A global revolution in geothermal energy is coming. How can the UK board the train?

Geothermal is one of civilisation’s oldest forms of energy. In fact, in ancient Britain the Romans used to use hot springs to provide underfloor heating. As a modern energy source for both heat and electricity, however, geothermal has remained the niche confines of geologically turbulent countries such as Iceland, Indonesia and Kenya. Iceland, for example, acquires 70% of its total energy from geothermal.

But all that could be about to change as the fast-evolving ‘next-generation’ forms of geothermal technologies increasingly make the energy resource extractable in most countries around the world.

According to a recent landmark report from the International Energy Agency (IEA), geothermal could power 15% of global electricity demand growth between now and 2050 if project costs continue to decline. That would equate to 800 gigawatts (GW) of power, equivalent to the current electricity demands of the US and India combined.

The technology offers the tantalising blend of abundant, flexible and clean energy that can support the deployment of variable sources such as wind and solar, and complement other baseload power like nuclear. Although geothermal only currently provides 1% of the world’s electricity, next-gen technologies technically offer the potential to meet the world’s electricity and heating demands many times over, found the research. And the power-hungry artificial intelligence (AI) behemoths are starting to cotton on to the potential.

Importantly, geothermal can leverage the existing know-how and equipment of the oil and gas industry to drill at greater depths and access vast, untapped wells of emissions-free energy. This could future-proof the creaking business models of the North Sea oil and gas majors, as well as be a potential game-changer for the UK government’s ambitious plans to decarbonise its power system by 2030 and reach Net Zero by 2050.

“By just using the oil and gas industry at its scale today, geothermal could power the freaking world,” states Jamie Beard, founder and executive director of Project InnerSpace, a non-profit working for geothermal energy’s global growth and development.

Conventional vs Next-Gen

Geothermal energy uses heat from the earth’s crust to either provide direct heating or generate electricity through turbines. The technology is split into two categories: conventional and next-generation geothermal. The conventional variety taps into naturally-occuring geothermal reservoirs near the earth’s surface – which involve a relatively rare set of geological conditions. Nex-gen technologies, on the other hand, uses modern engineering to replicate these conditions. Terra Rogers, programme director for superhot rock geothermal at climate NGO Clean Air Task Force (CATF), explains: “In conventional geothermal you had to have three elements: permeability, heat and water. But in next-gen, the only thing you need to find is shallow heat – you bring the permeability and the water.”

Closed-loop geothermal systems (CLGSs), sometimes called advanced geothermal systems (AGSs), involve the drilling and sealing of piping circuits deep underground. Fluid is circulated through the pipes and is heated by the rock underground. Enhanced geothermal systems use directional drilling and hydraulic fracturing techniques developed by the oil and gas industry to create fractures in hot, previously impermeable rock, into which fluid can be circulated and heat extracted. This technique was previously held back by the high drilling costs, but these have come down drastically in the past five years on the back of the shale gas industry’s rapid growth in the US and public-private research collaborations such as the DOE-backed Utah FORGE Initiative. Start-ups deriving from the oil and gas sector have made further progress since: for instance, Fervo Energy has built a commercial project in Nevada that cut costs by 50% and drilling time by 500%, and has 400MW of further projects in the pipeline.

Figure 3: Drilling rate improvements in early next-generation geothermal demonstrations

Source: U.S. Department of Energy

Out of all renewables technologies, the technical potential of next-gen geothermal is second only to solar PV and is sufficient to cover global electricity demand 140 times over, found the IEA. With these new drilling techniques able to access depths of over 3km, this makes geothermal accessible to almost every country. And drilling at depths over 8km opens up the potential of 600 terrawatts (TW) of geothermal capacity with a 25-year operating lifespan.

At depths below 3km, geothermal could provide 320TW of low to medium-temperature heat for use in buildings, industry and district heating, found the research. This would be sufficient to replace all fossil fuel-fired district heating networks.

Technical potential of selected renewable energy technologies for electricity generation (IEA)

There are, however, some environmental concerns related to next-gen geothermal, namely the risk of groundwater disruption and wastewater disposal related to the fracking techniques employed in EGS. There is also the risk of triggering earthquakes, with EGS linked to a magnitude 5.5 earthquake in South Korea that caused $75 million of damage.

But, according to Project InnerSpace, these risks diminish by the year as the technologies and regulations improve. EGS also drills at much greater depths than traditional fracking, which significantly reduces the risk of disrupting the groundwater. And in the UK, the drilling would be into granite, which does not contain the toxic chemicals of shale; and it would not be into a fault line as in the South Korean case.

Nonetheless, “fracking has become an extremely dirty word in the UK, which is going to make it difficult to obtain the social license for EGS in the country,” says Beard.

Powered by AI

Aside from its own technological progress, the geothermal industry has also received a shot in the arm from the recent AI revolution. With technology companies on the search for clean, firm, 24/7 energy to sate the ever-growing energy appetite of the data centres powering AI, the likes of Google and Microsoft have signed landmark power purchase agreements (PPAs) with Fervo Energy and Houston-based Sage respectively.

“These [contracts] are creating a lot of excitement and momentum in the industry, as it demonstrates the commercial viability of next-generation technologies,” says Beard. “The ability to co-locate geothermal plants with data centres is a key driver of this.”

Currently, only about 30 countries have dedicated geothermal policies. If others follow suit, the IEA predicts the costs could fall by 80% by 2035 to about $50 per megawatt-hour, making it the cheapest form of low-emissions dispatchable energy. This would see investment in the space jump to $1 trillion by 2035 and $2.5 trillion by 2050, found the researchers, with employment in next-generation geothermal alone rising sixfold to 1 million by 2030.

Cumulative investment for next-generation geothermal, 2025-2050 (IEA)

The oil and gas industry has a fundamental role to play in the evolution of next-gen geothermal, with 80% of the investment relying on capacity and skills that already exist in oil and gas operations. For the industry, this represents a golden opportunity to get its foot in the door of a potentially revolutionary clean energy technology, while also representing a perfect hedge against the future decline of oil and gas demand.

“You could almost flip a switch and turn the oil and gas industry into the geothermal industry,” says Beard. “If we swapped the 70,000 oil and gas wells we’re drilling a year for geothermal ones, by 2050 we would have met almost 80% of the projected global electricity demand and 100% of heat demand.”

Nonetheless, it is also worth pointing out that there is another step in technology’s development that still remains on the horizon – so-called ‘superhot geothermal’, where drilling can access depths of up to 15km. “Next-generation geothermal is already here and becoming commercially competitive. But probably we’ll have to wait until the commercial deployment of superhot geothermal before the technology starts playing a leading role in the global energy transition,” says Rogers.

LCOE of next-generation geothermal in a low-cost case, 2025-2050 (IEA)

A firm complement for UK renewables

The UK faces daunting logistical, technical and financial challenges to its goal of decarbonising its power grid by 2030 and its heating system by 2050. The country will have to boost its zero-carbon electricity by 175% to hit its 2030 target. The UK has thus far decarbonised faster than most, but as coal and gas-fired power plants are phased out, the grid is in desperate need for clean, firm power sources that can be scaled up and down according to demand. This would provide cover for the innate variability of solar and wind power, without which could result in a 50-100% cost premium to maintain a stable grid.

Unfortunately, when it comes to such clean, firm and dispatchable power sources, there are no silver bullets. The best alternatives for the role, long-duration energy storage (LDES), wave and tidal energy, and nuclear energy all face varying degrees of cost, scalability, technical or environmental concerns that have stymied their progress thus far. In the UK, this role is currently performed by gas-fired power plants, but next-gen geothermal offers the potential to decarbonise this fossil-reliant function of the energy system.

As with gas-fired power plants, next-gen geothermal can rapidly adjust its output to provide the ‘load following’ flexibility to stabilise the grid. EGS can also double up as an energy storage option, using excess electricity to increase pressure in its reservoirs, which can be reconverted into electricity when the grid needs it.

The country possesses a promising armoury of geothermal resources, appropriate for both power and heat generation. This includes various deep sedimentary basins in Worcester, Wessex, Cheshire and East Yorkshire-Lincolnshire, with ongoing tests in Northern Ireland’s Sherwood aquifers in Lough Neagh and Lagan Valley.

Source: Open Report OR/23/032

Hypothetically, the UK has enough next-gen geothermal resources to cover 200% of its electricity needs and provide a substantial amount of low-cost district heating. The Cornubian and North Pennine hot granite batholiths could potentially power the country for hundreds of years. But realistically, not all of these resources will be accessible. Recent research from Project InnerSpace found that, with current technology, the UK would be able to cover 20% of its energy needs with next-gen geothermal – around the amount currently provided by nuclear. This could be achieved through pad drilling. Pads with 10-20 wells on them could be drilled quickly, offering economies of scale and iterative cost reductions. With 50 sites containing 10 pads each, located primarily in the Cornubian and North Pennine batholiths, the UK could produce roughly 18GW or 150TWh a year, replacing 45% of current fossil-fuel generation. Importantly for the UK’s net-zero targets, the sites could be built relatively quickly, with Fervo Energy now able to drill a well in just 21 days using existing oil and gas technologies. With such efficiency, a new site could be completed in just three years.

Source: J. Busby et. al; 2011

Geothermal plants produce large quantities of hot water as a byproduct to electricity generation, which could be used to heat homes, buildings and industries in the surrounding areas. At around 1p/kWh, this would be considerably cheaper than heating provided by gas (7p/kWh) or electricity (27p/kWh).

Next-gen geothermal is already cost competitive with nuclear energy in the UK. A recent proposal to construct four 9.5km wells producing 13MWe in Durham is projected to cost $143 million, resulting in a levelized cost of electricity (LCOE) of £115/MW/hr. The LCOE for Hinkley Point C nuclear power plant, by comparison, ranges between £150 and £250/MW/hr. If the UK is able to catch up with the US and reach the DOE’s lower LCOE estimate of £35/MW/hr by 2035, the total cost for 18GW of geothermal capacity would be about £46.5 billion, on par with some of world’s cheapest power plants.

Diversifying into next-gen geothermal energy offers considerable promise for the UK’s oil and gas industry, providing opportunities to develop new business lines in an readily transferable clean energy economy of the future. The North Sea itself presents an immediate geothermal asset that can be leveraged, as the region has a very high-temperature subsurface due to the thin continental crust, “which is ideal for next-generation geothermal development,” says Beard.

This could also play an important role in the just transition of workers in the North Sea, by far the largest employer in the industry. “Geothermal could provide the jobs for the future that we’re certainly not seeing coming from renewables,” states Ingrid Huldal, an Aberdeen-based geothermal expert formerly with Expro Sustainable Energy Solutions. Similarly, enhanced geothermal could provide high-paying jobs and cheap heat to some of the UK’s most deprived areas in the south-west and north-east: a report commissioned by the previous government estimated that of the 10 local authorities with the lowest economic resilience are in ideal locations for EGS.

Legacy challenges

There are, however, a number of barriers to overcome if next-gen geothermal is to take off in the UK. Since the 1990s, investment in the sector has been minimal and the current geothermal capacity is less than 10 MW – deriving from three conventional geothermal projects in Cornwall.

Public awareness of the cleantech is, unsurprisingly, limited. None of the websites of all the major political parties – the Conservatives, Labour, the Liberal Democrats and the Greens – mention the technology, despite numerous citings of other clean firm-power solutions, such as hydrogen, tidal and nuclear.

“Geothermal has lacked a strong lobby compared to other energy sectors because it was seen as a niche industry with limited development potential,” explains Beard. “However, the recent renaissance should change that.”

Furthermore, due to high upfront capital expenditure of projects, geothermal projects in the UK have struggled to access private funding; instead having to rely on EU grants and local council funding, both of which have now dried up. Next-gen geothermal projects also do not benefit from the government’s Contracts for Difference (CfD) programme – designed to support low-carbon energy alternatives – which prioritise cheaper, already proven technologies, neglecting to account for the necessity of firm power, states Beard.

Developers also suffer from insufficient geological data in the UK. Before drilling, they need to understand the type of rock, the likely heat gradient and temperature at the desired depth, the location of groundwater, and the positions of faults. The limited data that is available in the UK, however, is at shallow depths, which increases the risks of delays and disruptions for projects. “We really need to get a better understanding of how the rock will respond to the drilling,” says Rogers.

And because of the lack of interest in geothermal over the past 20 years, there is limited know-how in the UK’s next-gen industry, along with a scarcity of relevant legislation, regulation and finance. As a result, deep-drilling equipment will most likely have to be sourced from the US, increasing the cost and time of projects.

Such challenges have left some sceptical about the industry’s potential in the UK. “I struggle to see how next-gen geothermal could transfer across to the UK, with the historical lack of support for the technology and the public perception of fracking being so bad,” says Huldal.

The great redemption

But for those who are sold by the prospect of introducing next-gen geothermal into the UK’s energy mix, there are a number of actions they can take to foster its development.

For the government, the first step would be adding a geothermal strategy to its 2030 clean power plan, according to Rebecca Tremain, CATF’s director of UK policy. According to the Project InnerSpace research, an adjacent move would be for the State Secretary for the Energy Security and Net Zero to publish a ministerial statement asserting next-gen geothermal could conceivably provide up to 20% of the UK’s electricity demands and large amounts of network heating. Additional government funding should be provided for council-led techno-economic assessments for next-gen projects and two commercial-scale superhot geothermal projects, suggests the research.

The government could also extend the definitions of CfDs and Feed-in Tariffs (FiT) to include heat as well as geothermal electricity. “They could even create dedicated geothermal-focused allocation rounds or ‘buckets’ within the CfD scheme to better support geothermal projects,” adds Tremain.

From a regulatory perspective, the government should explore possible exemptions for next-gen geothermal from hydrologic fracking regulations, and EGS projects should be allowed to reuse Environmental Impact Assessments that have already been carried out for the same plot of land, suggests Project InnerSpace.

According to Beard, the government should copy the US’ “one-stop shop” for geothermal permitting, and further regulation is also needed to clarify the right to drill through mineral rights to access heat – the source of a number of ongoing legal battles. “It’s often unclear who owns the heat resource: the surface owner, the mineral rights holder or the government. Resolving this ambiguity through legislation, as was done in Texas, can remove a major barrier to project development,” says Beard.

DESNZ recently commissioned research into the cost of geothermal energy – including EGS – for heat and power, which is expected to be published this year. A DESNZ spokesperson tells E-FWD: “We recognise the value of geothermal in our clean energy transition and are already supporting this technology through our renewables auction scheme. There has been strong innovation in this area [and] we will continue to assess if and how next-generation technologies could be used to support a clean power system in the future.”

As for the companies engaged in the space, there are a number of areas that require attention. First up, from a technical perspective, the subsurface equipment needs improving. “Currently there are only two or three surface equipment manufacturers in the world, and the technology isn’t very efficient,” says Rogers. Improving turbine efficiency is also crucial to making geothermal cost-competitive. Currently, geothermal systems lose up to 90% of the heat brought to the surface when converting it to electricity. “The oil and gas industry has expertise in turbo-machinery that could help drive innovation and funding to address this key technological hurdle,” says Beard.

And those oil and gas majors could go a long way to resolving the business model for geothermal projects by leaning on their renewable energy ventures, according to Beard. Used to dealing with boom and bust commodity cycles, the majors are unaccustomed to selling electrons in 30-50 year steady income streams. Such PPAs are the bread and butter of their renewables arms, however. “If they just got these two groups together, the renewables arm could teach the parent company how to do it,” says Beard.

With this spirit of collaboration in mind, the majors in the UK should club together to form geothermal consortiums, pooling their expertise and resources as well as sharing the upfront costs and technical complexities, according to Huldal. “The integrated geothermal companies are looking elsewhere, particularly Germany, due to the fragmented customer base in the UK,” she reasons.

But beyond just the companies themselves, Huldal believes there is a need for a “systems thinking approach” to developing the industry in the UK. “We need to get everybody to work together and connect the dots; it is still quite siloed.” This requires bringing together all the various external stakeholders, including “academics, government, politicians, private equity, CCS, wind companies” to incubate the embryonic industry.

For example, the environmental NGOs could help build the social license for geothermal amongst the public by looking to dissociate it from fracking in people’s minds, adds Beard. And the finance industry could make projects more bankable by developing standardised project finance structures to attract project-level investors to the industry.

But, above all, the key to unlocking next-gen geothermal in the UK is luring oil and gas back to the market. They have all the expertise and equipment to give the industry the kickstart it requires; and – what’s more – could radically change their own reputations in the process. “Geothermal could be the great redemption of the oil and gas industry,” asserts Beard.

Oliver Gordon is an award-winning freelance journalist and photographer based in London. He specialises in articles about sustainability in all its forms.

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