Geothermal Energy

Miatta Fahnbulleh Excerpts

Thursday 6th March 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)]

I thank the hon. Member for Bexhill and Battle (Dr Mullan) for bringing this important issue to the attention of the House. I also thank my hon. Friends for their contributions and for the valuable way in which they have engaged in this debate. The hon. Member for Bexhill and Battle has been a great champion of deep geothermal energy in recent years, and the role he has played in the formation of the all-party parliamentary group on deep geothermal is commendable. I was very pleased to attend its meeting in December, and I am grateful for the engaged and constructive discussion that we had.

I agree with the hon. Member that there is a huge opportunity here, and I echo his desire for action and pace; I will briefly say why I share that desire. He will know, as I do, that we are coming out of the worst cost of living crisis that we have seen in a generation, and energy has been at the very heart of that crisis. The reality is that energy is unaffordable for too many people and increasingly out of reach for people who absolutely rely on it as an essential good, and we as a Government are determined to fix that. That means that we need to take action to lower energy bills by breaking our reliance on international fossil fuel markets and sprinting towards clean, home-grown power. That is why the Government are so committed and why we are running at our clean power by 2030 mission, but it is also why our warm home plan is absolutely critical. I reassure the hon. Member that we see that geothermal power has a critical role to play in our energy mix, following its success in the fifth auction round of contracts for difference.

I agree that geothermal energy represents an important opportunity�if the hon. Member hears nothing else I say today, I ask him to hear that. It has the potential to deliver clean and secure energy and heat, reducing our reliance on fossil fuel markets. As he mentioned, we are acutely aware that geothermal energy could also support a just transition by creating thousands of jobs that use skills from our oil, gas and coalmining sectors. The Government provide financial support for geothermal projects today, and we will continue to do so. The critical thing is ensuring that this is done at an acceptable cost to consumers and in an environmentally friendly way.

As the hon. Member mentioned, the most widespread potential for deep geothermal in the UK is as a low-carbon heat source for heat networks. I am convinced that heat networks have a really important role to play as we roll out clean heat and upgrade millions of homes across the country. We have the opportunity to grow their market share from 3% today to 20% by 2050. One of my first visits as the Minister for energy consumers was to the Mersey heat network, where heat from the Leeds and Liverpool canal is being used to provide hot water and low-carbon power for thousands of people, thanks to a water source heat pump. That is a great example of how communities can benefit from local energy sources, which is what the hon. Member and my hon. Friends are advocating for in this debate. I completely commend that and support it.

There are significant geothermal success stories, such as in Gateshead, where the first mine water heat network to become operational in the UK received �5.9 million from our heat networks investment project. That money enabled the council and Gateshead Energy Company to install 5 km of new heat network pipes and a 6 MW water source heat pump. Today, that network heats 350 council homes and the Baltic arts centre, with 270 more homes to be added.

The hon. Member for Bexhill and Battle referred to the public sector scheme. Geothermal heat projects supplying public sector sites are eligible to apply for support provided that they meet that scheme�s eligibility criteria, and again, I agree with him that there is a big opportunity here. I would add, however, that any changes to the scheme would need to be considered once the current spending round is completed. That is what he would expect me to say, but I reassure him that I am very happy to meet him and members of the APPG to discuss their proposals.

[Dr Mullan]

The point to emphasise is that the current scheme is based on going project by project, which undermines our ability to bundle up the risk, which is so vital to deep geothermal. That is the key change we are looking for: the opportunity for a number of sites to be pulled together, which is what will be most attractive to investors.

[Miatta Fahnbulleh]

We want to think about creative ways in which we can unlock the potential for investment, so I am very keen to meet the hon. Member and members of the APPG so we can hear those proposals. I give him that reassurance.

Not just today but over recent years, the hon. Member has made a convincing case for the merits of pursuing deep geothermal. The Government remain committed to exploring the renewable energy opportunities afforded by our geography and geology. However, I hope the hon. Member will understand that the priority now�and the thing my boss has tasked me with�is developing the warm homes plan. It would be premature for the Government to set a geothermal strategy with detailed targets in advance of that plan. For us, it is a question of sequencing; for instance, if we are to make the most of geothermal�s potential, we need to start by creating an environment that enables the growth of heat networks and, crucially, protects consumers along the way.

To that end, the Department will bring forward a market regulatory framework in January 2026 to improve consumer protection. We are also consulting on heat network zoning, which is an essential part of our plan to establish and accelerate heat networks. We think that will significantly increase private sector investment and remove some of the barriers. We are committed to taking a long-term, strategic view, and we are trying to sequence this work so that we develop the warm homes plan and build the enabling environment. However, I absolutely recognise the need for us to set a policy framework in which geothermal energy can thrive.

[James Naish]

The Minister knows that I really admire the work she is doing in this space, and my intervention is more of a query than anything else. She has mentioned the warm homes plan; is a sense emerging of how many of the 5 million properties we are targeting through that plan might be fed by district heating and associated technologies? Is there a crystallisation of what that construct might be, to get us to the 5 million homes that we are targeting?

[Miatta Fahnbulleh]

We know that there is a big opportunity for district heating, particularly in some of our urban centres. In the work that we are trying to do through the warm homes plan, we are thinking about where those opportunities are and making sure that we work with regional and local government to do some of the planning and the identification of those opportunities. That means that we can take a strategic approach, area by area and place by place.

[Rachael Maskell]

I am really grateful for all that the Minister is doing in this area. However, some of this work is quite time-sensitive; for instance, we have a major development in York, the first phase of which goes into planning in September. We very much want to work with Government to see what we can deliver in York Central. Would the Minister be prepared to work with us to see whether we can get this model working on some of those micro sites?

--- Later in debate ---

[Miatta Fahnbulleh]

We are keen to work with Members across the House, and with local and regional government. We have set ourselves a challenging set of ambitions, so we are clear that we need to work with anyone that can unlock and bring forward investment opportunities, so as to realise those over the course of the Parliament.

It would be remiss of me if I did not say that we recognise that for all the opportunities, there are still challenges faced by industry to secure the necessary investment. As a result, as the hon. Member said, few deep geothermal projects in the UK are financially viable without Government support, unlike what we see on the continent and in other countries.

The hon. Member mentioned the role of Great British Energy. We are clear that it will provide further opportunities for investment in clean energy. The Great British Energy Bill sets out that

��clean energy� means energy produced from sources other than fossil fuels�,

including geothermal, so let me reassure him that it is within scope. Great British Energy is an independent organisation, but we will give it clear direction that it should be looking at all the opportunities that could be exploited across the country and at different technologies, such as geothermal.

Deployment at scale is also unlikely unless there is a demonstrable pathway to bringing down the cost of geothermal heat to make it comparable to other renewable technologies. We know that. It is why we have been working with stakeholders to improve our knowledge and understanding in this area. In 2024, we commissioned a costs research project, to which the hon. Member referred. We intend to publish that this year. I am asking my officials to work at pace to do that, but I reassure him that we will be engaging with industry prior to publication, and he has my assurance that I will facilitate that to ensure that it happens.

My hon. Friend the Member for Rushcliffe (James Naish) commended the British Geological Survey, and I share his enthusiasm for it. We have commissioned work from it on open access tools that show the technically viable opportunities for geothermal projects in the UK, and we will continue to work with it. The UK is also an active member of the International Energy Agency technology collaboration programme on geothermal energy�that was a mouthful�which has enabled us to gather further learning and to learn from other international examples.

All that is to say that we see the opportunity and we are trying to build the evidence base. We want to work with industry to think about how we unlock geothermal, because we see it as a viable route to the expansion of heat networks and to delivering the objective of warmer homes and cheaper bills.

In conclusion, we are absolutely committed to the project and to delivering warm homes. We know that we need a range of technologies to do that. We cannot do this sprint on our own, so we will always want to work with industry to enable us to get there. I thank the hon. Member for Bexhill and Battle again for securing this debate, and I thank my hon. Friends who are here for being such avid champions of geothermal. My Department is keen to work with them, and I look forward to meeting in due course.

Question put and agreed to.