The development of deep geothermal (DG) in the UK has the potential to reduce carbon emissions by 3MT annually, in addition to creating 10,000 direct and 25,000 indirect jobs. Despite these drivers, DG has largely been ignored by the government and by developers, with no mentions in the Sixth Carbon Budget, the 2021 Net Zero Strategy or the Energy White Paper. With only one DG heat network operational in Southampton and drilling activity limited to the Radiothermal Granites in Cornwall at the Eden Project, United Downs and by Cornish Lithium (to extract lithium from geothermal waters, with geothermal heat as a secondary benefit) DG is a missed opportunity for decarbonising the UK’s energy mix.
The reasons for this are varied and can be summarised as follows:
Political
Without a supportive and unified policy framework, UK DG developments are slow to mature and are driven by small companies supported by local government and funding from UKRI and Horizon 2020 – with long lead-times necessary to secure working capital. For example, the Green Heat Network Fund (GHNF) is accessible by DG developers however will not cover the costly preparatory work necessary to de-risk the subsurface and prove project feasibility. This lack of policy attention results in DG being largely unknown by the general public, the potential supply chain and by legislators. In comparison the UK offshore wind sector now has the largest number of installations globally following progressive policy support, most latterly with the Offshore Wind Sector Deal announced in 2019.
In comparison with other low-carbon energy sectors, DG has no dedicated technology and innovation centres to accelerate commercialisation and involve supply chains and researchers. This results in a piece-meal and fragmented market for knowledge and technology, where projects have to start from a blank page and expend effort in networking, supply chain development and in gaining sufficient technical knowledge.
Economic
Through our work with DG developers outside the UK we know that economic barriers to DG can be minimised, once financiers, insurers and the supply chain understand the development process and underlying risks. For example, drilling costs in Cornwall are reducing on a well-by-well basis as contractors gain experience and by the subsurface being better understood. There is appetite for investment in DG, proven by Cornish Lithium’s successful crowdfunding and subsequent private investment, with DG key to unlocking the business case for geothermal lithium. Eden geothermal has successfully accessed £5.5m from institutional investors, along with EU and local government funding. There is significant experience (subsurface and topside infrastructure) in Europe and elsewhere which can de-risk financing and insurance if this knowledge base is understood and signposted.
Government risk insurance, as seen in the Netherlands, could also de-risk developments to encourage capital. The funding of DG projects in the UK will require targeted government interventions, in the same way that solar and subsequently heat pump deployments were initially supported.
Social
Social barriers to DG development have been encountered in Europe due to seismic activity caused by well stimulation and operation. In the UK, from our project experience working on related projects for the Environment Agency, despite onshore oil and gas (O&G) well stimulation being subject to significant opposition by residents and environmental NGOs using seismicity and subsurface risk as reasons, this has not transferred to DG developments despite seismic activity being recorded in both Cornish projects. Public support remains high as DG is viewed as environmentally positive and benign and as efforts to educate local stakeholders yield results. More broadly, stakeholders are poorly informed on the local and national potential and benefits of DG and how projects are delivered.
The national benefits of DG, in terms of energy resilience and low-carbon energy production, need to be incorporated into policy, and the local benefits in terms of potential GVA also need to be understood for developments to be adequately supported.
Technological
There are significant learnings and case studies from Europe and the USA which can be used to support projects in the UK, if international collaboration and involvement in DG research can be stimulated. Despite the UK having an active O&G industry, onshore activity represents only 14% of production and the supply chains assumed able to support DG are shallow and not geographically fixed, hence there is a requirement to develop UK subsurface operational expertise if drilling costs are to be reduced through repeated experience with learnings shared. The O&G supply chains are only one part of DG technology. Once a DG well is drilled and proven, the challenge is to manage and distribute the generated heat or to convert thermal energy to electrical energy. The UK has a strong manufacturing and knowledge industrial base in these two areas which must be harnessed through identifying supply chain market fit for specific organisations and also different industrial sectors to energise supply chain interest and involvement.
Environmental
DG can be an excellent source of low-carbon energy, on a lifecycle assessment basis, however there are environmental challenges which must be communicated to stakeholders. These include the impact of seismicity, the impact on the subsurface, gas emissions from operations and the use of chemicals to ensure a sustainable flow from geothermal wells. According to one of our recent studies, the overall environmental risk from geothermal operations is low in comparison to other uses of the subsurface, for example hydrogen storage or CCS, however some risks are poorly understood by stakeholders, partially due to the low activity levels and geothermal falling between regulatory siloes.
Legal
In the UK geothermal water is not recognised as a natural resource, with legacy legislation designed for water abstraction, oil and gas activities or mining operations being used. Geothermal developers have no preferred access to land for development purposes. From our experience working with government and developers we know there is frustration on both sides due to the time and cost impact on licensing and permitting that an unclear regulatory environment causes. A unified approach is necessary to de-risk and accelerate projects and reduce project cost.
Licensing and permitting for subsurface resource is very challenging in the UK due to the technical complexity of the challenge and the politicisation of drilling and mining. For onshore oil and gas operators drilling equivalent exploration wells a time period of at least two years is required for permitting, with no guarantee that approvals will be given despite developments being legislatively compliant. DG is unlikely to face such opposition, however the risked NPV value of any project will not be acceptable unless planning and permitting timescales can be reduced and simplified.