INTRODUCTION AND CONTEXT
Thank you for the opportunity to address the Symposium today. I spoke last year at an event alongside the 1st Symposium to mark the UK’s membership of the IEA’s (International Energy Association) Geothermal Implementing Agreement. An agreement that has the mission to foster learning between countries and support the development of geothermal energy across the world. And I want to start today, if I may, by talking about deep geothermal in the international context.
Just two weeks ago I was in East Africa leading the largest ever Renewable Energy Mission to visit the countries of the Rift Valley.
A visit which had deep geothermal as its core theme and I was delighted to have a number of deep geothermal companies in the delegation - some of those companies are here today. The potential in the Rift Valley is vast and presents a fantastic opportunity for those countries to increase their energy security to drive their development and growth. And it confirmed to me the potential of deep geothermal to help us meet our energy and climate change goals of low carbon growth, both nationally and internationally. In Kenya, for example 190 Megawatts of geothermal power is already installed, but the estimated geothermal capacity is between 7,000 to 10,000 Megawatts. There are clear opportunities to develop the industry’s capacity and reach into these huge emerging markets and to drive the sector globally.
The International Energy Agency predict in their Technology Roadmap that by 2050, geothermal electricity generation could reach 1, 400 Terawatt hours per year, around 3.5 per cent of global electricity production and deep geothermal heat could meet 3.9 per cent of projected final energy demand for heat.
And tackling climate change and driving green growth is about creating partnerships - partnerships at international, national and local level. Earlier this year Charles Hendry went to Iceland and secured an historic agreement with the world’s leading user of geothermal energy, where we are seeking to foster partnerships across the commercial sector and through international partnership.
SEPARATING DEEP GEOTHERMAL TECHNOLOGIES
There are two different strands to geothermal energy - deep geothermal heat which can be brought up from underground and connected to a heat network to provide space and hot water heating for local developments, possibly even for whole cities. And there is geothermal power which generally means finding rocks deep underground that are hot enough to produce electricity. They are not mutually exclusive - a power station can and should find a use for this heat too.
DEEP GEOTHERMAL HEAT
I would like to first turn to deep geothermal heat, particularly as this morning many of you attended a workshop to identify and assess the barriers to geothermal and district heating projects in the UK. My officials took part in the workshop. The workshop was timely as there is real momentum developing in this area.
Some decades ago Southampton pioneered the potential to connect deep geothermal heat sources to city heat networks. But we now have a number of cities showing a great deal of interest, and that is crucial, because decarbonising our cities is a big challenge.
Taking the carbon out of space and water heating is a key plank of our 80% emissions reduction target. This was spelt out in last December’s Carbon Plan and then in our strategic framework on low carbon heat which set out the possible pathways to achieving this. The Heat Strategy was published in March and I hope you will have all read that.
Heat is a local issue and implementing our strategy will need to capitalise on the best local solution. Heat networks will be an important part of the future solution - providing heat to dense urban areas. In theory, up to half of the heat demand in England is in areas with high enough heat density to make heat networks feasible.
That is why DECC is running what we call our “ low carbon pioneer cities” project. We are helping cities like Manchester and Newcastle to develop their district heating plans. The great thing about a network of course, is that you can have multiple sources of heat supply and these cities have identified deep geothermal as a possible source for theirs.
And we are backing up our strategic vision for heat with the world’s first Renewable Heat Incentive. Last month the Government published a Consultation on revisions to the non-domestic RHI. We have proposed a separate and higher tariff for deep geothermal heat - where previously the technology was grouped with ground source heat pumps at a lower tariff. This is a clear statement of our commitment to this technology and to the delivery of our strategic vision for heat.
There’s also renewable cooling, where deep geothermal heat can be used to provide summer cooling using absorption chillers - meeting what is likely to be a growing cooling demand in the future, and which is also supported through the RHI.
At a shallower level, but still geothermal, there’s the potential sitting below huge swathes of the UK - in disused mine workings. Some of the figures of this potential low-level heat resource are really very significant, for example, the British Geological Survey estimate that 40% of Glasgow’s heat demand could be met from heat recovered from water in local mines - and could provide that heat for 100 years.
So I see the potential for the supply of heat from a range of depths underground, in a range of locations. We have set out the strategic case and are driving this at central and local government to make this happen.
Turning to geothermal power. The attractions of this technology are clear - a form of electricity which has little visual, noise or air quality impact, and as a result meets little to no opposition to local development - unlike almost every other form of renewable generation.
And on top of that, it provides a highly reliable baseload supply which is not weather dependent. I know that many in the industry were disappointed to “only” get two ROCs for your technology in the recent Banding Review announced in July. But the “only” is in inverted commas, because actually two ROCs is quite a big subsidy, and that subsidy is being paid by electricity consumers. In other words everybody. So it is right that the Government’s aim was to set the new RO bands as cost-effectively as possible, to meet our 2020 target at least cost to consumers, who pay for the RO through their energy bills.
We faced some very difficult decisions in the RO review process and simply couldn’t do everything we had hoped to across all technologies.
I welcome the most recent report by Sinclair Knight Merz, commissioned by the Renewable Energy Association, the main findings of which Tim Jackson has just run through. And I agree with the report’s conclusion that deep geothermal technologies will be part of the energy mix going forward. But, as the report makes clear, particularly for the deep power projects there a number of uncertainties and qualifications that will need to be addressed, if we are to fully understand the realisable potential of this resource.
But although we weren’t able to set a higher band in the RO, I do want to do more for deep geothermal power. In the RO announcement we left open the door to exploring other ways to support projects. It is the uncertainty and risk of these very deep projects that we need to bridge - Edward Davey’s visit in July to the Eden Project has helped to re-invigorate this ambition in the Coalition Government.
Government overall commitment to Deep Geothermal
Last month I spoke at the first meeting of the All Party Parliamentary Group on deep geothermal - the formation of which is a very welcome development in its own right. The question I tackled right up front then is one I want to reiterate here to this wider audience - it is - does this Government still care about deep geothermal as a clean energy technology?
Yes, we do.
Would we like to do more?
Yes, but - and it is big ‘but’ - given the catastrophic deficit we inherited we have to achieve more with less. This has meant that we faced some very hard choices about the overall pace and scale of support for renewable technologies and our strategic priorities.
I hope that I have painted a picture of this Government’s continuing interest and practical action across the deep geothermal sector.
Together we all have a part to play in delivering our shared vision and this will mean working in partnerships - partnerships forged through events like this.
Thank you for listening.