Geothermal energy requires European policy solutions – EURACTIV.com

Geothermal power is a reliable and renewable energy source that is local by its nature and offers baseload power generation. Alongside energy efficiency measures and other renewable heat sources, like heat pumps, it could be part of the solution to Europe’s energy crisis, says Sanjeev Kumar.

Sanjeev Kumar is Head of Policy at the European Geothermal Energy Council. He spoke to EURACTIV’s Kira Taylor about the potential of geothermal to provide a reliable and renewable energy source in Europe.

Europe is in an energy crisis. Commission Vice-President Frans Timmermans has said that, if we had switched to renewables five years earlier, we wouldn’t have the issues we’re having with high energy prices. How do you approach the current issues from the geothermal perspective?

With geothermal, there are no supply issues. We are literally standing on an endless power source with billions of years’ worth of heat that can be used for heating, cooling and electricity. So it makes perfect sense for regulators to invest time working out how to utilise geothermal energy.

We’re not saying geothermal is the answer to everything, but if you balance geothermal with wind, PV, solar thermal, ground source heat pumps, air source heat pumps and better energy efficiency, then actually you can pretty much decarbonise the largest energy consuming parts of the economy really quickly. Geothermal makes an 100% renewable energy system obtainable.

At the same time, if you electrify transport, you’ve got baseload power generation from geothermal. Regulators need to incorporate geothermal more in their pathways to decarbonising buildings, industry and transport. It needs to be part of the public conversation. If not a geothermal strategy, then certainly a geological strategy at the European level because a lot of these sectors require European policy solutions.

The best example is to look at the French Environment Agency. With geothermal, they found that the levelised cost of geothermal is €15 per megawatt hour (MWh) compared to €51/MWh for conventional fossil gas. So even with all of the massive subsidies for fossil infrastructure, gas is still infinitely more expensive than geothermal. If we can find a way to get more and more geothermal off the ground, then actually you would have solved a lot of issues.

The proof of the pudding is that, in EU countries’ national energy and climate plans and in the last energy council conversation around the Fit for 55 package, there was a lot of resistance to the renewable heating and cooling subtarget in the renewable energy directive.

Member states don’t want to do this. It constrains them. Yet this is the genesis of the political problem. If they’re serious about this, they will address renewable heating and cooling. What I think they’re looking for is a quick get out of jail card. We’ve had quick get out of jail cards for the last 40 years. And it just creates a crisis every couple of years and it puts Ukraine through the mill. It’s just geopolitically not a smart thing to do.

Deep geothermal has a lot going for it: it’s a renewable energy source, and it potentially provides baseload electricity supply without the variability of wind and solar. So why has it not picked up in a major way yet?

Geothermal up to now hasn’t had the attraction that wind and solar has partly because you can’t see it. Secondly, geothermal projects are much, much bigger projects to get off (under) the ground. Then the third issue is that there’s just been very little policy focus around the specific needs of geothermal.

The main difference between wind and solar and geothermal is that they’re both manufactured. You can go to a factory and start making the same standardised products on an assembly line. For geothermal, it’s an engineered project, so each project fits into location and available resource. The challenge for the industry is to standardise as much of its licensing, permitting, project financing and risk mitigation. At the moment, these skill sets are wrapped up chasing oil and gas.

How have deep drilling techniques evolved over the years? What is the state of the art technology now?

The main advances in geothermal have all been around the depths at which you drill. So you have some technologies that are able to drill very, very deep. You then have issues in terms of the rocks or the geological formations you’re drilling into. The harder the rock, the stronger the drill needs to be.

There are two main technological innovations that we’ve seen over the last couple of years – and we expect this to be transformative not just in terms of a new market, but also increasing the profitability of existing geothermal sites: horizontal drilling and multi-drain drilling.

The Engie & Athena multi-drain drilling project in Velizy-Villacoublay, France, won the Ruggero Bertani European Geothermal Innovation Award 2021 by nearly doubling the existing geothermal energy source by heating 12,000 houses with geothermal energy rather and saving 22,800 tons of CO2 per year.

Significantly increasing energy flows from existing capacity is a both lucrative for the project developer and the environment.

Looking at the next 10 years, is that the main technology? How do you see geothermal growing?

Geothermal’s challenge over the next decade is less about technology – the most sophisticated drilling already exists. Humanity has been able to drill very deep into quite hostile environments for a long time – they’ve just been searching for a resource that has caused considerable climate damage.

Shifting this to renewables means developing business models for large-scale geothermal energy utilisation. This requires regulators to create a market for renewable heat for the industry to move.

Now the main challenge for the industry is to focus on business model innovation. Part of this is looking at ways in which project developers can better utilise existing capacity, as well as experimenting on different ways to secure sufficient income to remain operational.

For example, geothermal lithium is a brand new and very lucrative business model. Extracting lithium chemical deposits, which have been processed by mother nature, adds a new revenue stream.

Corporate purchases are another model. In the US, Google partnered with Fervo to provide baseload carbon-free power.

Dandelion Energy is another example of business innovation in the US that could be replicated in European markets. Dandelion Energy was formed as a spin-off company from Alphabet, which owns Google, to scale-up geothermal Ground Source Heat Pumps (GSHPs) by creating an accessable consumer interface and amortising upfront installation costs into monthly bills. Then you also have a different business model in the sense of district heating. The issue there is how do you construct the business model at a local level?

One of the new markets that the industry is slowly starting to grapple with – policymakers are not in this space yet – is Heat Purchase Agreements (HPAs). Power purchase agreements have largely driven a lot of the growth that we’re seeing today in wind and PV. Heat, however, has a different requirement because one has to build the infrastructure to connect the renewable energy resource and the customer. The ECOGI bio-refinery, located in France, is an example of a HPA. It uses geothermal heat from a local Electricité de Strasbourg plant to convert plant-based raw materials into pharmaceutical, nutritional and food products.

There’s also an issue around building capacity for environmental impact assessors within member states and local regions as well because that kind of skill, while in some places has been maintained, requires support in others.

The final thing, again in the business model, is risk mitigation. Any technology will have a risk attached to it. With geothermal, you’ve got two risks. The first one is your project risk. Then, with geothermal as well, sometimes you have a resource risk. So you drill, but actually you need to drill a bit deeper in order to get the flow rate and resource that you originally modelled. Mature geothermal markets address these issues with private insurance products.

The issue is that there are only there are only a few mature markets for geothermal at the moment so support in the form of guarantees is needed to move enfant markets to mature ones.

You mentioned earlier the experience in drilling. Oil and gas companies have a lot of experience in this. They’ve conducted a lot of geological surveys, which are useful for geothermal. Why do you think more haven’t come across into geothermal?

The profitability of drilling for oil or gas is infinitely more than geothermal. What you find historically is that, whenever there’s been slack within the oil or gas market, the drilling service sector effectively just switches over to drilling for geothermal.

What we’re now starting to see is many more companies moving into geothermal. Most of the big majors are now starting to talk about geothermal. It’s the most logical space for them to move into.

The problem is that we lack the political conversation to accelerate this transition. At present, the political conversation centres on a just transition from coal industry, but there is no talk about the transition pathway for the oil and gas drilling industry.

Does something like closed loop systems offer oil and gas an out?

The underlying engineering basis of closed loop systems is geological understanding and horizontal drilling, which are the mainstay of the oil and gas industry. So clearly, you see that expertise coming over and developing new markets for geothermal.

The sector needs more of the way in which the oil and gas industry has standardised their products and regulations. All of this requires a regulatory pull from legislators, especially those focused on the revised 2030 targets.

Importantly, once geothermal does get those foundations in place, we expect significant volumes of growth for renewables at the expense of fossils. This is good for geothermal, jobs, sustainable growth, the environment and, of course, the climate.

There’s this idea of geothermal anywhere – that, if you drill deep enough, you can pretty much provide geothermal energy to everyone. How likely is that? Are there still areas that would be missed?

There was a study that just looked at the existing district heating system and could you convert that over to geothermal. It found that, if you could do that, you could decarbonise 25% of Europe’s population. This is just with the existing district heating infrastructure that is around 5, 6, 7 years ago.

In terms of whether geothermal is available everywhere, do you have the resources to meet demand? The answer is very simple: yes. Once we get the environmental impact assessment architecture correct, once we have better risk mitigation frameworks, then actually you can drill at completely different temperature ranges.

How bad is the risk of tremors for deep geothermal projects? Is the recent example in Strasburg a cautionary tale for companies looking to expand in Europe? Does it tell them they need to do more communication with communities or was that just a one off?

That’s more a one off. This wasn’t necessarily the company. They were asked to do additional testing by the regulator and that led to the incident. So part of the story there is that we need to have regulators who fully understand the geothermal technology.

We need to take this on board, learn whatever lessons need to be learned, and move forward. With every single thing that we do in life, whether you’re building a renewable energy system, building a metro, house, school or hospital and it requires foundation work, then you’re, by definition, moving into the territory where you will have an impact on the natural environment.

The question is all about how to manage these impacts. The industry is very keen to work with local stakeholders and communities to raise awareness and build engagement.

In terms of regulation, what are the main differences between Europe and the rest of the world? Are the restraints bigger in Europe than elsewhere?

The main restraint is largely political will. Geothermal power was born in Italy in 1904. A great example of European innovation. The Laderello fields, in the Tuscany region, still produce geothermal power today.

But the US, Iceland, Turkey and, increasingly, China are the countries which have the political will to support geothermal power and/or heat plants. The US National Renewable Energy Laboratory (NREL) constantly produces estimates of capacity, guidance on technology, business models and policy.

In China, the 14th five-year plan is about geothermal. You can see that the Chinese government has clearly directed Sinopec, one of the largest oil and gas companies in the world, to focus on geothermal. That’s a strong political direction.

We have nothing of the sort within Europe. In fact, the EU’s commissioners for energy and climate spend all the time saying that the answer is more wind and solar rather than we need more renewables.

That is because, in Europe, there is an inbuilt strategic constraint called the internal market for gas. This provides a regulatory pull that locks the EU into gas consumption and locks out renewable heat.

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