Geothermal Energy

Motion made, and Question proposed, That this House do now adjourn.—(Samantha Dixon.)

16:59:00

I am grateful to have been granted this Adjournment debate, as it provides a welcome opportunity to put on the record in this new Parliament the benefits that deep geothermal could deliver for our country, in particular for parts of our country that most need investment, while making a contribution to the vital issue of energy security. Helping me in this effort is the all-party parliamentary group on deep geothermal, which the Association for Renewable Energy and Clean Technology helps to administer. I am delighted to spot the hon. Members for Truro and Falmouth (Jayne Kirkham), for Camborne and Redruth (Perran Moon) and for Rushcliffe (James Naish) in the Chamber, who are all members of the APPG, which provides me with an opportunity to recognise and thank them for the work they are doing for the cause. Deep geothermal energy remains an underutilised resource in the UK, despite its potential to provide reliable renewable heat in particular, and also power. With growing pressure to secure our energy future and decarbonise heating, now is the time to give this technology the attention it deserves. As we work towards energy security and decarbonisation, we must explore every viable renewable energy source. Deep geothermal offers a stable and sustainable solution, yet it remains largely untapped in the UK. To unlock its potential, the Government must take the lead, providing the necessary support to get projects off the ground and demonstrate their long-term viability. One of the biggest challenges we face in the journey to net zero is the decarbonisation of heating, which must be treated as a priority. The UK has more than 28.5 million homes and 1.9 million other buildings—including offices, hospitals, shops and warehouses—the vast majority of which rely on gas boilers for both heating and hot water. These buildings alone account for nearly one fifth of the UK’s total emissions. The Climate Change Committee has identified decarbonising heat as one of the most difficult yet essential steps in reaching net zero. Achieving net zero by 2050 requires us to use every tool at our disposal. While much of the Government’s attention has been focused on air and ground source heat pumps, alongside other electrification methods, which have an important and certainly dominant role to play, converting the entire housing stock to those technologies will put immense pressure on our electricity grid and supply chains. That is where deep geothermal stands out. It offers a reliable, low-carbon solution for heating that is not dependent on sun or wind—it is there all year round, whatever the weather—and has been successfully deployed in other countries to great effect.

Does the hon. Member agree that geothermal, as a baseload energy source that can be developed quickly, should be included in the Government’s clean power plan and have the priority that that affords for grid connections?

I fully support the hon. Member’s efforts to raise this issue. She will know from the local projects in her constituency that we are making a start, but it is not enough, and this needs to be part of the broader plan in a comprehensive way. When I first learned about deep geothermal technology, I thought it sounded too good to be true: an environmentally friendly, reliable and cost-effective source of heat and power right underneath our feet. But the more I explored it, the more I realised it truly lives up to its promise. Let me briefly explain the technology. Deep geothermal taps into naturally occurring hot water deep underground to produce significant amounts of usable heat and energy. Making use of that is no different from the way in which the Romans built their baths above hot springs; we just run a pipe down instead of relying on the water making its own way to the surface. People sometimes wonder whether the technology is fracking mark 2. Fracking involves the use of high pressure to crack the rocks to create artificial flows. Like Europe, we have access to resources of naturally flowing water that simply need to be tapped. Greenpeace, Friends of the Earth and the United Nations all support deep geothermal in the light of its environmental benefits. A site is typically 1 to 2 acres. It does not take up huge swathes of farmland like solar panels can or involve erecting wind turbines, which some communities think detract from the local landscape.

I thank the hon. Member for giving us the opportunity to discuss the potential of geothermal and the barriers when it comes to planning. In my constituency of Camborne, Redruth and Hayle, we have businesses that are at the forefront of both shallow geothermal energy, with ground source heat pumps developed by Kensa, and deep geothermal systems such as those being pioneered by the Geothermal Engineering Ltd deep geothermal power project, which is soon to become operational. Does he agree that industry needs Government support, including planning reform to reduce deployment timescales, and a UK geothermal licensing scheme to calculate the size of the geothermal asset and how that asset is protected in law?

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.

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?

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.

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?

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?

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?

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.

17:16:00

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.

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.

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.

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?

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.

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?

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.

17:28:00