The UK government has moved towards active support for shale gas, indicating its intent to support exploration with tax incentives. Meanwhile another energy source that also uses hydraulic stimulation (‘fracking’) but which doesn’t have any carbon emissions, has minimal landscape impact and will not pollute local water supplies struggles to get established.
Deep geothermal energy is available in abundant amounts in several parts of the UK but is almost ignored by policy-makers even though a recent report suggested that geothermal sources could provide a third of the country’s electricity and much of its heat. It languishes unloved at the bottom of the energy department’s list of low-carbon technologies while shale gas is seen as the salvation of the UK economy. Is the disparity in treatment between the two sources of energy justified? Should the ‘shovel ready’ plan for a geothermal electricity plant at the Eden Project get more support?
(Eden Project photo by Tamsyn Williams)
Four kilometres and a half kilometres beneath the Eden Project in south Cornwall the temperature is about 180 degrees centigrade. Eden and its engineering partner EGS Energy have planning permission to drill down to the heat. One well will pump water down to the hot rocks while a second will collect the now superheated water and return it to the surface. At 200 degrees, the water will turn to steam at the surface and drive a turbine, producing about 3 megawatts of electricity. Free flow of the water from the downward well to the upward well will require hydraulic fracturing (fracking) of the hot granite, very similar to gas drilling.
The water used in deep geothermal requires no additives. It circulates in loop, and thus doesn’t deplete local supplies. Once the drilling is completed, the steam-powered generating station occupies small low rise buildings. In theory, the energy from four kilometres down will provide steam for ever: heat will gradually seep back into the well area from the almost unquantifiably huge amounts in surrounding rocks.
The problems are are similar those that face pioneer Cuadrilla in its proposed shale gas drilling operations in Lancashire. The geological conditions more than four kilometres down – deeper than Cuadrilla’s 3 km deep wells – are unknown. Will it be possible to push enough water through the fractured granite? Will enough liquid reach the upward well? Will the geology mean that drilling is even more expensive than expected? A major R+D programme in the 1980’s at Rosemanowes, not far from the Eden Project, spent almost £40m of government money without proving that energy could be extracted at a realistic cost. Cuadrilla knows this problem well: it has so far spent $100m in Lancashire without any certainty yet that it will ever be able to extract gas in significant quantities.
The Eden geothermal project
The two wells at Eden will be hugely expensive. One estimate is that each will cost over £10m with the generating plant and other works costing another £15m or so. For £35m the owners will get a plant that generates a net 3.2 megawatts of electricity almost constantly throughout the year with very low operating costs. At today’s retail prices, 3.2 MW of electricity is worth about £3m a year. In addition, the plant produces heat which could be used in the Eden domes but this isn’t as financially important as the electric power.
There is some subsidy under the Renewables Obligation and Renewable Heat Incentive but these are unlikely to add more than another £3m to the value of the annual output of the project. After operating costs, the annual cash flow might be about £5m. On a capital cost of £35m, these returns aren’t enough to excite most investors and the project has struggled to get fully financed.
Perhaps more important to potential investors than the limited returns, the Eden geothermal project may fail ever to produce the full 3.2 MW. The conditions 4 kilometres down may be utterly unsuitable. No one can know until the £10m first well has been sunk. Some of Cuadrilla’s early wells have also failed. But in the case of shale gas, the potential is so vast that commercial investors continue to risk their cash. At Eden, the cash flows aren’t rich enough to incite the gamblers seeking to exploit shale across the UK. More generous levels of support in Germany have just produced the second fully operational deep geothermal electricity plant at Insheim.
Should the UK provide more support to deep geothermal?
At £35m for 3.2 megawatts of electricity, deep geothermal is very expensive. However the experience of fracking companies in the US can give confidence that costs will come down. The Economist reported that wells drilled 2.5 km into the Marcellus shale in Pennsylvania cost $6-7m each, less than half the figure at Eden. Shale gas exploitation in the UK should eventually help pull down the costs of geothermal wells. If the Eden plant cost £20m rather than £35m, geothermal would be close to competitive with fossil fuelled power stations. (However if a shale gas boom reduces gas prices in the UK by two thirds to the current level of the US, the prospect of cost parity would recede).
The UK has a stuttering plan for electricity for electricity decarbonisation but its proposals for replacing gas as a source of heat are remarkably thin. Geothermal energy provides realistic potential for replacing gas for domestic and industrial heating. Of course heat is difficult to move around and geothermal sources don’t exist across the whole of the UK. The limitations are clear. Nevertheless deep geothermal offers large amounts of genuinely reliable and low carbon heat with no problems of potential pollution.
A recent analysis by leading engineering consultancy SKM suggested that deep geothermal could provide about 25% of the UK’s electricity and a significant fraction of its heat need. Some estimates of the potential from shale suggest much larger figures but more sober commentators have offered estimates not much different from SKM’s calculations for geothermal. Energy from geothermal will be available for ever – unlike gas – and doesn’t cause CO2 emissions. It justifies far more support in its initial stages than it is currently getting.