investing in the sector would create thousands of well-paid jobs and drive green growth in areas that need it most. Fourthly, deep geothermal provides a natural transition for oil and gas workers, as many skills, such as drilling, are directly transferable. Oil and gas companies�sometimes UK companies�are delivering these projects across Europe. Surely this is the obvious industry to invest in to protect those jobs and businesses as we transition.

How might we go further in the short term? I have worked with the industry to develop a ready-made plan. I ask the Minister to look closely at the proposals that the APPG have produced to create a carve-out in the public sector decarbonisation scheme to unlock this opportunity. The PSD scheme has already played a crucial role in helping public sector buildings transition to low carbon heating solutions. However, a specific programme could be carved out to support an initial cohort of deep geothermal projects, ensuring that schools, hospitals and other public buildings can benefit from this reliable, renewable heat source. By doing so, the Government would not only accelerate the decarbonisation of public infrastructure, but provide a strong foundation for the wider geothermal industry to scale up and attract investment.

I have spoken in the Chamber before about how hospitals are fantastic anchor candidates for deep geothermal plants. Industry leaders have identified that, of the 210 NHS hospitals in England and Wales that have been prioritised for decarbonisation due to their high heat demand, 109 overlie potential geothermal aquifers. The advantage of working across the NHS is that we can bundle up opportunities to create a bigger investment opportunity. I know that hospitals across the country are already exploring this, including Eastbourne district general hospital, which services my constituents in Bexhill and Battle.

One of the challenges for deep geothermal is scale of cost and uncertainty. Solar and wind are cheaper and more certain investments. A single geothermal plant is expensive and cannot be guaranteed to tap into the reserves the analysis suggests will be found. By pooling together the investment opportunity of a number of sites, economies of scale are created, the risks of not all the sites delivering can be factored in and the numbers can still be made to add up.

The private sector is willing and able to invest in such an opportunity. I have personally met representatives from a number of capital funds and deep geothermal developers and they would leap at such a project. We estimate that a dedicated fund of just �15 million for 10 plants at 10 public sector sites could unlock �250 million of private sector investment and kick-start a wider industry in the UK. Will the Minister meet me and other members of the APPG to discuss that in the near future?

Alongside that, there is a powerful argument for a broader geothermal development incentive, modelled on the heat incentive, which will provide businesses with confidence that geothermal is part of the UK�s energy future. It could be modelled on contracts for difference, ensuring a competitive process, but by offering scale we would again be reducing risk for developments.

I know there are concerns about open-ended support for any industry, but the aforementioned REA-Arup report modelled support for only an initial wave of 30 projects that would help establish a scaled industry in the UK, which could then stand on its own two feet.

Establishing a deep geothermal strategy is crucial to setting clear targets and providing a long-term road map for the sector. Will the Minister advise whether the Government will produce such a strategy? Government support is key to enabling a route to market for the sector. I know the Government are shortly due to publish a review of the comparative costs of deep geothermal. When does the Minister expect the review to be published? That would provide a welcome update. I know that industry stakeholders that work with the APPG and others would be happy to act as critical friends of that review ahead of publication. Would the Minister be happy to facilitate that? It is so important to ensure that this review has looked at all the evidence and can make full use of the experience of industry.

The APPG also considers and is trying to raise awareness of the benefits of shallow geothermal, as the hon. Member for Camborne and Redruth (Perran Moon) mentioned. While it is very closely related to deep geothermal, as we might expect, that industry faces different challenges, but it could offer solutions even more widely. I know that significant private sector investment is available. Again, we are talking about a technology that could reduce the strain on electricity-driven grid connections. For both sectors, GB Energy might well be expected to play a vital role. Can the Minister confirm my expectation that its remit will extend to heat as much as to electricity, and can she confirm whether the mandate from Government will ask it to consider deep geothermal specifically?

[James Naish]

On that point, could the Government not help the industry by also ensuring that there is an overarching geothermal regulatory regime, which I think it is fair to say we do not really have yet in the UK? Would the hon. Gentleman support that being brought forward?

[Dr Mullan]

I agree with the hon. Gentleman; that is one of the pieces of the jigsaw that will further unlock private sector investment. In my engagement with industry, that is slightly further along the chain of things that it is looking for�the numbers do not add up at all at the minute, let alone a proper regulatory regime being in place. As soon as we unlock the numbers, the demand for all the other areas will really ramp up, which is why we need this thought-through strategy from Government so that they can anticipate and prepare to bring in the other elements when they become particularly important.

I hope that I have done an adequate job of showcasing the industry and its potential. Everything we have learned in recent years shows that we need to take advantage of every opportunity. We need to build the biggest coalition, deploy the largest possible workforce and spread the benefits of decarbonising as widely as possible if we are to succeed and bring the country with us in the challenge. I cannot think of a better way of doing that than putting dedicated resources into deep geothermal. I know that it could bring benefits to my constituents and to the constituents of many other Members and unlock hundreds of millions, if not billions of pounds of investment into our economy. I look forward to hearing about the Minister�s plans and ambitions, which I hope will get us there.