Geothermal Energy

Rachael Maskell Excerpts

Thursday 6th March 2025 Commons Chamber

[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.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful for the work that the hon. Member has done in this area. York has rich sources of deep geothermal. The York Central site could heat 30,000 homes in my constituency, yet the local authority and other bodies do not have the confidence to bring those projects on board. Does he agree that the Government could provide tools and support to enable such projects to come to fruition, as well as just improve basic understanding?

[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?

--- Later in debate ---

[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?