[Mr Nigel Evans in the Chair]
I beg to move,
That this House has considered the potential for geothermal energy resources in the UK.
It is a pleasure to see you in the Chair, Mr Evans. I am pleased to have the opportunity to open this debate on what is a huge carbon-free energy resource for this country. I hope we can use the debate to highlight the potential of the resource and to encourage the Minister to act, so that we fully realise the opportunities.
In Britain, geothermal energy comes in two forms: that which occurs naturally in the geological structure in some places, and that in old mine workings. I first became aware of that when I was a trustee of Auckland castle, which sits on the Butterknowle fault. At that time, the trustees looked—I understand they are still looking—at the possibility of using the geothermal energy there to heat the castle, and perhaps for a district heating scheme.
The Butterknowle fault runs across my constituency. It is a geological feature where coal was mined from the time of the Romans to the mid-20th century. Now the coal is exhausted but scope for geothermal has been discovered. At a depth of 500 metres, the heat is 30° C, and at 1.5 km there are rocks of about 73° C. It would be really good to exploit that, particularly because some of the villages on the fault—Evenwood and Cockfield—are off the gas grid, meaning that fuel bills and, in turn, fuel poverty are high. I met a woman whose winter oil bill one year was £3,000. I know that such a system exists in Southampton, and I hope that my hon. Friend the Member for Southampton, Test (Dr Whitehead), who was the leader of the council there when the project began—indeed, I think he was instrumental in beginning it—will tell us more in his Front-Bench speech about how that works. Maps show that there are considerable areas of the country where it is a possible source of energy.
The second kind of geothermal energy we have is warm water in old mine workings. At about 30° C, the water is generally not so hot, but it is nearer the surface and therefore easier to extract. The Coal Authority has completed maps of 23,000 former collieries and has a very good understanding of the geology, the engineering and the feasibility of such schemes. The former mine workings are treated as a £3 billion liability for British taxpayers, because they must be kept safe, but they could be turned into a massive stream of income for them instead. Durham University’s Durham Energy Institute, in particular Dr Charlotte Adams and Professor Jon Gluyas, has done, and continues to do, a lot of work on this, and it has shown that the scale of the resource is phenomenal. Currently in this country, 80% of people heat their homes with gas. Durham University believes that the deep geothermal—the geological—could provide 100 GW of power, which is 16% of the electricity we consume.
Turning to the mine workings, a quarter of homes in this country sit on the old coalfields—7 million homes that could use mine-water heat instead of gas. In business terms, that represents a business or a sector with an annual turnover of about £2.5 billion and profits of £250 million. The net present value of the resource is £72 billion—I am using these numbers because I know that the Minister is financially literate and will understand their significance—and the net present value of the profits is £7.2 billion, so the Minister should look to turn the current £3 billion liability into a £72 billion asset.
Furthermore, the heat source is virtually carbon-free. It is estimated that enabling a quarter of the homes in this country to move over to it would save between 10 and 15 million tonnes of carbon a year. The current warm water would supply heat for 100 years, but if pumping technology were introduced to recycle the heat, that period could be extended almost indefinitely. I am told that by Durham University, which says that to meet our next carbon budget, it is essential to decarbonise heat. The Government’s current strategy is to do that by shifting people from gas to electricity heating, but electricity generation is only about 35% efficient, whereas I understand that for geothermal the figure is 75% or 80%, so the loss during production, transmission and distribution is much less. Geothermal would, therefore, be a much better route to pursue to hit our carbon targets. Some 40% of our carbon emissions are produced by fuel for heating, so if we decarbonised a quarter of the country there would be a reduction in our carbon emissions of 10%. That would be fantastic. It represents a really large reduction that is really worth having, and it would give us more flexibility in other areas of life.
There are considerable other policy advantages of using the mines in this way. First, this source of energy would improve energy security. Geothermal energy is not intermittent, unlike wind and solar, and it would reduce our dependency on unstable foreign regimes.
I do not know if my hon. Friend sees Iceland as an unstable foreign regime, but another idea is to have an interconnector through to that country, which gains enormous power from geothermal energy. Would my hon. Friend say that that fits into her debate in some way?
My hon. Friend has just inserted it into the debate, so it obviously fits. Yes, that is a country that is already using the resource, as are others, and I will come on to that in a moment.
As I said at the outset, there is significant fuel poverty in some parts of the country and using geothermal energy is a way of tackling that. The sector could also be a source of jobs, especially in the former coalfield communities, which still suffer economic decline and need regeneration—in 2004, the Department of Trade and Industry estimated that it could create a million jobs. That is a very big number, and it might not be as many as that. If we compare it, however, with the 300,000 jobs in the oil and gas sector, we can see that it is obviously a significant number of jobs. Moreover, the skills and supply chains used in the oil and gas sector would be similar to what is required for geothermal. It would provide a useful transition for those businesses as the North sea declines.
Fourthly, geothermal could help to improve food security. That warm water would facilitate horticulture in parts of the country where it does not currently exist. Fifthly, mines can be used to store heat and therefore to balance power across the grid. We would be developing an industry that could be a source of exports. My hon. Friend the Member for Stroud (Dr Drew) suggests importing heat from Iceland. I do not know whether an interconnector across the very deep waters of the north Atlantic is feasible, but I know that in many areas of renewables, this country has done a lot of innovation and research and then not seen through the development. In the case of wind, we did a lot of the basic science and initial work, but the industry has flourished more in Denmark, Norway and Germany than it has here. We must stop making that mistake. We need a different approach for geothermal, because we could be exporting engineering services for geothermal.
Another advantage is that there is no nuclear waste with geothermal, which compares well with some of the other power projects being promoted. It also does not produce the environmental damage that fracking produces, yet in the Government’s 160-page clean growth strategy, there is not a mention of geothermal. I want to understand why that is. The strategy says that the Government wish to ensure that they can
“deliver affordable energy for households…decarbonising ‘harder to reach’ parts of the UK economy”,
particularly heating. The strategy says that it is important to have “concerted joined up working” across Departments. It wants to see innovation to minimise costs. I agree with all those things, and geothermal is a policy area where they could be put into practice.
I know the Minister well. When she puts her mind to something, she is a very effective operator. She is a formidable figure. Officials in her Department have told me that they have found her leadership on renewables inspirational. I know she is not a paper shuffler. I want her to pick up the baton and run with it, because I have confidence that if she wanted to, she could make a difference here. The time to do that is now, using the skills and know-how of the petroleum industry. I am going to give her a few practical suggestions as to what I would expect to see in a policy for geothermal.
First, the basic science is strong, but we need more demonstration projects. The Coal Authority needs more resources to do those, as well as to provide advice for commercial actors.
Secondly, in the medium term we should probably have regulation and a licensing system that would bring in money for the taxpayer. For now, it would be sensible to extend the contract for difference to heat. At the moment, it operates just for electricity. In the Netherlands, the Government introduced a form of risk insurance. In five years, the scale of their geothermal sector has doubled.
Thirdly and finally, my concern is that we should see reform to planning and building regulations. The resource is being lost and opportunities are being wasted. One of the studies that Durham University did was into some old mine workings in Spennymoor in my constituency. It found that it would be feasible to have a district heating system for a new development of 300 houses. The local authority had no powers to require the house builder to consider, let alone implement, sustainability factors or renewable energy sources.
We all know that the large national house builders want to minimise risk and maximise profits, which, on being interpreted, means that they are lazy and greedy. They are not going to innovate unless they are required to do so. It has been suggested to me that we need a return to code 6 for sustainable homes. That gave us targets for achieving carbon neutrality in house building. Just as with the transition from oil and gas, the time to reform the building regulations is now. We are trying to build a lot of houses, so now is the time to raise the standards.
Everybody knows that retrofitting is more costly, so this is the moment to raise the quality of the housing stock for the next 100 years. We are in danger of making exactly the same mistake that was made after world war two, when a lot of prefabricated buildings were built. If we are going to build a lot, we need to build high-quality buildings for the long term, not the slums of the future. I suggest to the Minister that she organises a seminar for the national house builders and experts in the field to educate them. Will she write to or meet her colleague, the Minister for Housing, the hon. Member for Esher and Walton (Dominic Raab), to persuade him that he needs to incorporate the changes into the building regulations? He is going to make big changes to the building regulations, so he may as well do a proper, comprehensive job.
I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on securing this debate. On the issue of asking the Minister to try to convene a seminar, does she agree that in doing that, it would be an idea to have mapped out the most productive areas and the likely benefit to be derived? That would act as a harbinger for extracting the maximum amount of benefit for the minimum amount of input.
The hon. Gentleman is absolutely right. We need two maps. We need the map of the geological possibilities and the map of the former coalfields. The Coal Authority has done a lot of work on that. I am sure it has shared that with the Department for Business, Energy and Industrial Strategy, but we need to give these things more currency than they have at the moment. It is also important that we have a national scheme. We do not want a system where builders are required to explore the possibility in, for the sake of argument, Derbyshire, but not in Norfolk. That will mean that they are encouraged to go and build in Norfolk, but not in Derbyshire. That is why we need a national approach. We need to go beyond a strategy to having a plan.
I thank Jeremy Crooks from the Coal Authority and members of the Durham Energy Institute and Durham County Council’s planning department. They have all helped me understand this important issue.
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on bringing forward this important debate. She brings incredible energy and enthusiasm to any subject matter, whether it is here in Westminster Hall or the Chamber, and I thank her for that.
To digress slightly, hailing from Strangford and having lived there for all but four years of my life, my initial interest in this subject began with the sight of the UK’s first SeaGen tide turbine, which harnessed nature’s resources. The hon. Member for Bishop Auckland referred to that with regard to geothermal resources, but in a passing way I want to explain why the first SeaGen tide turbine was interesting to me. I live on the edge of Strangford lough. At the entrance of the lough, at the narrows, the tides rush with an almost nervous but very strong force. The SeaGen project was able to harness that energy. My interest in that came about when I was wearing my former hat, a long time ago, on Ards and North Down Borough Council.
The world’s first commercial-scale tidal turbine was commissioned in Northern Ireland’s Strangford lough in July 2008. The project had two 600 kW turbines and required a total investment of £12 million. The energy produced equalled the power required by 1,500 households annually. That milestone indicated the completion of the demonstration phase of the project. We recognised that if natural resources were there, we could generate energy from them.
The subject of today’s debate—geothermal resources—is clearly slightly different, but the SeaGen project, right on my doorstep, gave me a real interest in this area. I was, and am, passionate about that project because I saw its potential. That interest led me to enjoy the research for today’s debate and learning that in Iceland—some hon. Members have intervened along these lines—geothermal energy provides around two-thirds of the country’s primary energy demand. I am not sure about running a pipe from Iceland to here, or whatever the proposal may be. Nothing in this world is impossible, but whether it is cost effective is the issue. However, Iceland’s achievement is incredible and less reliance on fossil fuels can be only a good thing.
It is time that we started to look at those things. The hon. Member for Bishop Auckland has generated the core of interest in the debate to enable us to focus on it and give the Minister time to prepare a detailed and comprehensive response, which I am sure the Minister and her staff are doing at this moment. We can then rely less on insecure middle-eastern trade and influence, and stand on our own two feet.
If someone drives a car or lives in the countryside their petrol and diesel bills will be bigger than most. Some people heat their house with oil. We do not have to worry about that much at this time of year, but at other times we do, and the price of oil is extreme. The countries that resource and supply oil will have a meeting this week, as my hon. Friend the Member for East Londonderry (Mr Campbell) mentioned, and there is some indication that the price may be reduced. The fact is that we are experiencing the highest oil prices for some four years. When I go to fill up with diesel on a Saturday morning at 131.9p per litre, that gives me an idea of it. Not too long ago, it was under 107.9p, so that is quite an increase.
The Library briefing paper indicated that the geothermal potential of the UK was investigated by a programme funded by the UK Government and the European Commission that ran from 1977-94. It identified the key heat flow areas of potential in the UK and, in May 2012, a paper by consultants Sinclair Knight Merz in association with the Renewable Energy Association, an industry trade body, argued that geothermal power could provide 20% of the UK’s electricity and all of the UK’s heat demand. Subsequent reports may have put the figures lower, but the common theme is that there is scope for further investigation of how we can harness geothermal potential in a cost-effective way.
I understand that in Northern Ireland we have some potential for geothermal interest—perhaps in North Antrim and Mid Ulster. There was also talk at one time of potential for development along South Down. I understand that this is not directly the Minister’s responsibility, but has any contact been made with the Northern Ireland Assembly, which is unfortunately not working at the moment in the way that it should, to see what part Northern Ireland can play in the strategic policy for the whole United Kingdom of Great Britain and Northern Ireland?
In 2017, a study estimated that the UK theoretically had enough resource available to surpass easily all UK energy demand in 2015. However, the amount that was technically available was much smaller than the theoretical resource, and recovery would depend on depths drilled and areas targeted. Although there might be some potential there, the costs of extraction might be such that doing so would not be financially feasible. Can the Minister throw any light on how we can play our part in Northern Ireland?
I am not an engineer—far from it. If a hammer cannot sort something out, I do not know what can, but that is just me being the DIY man around our house. When it comes to doing simple things, if it is easy and a hammer can do it, I am your man. When it comes to the concerns highlighted in today’s debate, it is our duty to commission reports from those who have the ability, who are experts and who know what they are talking about. I believe that renewable energy resources are very much worthy of investigation. The hon. Member for Bishop Auckland is really saying, “Let’s look at that—let’s see what we can do.” Is it possible to provide 20% of the electricity needs of the whole of the United Kingdom of Great Britain and Northern Ireland? If we can, it will be time well spent, and I support the hon. Lady in trying to achieve that goal.
I support the Government and the Minister in their pledge of £300 million to invest in district heat networks over the next few years as an important way of ascertaining the best way towards a self-sustaining ability to harness a power source that can address the entire UK’s needs. The £300 million seems like a lot, but when spread across the United Kingdom it might not be as much as we would think. However, if it initiates interest in the subject, it is something we should try to do.
In conclusion, I congratulate the hon. Member for Bishop Auckland on introducing the debate. I look forward to the speech of the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), and to the Minister’s response. We in Northern Ireland want to be part of the strategy, and are keen to see how we can play our part to make that happen. I am keen to see how we can take advantage of nature’s best, and perhaps nature’s worst, for energy provision. If we can do that, I think it will be time well spent.
It is a pleasure to serve under your chairmanship, Mr Evans—with your strong and long Welsh history, I hope you may even know the community that I will talk about today.
Geothermal energy has tremendous potential, and I warmly congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing the debate. It was very interesting to hear her informed view on why such projects can be of huge benefit to Durham, and to the whole of the UK. I will focus my remarks mainly on the Caerau project in my constituency.
Bridgend County Borough Council, which serves two thirds of my constituency, has commissioned a survey to ascertain whether water held in the former Caerau colliery, in the Llynfi valley, could provide a sufficient heat source for a project. If the survey results are positive, there are proposals for a geothermal energy project to generate energy for nearly 1,000 homes across the Llynfi valley. That could provide safe, reliable and cost-effective heat and build a green energy industry in the heart of the south Wales coalfields.
If the project is successful, that will catapult Caerau to the forefront of the UK’s energy revolution. The project is a clear example of effective collaborative working, and I pay tribute to the Labour leadership of Bridgend County Borough Council, including Councillor Huw David, the leader, and the Welsh Labour Government. They have worked tirelessly with the private sector to secure the necessary EU funding for the scheme to get the go-ahead.
At its core, this is about moving towards a clean energy mix that the UK can rely on, but it is about much more than that in my opinion. Across the coalfields, many communities are still feeling the effects of the end of the mining industry. At its peak, the Caerau colliery once employed more than 2,400 workers. ln the village, the working-age population today is just over 4,000. The end of the industry was disastrous for that community. Even today, the unemployment rate remains stubbornly above the national average. Those communities need funding, employment and industry. Geothermal energy projects can provide that much needed injection.
I am chair of the all-party parliamentary group for coalfield communities and the representative of one of Wales’s most prominent coalfield areas, and this is an issue that I care deeply about. Geothermal energy is an opportunity to help regenerate our coalfields, and we must grasp that opportunity to build on the history and tradition of our collieries with a new industry that is clean, safe, and can provide energy and jobs where they are needed.
Of course, such projects have their benefits, but we must take care to listen to those who live close to the collieries and ensure that they have as much support from local residents as possible. In addition, as my hon. Friend the Member for Bishop Auckland has already said, we must ensure that local residents get the potentially lucrative benefits of the projects, and reap part of the economic and social rewards the developments bring, whether that be through employment opportunities, community funding or receiving a benefit through their energy bills.
I know from speaking to residents in Caerau that there is a lot of optimism and promise for the project, but there is some concern too. It is vital that residents are informed as much as possible about the positives that such projects can bring. Through the design, construction and maintenance process, they must be fully engaged and represented. Their opinions should take priority and it is they who should be the focus of such projects.
Needless to say, geothermal energy is not the silver bullet for solving our energy insecurity as a whole and can only form a part of our future energy mix. It will come as no surprise to the Minister if I take the opportunity to mention the Swansea Bay tidal lagoon as part of that energy mix within Wales and across the United Kingdom. While I am delighted to see the Welsh Government, local government and other authorities supporting projects such as the tidal lagoon, it is for the UK Government to come forward with a long-term proposal that gives us energy security. In my opinion, which again will come as no surprise to the Minister, that should include the Swansea Bay tidal lagoon.
Juggling the trilemma of meeting our climate change targets, improving our energy security and keeping tariffs down for consumers is a difficult task. I accept that, but I would like to stress that we need effective and radical action from the UK Government to address baseline power alongside our work to advance local renewable sources of energy. I agree with my hon. Friend the Member for Bishop Auckland that the Minister is not a paper-pusher; she is a proactive Minister. I would like to believe sincerely that she will do all she can to deliver energy security for the UK using mixed sources, including geothermal energy and the tidal lagoon. I still have faith that the Government will deliver that.
Geothermal energy is a unique opportunity to build industry in communities where it is often missed most, by many people who still remember with great pride serving in collieries and who still face the cycle of unemployment two or three generations after the closure of those heavy industries. Of course, we should take caution and understand that that alone it is not the solution to all of our energy woes—but it is a hugely positive opportunity for our coalfield communities, and for building a future energy mix based on renewable energy. It is one we must give serious consideration to.
I end with an invitation to the Minister. I appreciate that some energy policy is devolved to the Welsh Government, but if she would like to see the Caerau project, I would very much welcome her to my constituency to see in action the innovative work that Bridgend County Borough Council is doing, along with Cardiff University and the Welsh Government.
It is a pleasure to serve under your chairmanship, Mr Evans, and I apologise for my late arrival to the debate. I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on securing this debate. I was lucky enough to secure an Adjournment debate on geothermal injury in my constituency in Clackmannanshire a few weeks ago on 4 June. The Minister was very generous in her response then and I hope she will be even more so today.
Geothermal is a fantastic opportunity and, as we have heard from different Members today, it could breathe new life into areas that have been without a key industry and key employment opportunities for a long time. It is important that as part of the industrial strategy, which looks at the entire United Kingdom, we use the powers in this place—energy is of course reserved—to make sure that every part of the United Kingdom benefits from geothermal initiatives and that the United Kingdom remains a leader in renewable energy and shows the way, as we have in other areas, such as wind. As I said in that earlier debate, there are a number of international partners and friendly countries that are already far ahead of us, such as El Salvador and Costa Rica, which already bring in 15% of their energy from geothermal sources. We are leading the way on wind and we want to lead the way on geothermal too.
Energy is a reserved function. The hon. Member for Strangford (Jim Shannon), who is now not in his place, mentioned the district heating fund—obviously heating is devolved in different parts of the United Kingdom, and that is £300 million. I hope the Minister and the Treasury could apply a little flexibility on how that fund is applied for, especially when it is linking to geothermal energy projects across the United Kingdom, so that all parts of the United Kingdom can benefit.
My Adjournment debate was very much about Clackmannanshire, an important part of my constituency. It has a long history of mining and milling. We have mines filled with water that is sitting at around 40° C. Geothermal energy enables us to use technology to tap some of that warm water to help with heating and to generate power. That could help not only build new homes, but slash energy bills. In my constituency, in Clackmannanshire, about one in three suffer from fuel poverty. Introducing a new form of energy could help tackle that, as well as slashing up to 50% off the energy bills of the local council. As we know, every council in the country faces funding challenges and that would be very welcome.
Geothermal is not a total solution, but it is an important part of our future energy mix. The leadership that the Government have shown through the industrial strategy highlights the fantastic opportunity we have. We have grasped that with both hands with wind, but we can lead in geothermal energy throughout the United Kingdom. I hope that through this debate and the Minister’s support we will be able to move that agenda forward and deliver for our constituents.
It is always a pleasure to serve under your chairmanship, Mr Evans, and I thank the hon. Member for Bishop Auckland (Helen Goodman) for securing this debate. Many interesting points have already been made on geothermal energy; it has been quite an education. The hon. Member for Bishop Auckland enlightened me that we have an MP in our midst who delivered projects on geothermal energy and I will make reference to that later on. Her points on disused coalmines are absolutely relevant, as were those raised by the hon. Member for Ochil and South Perthshire (Luke Graham) about the coalmines in Clackmannanshire.
My ears pricked up when the hon. Member for Bishop Auckland mentioned fracking. I would inform those here today that the Scottish Government have won their fracking case. The Court of Session has today rejected a petition by Ineos Upstream Limited and Reach Coal Seam Gas Limited that sought to challenge the Scottish Government’s action in relation to unconventional oil and gas. I am absolutely delighted by that.
I can handle anything at all, but I want to get on with what we are talking about, which is extremely important. With the demise of coalfields, the potential for communities to benefit from new energy possibilities is endless. My home town of Denny in Falkirk is built on coalfields. The whole Falkirk area is built on coalfields and the potential that we have there should be realised. I hope that will happen over time.
As has been mentioned, geothermal energy is the heat stored in the Earth’s crust. The term brings to mind large geothermal energy plants exploiting volcanic sources of heat, such as those found in Iceland. As we heard from the hon. Member for Strangford (Jim Shannon), geothermal energy satisfies around two thirds of Iceland’s needs. To add to that mix, there is also a vast non-volcanic geothermal heat resource—the top 10 to 15 metres of the Earth’s surface act as a heat sink, trapping the sun’s heat.
As we have heard, estimates of the UK’s geothermal power potential vary. There are credible estimates that we could supply 4% to 20% of the UK’s electricity demands, and all of its heat, which is indeed good news, especially if the energy were used to combat fuel poverty. Why people in this energy-rich country suffer from fuel poverty totally escapes me and probably everybody else here. Given the huge potential of this fully renewable resource, why is it not being widely deployed? Will the Minister tell me if any geothermal projects have been awarded to contracts for difference during either of the allocation rounds to date?
There are mature geothermal renewable technologies providing heat and electricity that should and must play their part in the decarbonisation of our energy networks. Then there are ground source heat pumps, where water is pumped through pipes laid within the top 10 to 15 meters of the earth. The pipes absorb heat from the soil, which is then extracted to provide heat. They are cheap to run and are typically small installations, servicing homes, individual buildings or small-scale industry. Ground and water source heat pumps accounted for 6% of non-domestic accredited installations and 15% of domestic accredited installations under the renewable heat initiative between 2011 and April 2018. We surely need to be more ambitious than that.
Deep geothermal plants draw heat from rocks or aquifers heated by the earth’s core, and the UK certainly has geological features suitable for that, especially in Cornwall, northern England, the English midlands and Scotland. As the hon. Member for Ochil and South Perthshire said in a geothermal energy debate on 4 June, there are only nine geothermal energy projects in operation or being planned in the UK: four in Cornwall, two in the north-east of England, one in Southampton and three in Scotland. That is hardly the uptake we would expect for a reliable form of renewable energy that poses few big engineering challenges.
The UK has a poor track record of supporting deep geothermal projects. The UK first showed interest in mapping the country’s geothermal potential during the 1970s oil crisis, but funding was withdrawn as oil prices fell. The practice of short-termism and lack of vision had begun. The first commercial deep geothermal project in the UK started life as a Department of Energy research and development project in 1980 in Southampton, as has been mentioned. The Department of Energy abandoned it as being not economically viable. With a lot more vision than the Department of Energy—perhaps thanks to the hon. Member for Southampton, Test (Dr Whitehead)—Southampton City Council took over the project and developed it into a commercial district heating system, supplying more than 1,000 residential properties as well as hospitals and commercial and civic buildings. I applaud the council for taking that forward and for its courage and vision.
The UK deep geothermal energy challenge fund was set up in 2009 and £4 million was allocated to projects in 2009-10. However, the then Department for Energy and Climate Change halved that in 2010-11. What was it playing at? An early-day motion was lodged by a cross-party group of MPs expressing regret about the decision and 46 MPs signed it. Will the Minister tell us whether I am right in thinking that no further funding has been provided by the fund? I look forward to her answer.
In 2013, the Government withdrew a £6 million grant allocated to the United Downs geothermal power station project in Cornwall on the basis that the project could not attract enough private investment. However, the project went ahead in 2017 after the company was able to crowdsource nearly £4.5 million in private investment using debentures sold by the renewable energy and crowdsourcing specialist Abundance Investment. There seem to be an unending series of obstacles facing projects because of the Government.
The UK’s regulatory landscape and renewable heat initiative create structural barriers to investment in geothermal energy. There is no joined-up approach to licensing geothermal energy in the UK. Developers must navigate the planning system plus a number of environmental permits and consents, and a lengthy, complex process involving local planning authorities, the Environment Agency, English Heritage and other bodies. Unlike a licensing system, a system of permits cannot secure investment in the geothermal sector. As far as I am aware, there is nothing to prevent another developer drilling next door to an existing development once a company has demonstrated a successful well. Will the Minister confirm whether that is the case?
Arrangements for geothermal energy under the RHI actually prevent investment. Asset-based lenders and finance companies do not regard future RHI revenues to be security against lending risks as they would in the case of physical assets. The physical assets of a geothermal energy project have poor portability, since so much of them are stuck in the ground. Asset-based lenders and finance companies do not view the assets as security because they are difficult, if not impossible, to liquidate. Projects cannot lock in to an RHI tariff at the pre-accreditation stage, which adds uncertainty, particularly for projects with long lead-in times. RHI asset ownership rules are complex and prevent companies using an operating lease model, since under the present arrangements the asset finance provider would have to be the applicant receiving the RHI revenues.
It is interesting that a third of the operations are in Scotland, where there is consistency of support. Following a feasibility study of the potential of geothermal energy to provide a renewable source of heat in Scotland, published in 2012-13, the Scottish Government set up their geothermal energy challenge fund. In 2015, the fund invested nearly £250,000 in five feasibility studies. The projects are an important step towards demonstrating how geothermal energy could cut the estimated £2.6 billion a year spent on heating by householders and the non-domestic sector. They are in the Aberdeen Exhibition Centre; Guardbridge in Fife; Polkemmet in West Lothian; Hartwood in North Lanarkshire; and Hill of Banchory in Aberdeenshire. A small investment returns very large benefits.
A further four proposed projects were invited to contact the Scottish Government’s low carbon infrastructure transition programme team to discuss possible early development support to help them in their proposals. Scotland’s first deep geothermal heating system, the HALO 2 km deep borehole being drilled near Kilmarnock, received a £1.8 million grant and is under way as we speak. The Scottish Government’s investment in renewables is underpinned by a coherent decarbonisation strategy and is in turn underpinned by an all-party agreement. The political certainty, and the consistent political and financial support for that and for renewable energy as a whole, sends a message to businesses that the Scottish Government and Parliament are a friendly environment for investment in geothermal technologies.
Today Scotland may have a third of the UK’s planned or operational geothermal energy plants, but it seems that proportion will increase steeply in the near future. As with onshore wind and wave energy, the UK Government could learn much from the Scottish Government’s approach to supporting geothermal energy development. We are at a privileged moment in time developing renewable energy. The Scottish Government and Parliament are realising that ambition on behalf of all our communities.
Finally, I have been clear that any threat to Scotland’s distinctive and ambitious approach to environmental standards and climate change is completely unacceptable. The best way to ensure our environmental ambitions is to ensure that Scotland’s devolved powers continue to be respected.
I congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing this important debate and on putting her case with such clarity and precision. After what she found out about geothermal during her research for this debate, I am sure she will agree with me that it is indeed Britain’s forgotten renewable. It is not forgotten because it is not feasible or because it does not bring tremendous benefits. It is forgotten simply because no one has done much about it, even though that resource is under our feet in many parts of the country and is relatively easy to access. When that resource is accessed and developed, it provides potential free heat and power, probably for 100 to 150 years, as a result of a single borehole drilled down into the ground to unleash it.
Why it should be forgotten is a source of puzzlement to me, because it is a universal and beneficial renewable. Some people may regard deep geothermal as not quite renewable, in that if there is drilling into a deep geothermal aquifer, the aquifer, in theory, depletes over time. However, if water is being raised from the aquifer at the typical temperature level in the UK of about 73° or 74° Celsius, that resource will deplete at only 1° in heat per 100 years. Yes, it depletes a bit, but it is not exactly calamitous—unlike, one might say, drilling a fracking well, where the well depletes after about eight years.
Such a fact-free debate.
No, it is a very factual debate—that is the difference.
The geothermal potential of the country is enormous, and the hon. Member for Falkirk (John Mc Nally) set out what the potential would be, in electricity and heat, for the UK were we to proceed seriously with geothermal energy. Perhaps a limiting factor is the fact that geothermal energy is not available everywhere in the country. We need to be clear about the fact that deep geothermal is available on the basis of three different kinds of site. Basins with very ancient water at the bottom are one kind of site. Another kind, which require slightly different technology, are areas with radiothermal granite batholiths. I believe that the Minister, as a first-rate geographer in her time, will know all about batholiths and lopoliths and various other things. We have quite a lot of radiothermal batholiths in the UK, with naturally occurring radioactive-based heat coming from deep within the earth’s crust. Another kind of site relies on the availability of technology to release heat by putting water down one pipe and up another, giving geothermal as a result.
As my hon. Friend the Member for Bishop Auckland mentioned, lower-temperature geothermal resources arise from abandoned mine workings. With heat-concentration techniques that is not a problem, in terms of concentrating the heat to get into production either for heat distribution or, indeed, for making steam to generate electricity.
As hon. Members have kindly mentioned, I have an interest in the debate because I think I can claim to be the only sitting Member of Parliament who has directly set up a geothermal energy scheme. I know a little, therefore, about how it all works. That scheme is based, as has been mentioned, in the middle of Southampton in a not particularly prepossessing shed, with a small wellhead in the carpark of the former Toys R Us store. That unprepossessing setting hides a well, drilled to about 1,800 metres. Water comes up at just over 70° Celsius and is converted into the material for a district heating scheme by a heat exchanger and concentrator. Now Southampton has a city centre district heating scheme with some 17 km of pipes, covering the university, the civic centre, the country’s only geothermally heated hypermarket and a five-star hotel. In other words, there is a complete city centre arrangement, heated substantially by geothermal energy. Not only that, but it has been heated in that way on an untroubled basis since 1987, and will continue to be so until 2087 on present estimates of what may be available. That is the potential, in practice, for geothermal energy.
The hon. Gentleman speaks with great knowledge, and I pay tribute to his work promoting geothermal power in his constituency. What are his thoughts on the potential for geothermal power in more rural areas, where there is great reliance on oil central heating, often at great cost and with a high carbon footprint? Does he believe that more could be done to incentivise and encourage developers in rural areas to look at geothermal power for new developments and homes?
I have to tell the hon. Gentleman that he is the only Member present for the debate who does not have a geothermal resource under his constituency. I have mentioned the different types of geothermal resource, and the large Mesozoic basins are in East Yorkshire and Lincolnshire, around the whole Wessex area, in Southampton and Worcester, and in Cheshire. The radiothermal batholiths are in the eastern highlands, across the north-east and north-west of England, and in Cornwall. The hon. Member for Strangford (Jim Shannon) will be delighted to know that about half of Northern Ireland is covered by two Mesozoic basins, giving most areas a strong resource.
The problem is, first, that that resource is not available everywhere and, secondly, that because of the capital cost of the borehole, geothermal energy is probably best suited to larger district schemes. One of the key issues is that because of the immediate availability of the resource, if an area—particularly a rural area—is capable of receiving it, it can be used for relatively small district heating schemes, or for local plant producing electricity in the area with a combination of a relatively small heat take-off. There is considerable potential, but I am sorry to tell the hon. Member for Central Suffolk and North Ipswich (Dr Poulter) that drilling under his constituency at the moment would be fruitless, as far as I am aware. However, it is possible to do it in some rural constituencies where the resource is more available.
A number of new, larger homes—particularly barn conversions, which are very popular in Suffolk—have invested in the technology as a means of heating. My question is more about how we can do more to incentivise developers on small-scale developments, perhaps on the edge of rural villages and towns, to look at similar schemes, and what suggestions the hon. Gentleman may have to bring forward those incentives.
I think that the hon. Gentleman is referring to vertical hole shallow geothermal ground source heat installations. They are perfect for rural homes, as he described. They will provide sufficient heat, from a relatively shallow penetration into the earth, for heat exchangers to heat a home to a regular temperature of 60°-plus. Although I do not think that that is an essential part of this afternoon’s debate—it is more to do with ground source heat pumps—the hon. Gentleman is right. It is a technology that I would strongly recommend for off-grid properties in which, in the past, the alternative heating might have been oil. It can absolutely reliably replace that form of heating. I join the hon. Gentleman in recommending to the Minister and the Government that efforts to secure the installation of ground source heat pumps for off-grid properties in rural areas would bear considerable fruit and ought to be strongly supported—rather more strongly supported, I suggest, under the renewable heat initiative than is currently the case.
I hope that I have set out the potential for geothermal energy, and stated how it can be done in practice and what its benefits are. I was leader of Southampton City Council at the time that the scheme I described was initiated, but provided that it had the resource, almost any local authority in the country could pilot and undertake such a scheme relatively easily. The main issue is how to raise the initial capital funding up front to get the scheme under way.
Let me say one or two words about what the Government ought to be doing—in addition to the constructive and sensible suggestions made by my hon. Friend the Member for Bishop Auckland—to start using this resource. Capital grants will be required up front for the essential drilling of the well. The Government have underwritten several such schemes in various parts of the country to the tune of about £2 million a time, and we should extend the availability of those initial grants. Currently, the money available through the non-domestic renewable heat incentive is not sufficient to get those schemes under way from a capital point of view. As far as deep geothermal is concerned, the RHI currently provides 5.38p per kWh. That does not compare favourably with funding for ground source heat pumps, which comes out at 9.36p.
At the moment, the incentives to get such a scheme going properly in any area are not sufficient. That is particularly unfortunate; geothermal energy ought to be considered a different form of renewable energy, because of its known longevity. When we invest in a geothermal energy plant, we are investing in a capacity that will give us free energy for 120 years—we cannot say that about pretty much any other renewable energy source, except possibly the Swansea tidal lagoon. I therefore think that the criteria under which geothermal energy is considered should be based on that kind of payback and that kind of timeframe.
My hon. Friend tempts me down a path that will be familiar to many colleagues. His point raises the question of whether it is appropriate to use the same Treasury discount rate for something that is so long-run as we would for a project that would last for 25 years. That would be another way of squaring the circle.
My hon. Friend makes an interesting point—that might be her seventh recommendation for the Minister this afternoon.
In conclusion, all hon. Members who have contributed to this debate have made clear their support for the potential of this form of renewable energy, and they have given examples from various parts of the UK. I particularly applaud the Scottish Government’s initiative to bring forward real funding for geothermal schemes, and I hope that in the not-too-distant future Southampton will no longer be the only geothermal plant in the entire United Kingdom that operates in the way I described. There are glimpses of progress here and there, but it is by no means continuous or anywhere near to fulfilling the enormous potential that geothermal energy offers.
My request and suggestion to the Minister is that she might like to come to Southampton and have a look at the little wellhead in the Toys R Us carpark and the shed in which the scheme is housed, so that she can see for herself just how much comes from that little site, how much good it has done for a whole community and city, and how much good it will do for many years to come. We should consider geothermal energy in that way, and if we do, we will go a long way towards understanding how good it could be for the UK. I hope that we will then put our resources where our hopes are and ensure that geothermal energy has a bright future in the UK, just as it already does in other countries.
The hon. Member for Falkirk said that 66% of Iceland’s overall energy requirements come from geothermal energy. Indeed, a project called IceLink is currently considering the possibility of an interconnector between Iceland and the UK, in partnership with National Grid and Landsvirkjun, the state-owned generator in Iceland. That is a real possibility for the future. We could be in the position of having home-grown geothermal energy and bringing into the country someone else’s geothermal energy to complement that, so that together we would have a completely carbon-free source of energy that would last the UK for a century. I think that is a prize to be worked for.
It is a great pleasure, as always, to serve under your chairmanship, Mr Evans. We have had a brilliant and fascinating debate, and I commend the hon. Member for Bishop Auckland (Helen Goodman) for an extremely thoughtful, excellent, fact-filled and numerical brief. It is always music to my ears to hear about net present values, particularly when they involve a £7 billion greater turnover for an industry, and the opportunity to create billions of pounds of gross value added and provide many jobs. I thank her for putting the debate in that context. I also thank, as she did, the Coal Authority and Durham University for providing an excellent backdrop to the debate.
As the hon. Lady pointed out, 25% of housing stock in her constituency sits on top of coal workings, which were dug out at exceptional, personal cost by men working in the most horrific conditions, with heat often being one of the worst things they had to deal with. It should therefore come as no surprise that the areas that have been allowed to flood are hot areas, and it would be great to think that at the Durham miners’ gala on 14 July, the topic might be how the legacy that was so painfully won by the shovels and picks of so many men could be used to create something positive for our low-carbon future.
The hon. Member for Southampton, Test (Dr Whitehead) is always good at explaining these issues. I will not run through the batholiths argument again, but we have a long history of exploiting our various deep-geothermal sources. Like many other places, Bath, which is close to my constituency, was built on the thermal springs that were a happy by-product of those hot-spots. It was a pleasure to hear the hon. Gentleman describe the scheme in the city of Southampton, which was the first of its kind in the UK. The important thing about that example is that it shows when it works. This sort of heating works well when there is year-round take-up. One of the issues with such schemes is that they do not work terribly well when people need heating at just one time of the year, because the economics are not attractive. The hon. Gentleman said that an entire ecosystem was constructed around that heat, so that is a really good example. Of course, the water is 76°, so it comes up pretty hot. As the hon. Member for Bishop Auckland knows, the Eastgate renewable energy village, near her constituency, is the first eco-village in the UK. It was funded as way to explore this technology, and it provides heat from geothermal sources.
This is an incredibly exciting time to come together to talk about this issue. In 2013, we commissioned a review of the opportunities for geothermal, both heat and energy—I will talk about the distinction in a moment—and we mapped out the relevant parts of the UK. We have to pick through the issue of geothermal for energy and heat carefully. Iceland sits on the spot where the mid-Atlantic ridge breaks apart, which is not necessarily the most geologically stable place to be, so massive amounts of geothermal energy come to the surface, and islands are created overnight. I am very interested in the Icelandic interconnector project, which has the opportunity to create jobs in a cable factory where the interconnector makes landfall, and is a very interesting opportunity to bring in power generated by high levels of geothermal energy.
Unlike Iceland, we have relatively few opportunities to generate geothermal energy easily and cost effectively. The hon. Member for Falkirk (John Mc Nally) asked whether any projects have received a CFD, but none have bid in. Given what has happened to the cost of renewables—we have led the world in developing an offshore wind industry, and we are buying renewable energy at low prices that we could not have imagined even a few years ago—it is difficult for geothermal electricity to compete for CFDs. Arguably, the opportunities for heat are much more local and interesting.
Hon. Members have talked about the challenge of shallow geothermal, and we think that the most promising area is the low-temperature applications, such as district heating schemes. As the hon. Member for Bishop Auckland said, the water in her constituency is 30° C and shallow, so we do not need an incredibly difficult boring process to get it. We have heard from all parts of the UK, which is refreshing, about the opportunities for such heat schemes. I found the hon. Lady’s point about creating an export industry fascinating, because of course it was the mining industry that created the beam engine. The newcomer Watt engines, which pumped water out of the mines, led directly to the industrial revolution and our global leadership in technology. It is fascinating to think about how we can extract heat from those mines and create export industries across the UK.
The British Geological Survey, which is a marvellous institution, has surveyed the UK. We know about the opportunities both for deep geothermal heat and for shallow geothermal heat extraction, which is very widely distributed. Every investment we make has to pass a triple test: it has to deliver decarbonisation, it has to be deliverable at the right cost for consumers, and it has to create economic value added, as the hon. Lady expounded eloquently. That is the filter through which we review these schemes.
The hon. Member for Falkirk asked me several questions, which I shall try to answer. One was about the CFD—hopefully he is satisfied with my answer. Secondly, he said that the Government are not doing anything, but I am afraid I have to reject that. Heat is a devolved matter in Scotland, as he knows, but that has not prevented the UK Government from providing £4.5 million for the deep geothermal challenge scheme. The £250,000 he referred to was a welcome addition, but most of the funding was provided by UK-wide taxpayers. He talked about the HALO project, which I believe has been funded to the tune of £1.8 million by the Scottish Government and £3.5 million by the UK Government. I do not like to make political points; I find it much better to talk about investing in our UK-wide resources for the benefit of UK consumers and taxpayers. We have to go through the technological process and ensure these projects are economically effective so we do not burden taxpayers and bill payers unnecessarily, and we have to innovate.
Most houses—although not in rural areas—are on the gas grid, so when we invest we have to think hard about the cost trajectory vis-à-vis the fully costed position of being on gas heating. On the issue of rural homes, I am pleased to see my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) here because, like him, I represent a very rural constituency, in which more than 40,000 homes, including mine, are not on grid. The challenge of decarbonising those homes and reducing our dependency on heating oil, which the hon. Member for Strangford (Jim Shannon) mentioned, is live. In our clean growth strategy, we set out our intention to ensure that no new buildings in rural areas use fossil fuel sources of heat by 2025. We are determined to get to that level and to encourage innovation of the kind that my hon. Friend the Member for Central Suffolk and North Ipswich talked about.
How do we innovate, drive down the cost of extraction and use that heat to the maximum effect to ensure that these projects are economically viable? We are working with the Natural Environmental Research Council and the BGS, and are funding a £9 million geothermal research facility—the UK geoenergy observatory—to study low-temperature geothermal energy in former mines in Glasgow. We also have a number of other innovation programmes and are working with the industry.
I want to flag up a possible route to funding, because I want to ensure that some of these schemes are developed. Phase 7 of the industrial strategy challenge fund, with £10 million of funding, is open for bids. The launch event for it is on 4 July. It would be great to see whether we can create a bid for an innovative scheme to produce a working, cost-effective scheme. As the hon. Member for Ogmore (Chris Elmore) said, we have the heat networks investment project, with more than £300 million of funding. I commend the Welsh Government, Bridgend County Borough Council and the hon. Gentleman’s efforts in creating that scheme, which has bid into the heat networks scheme. Although this is a devolved matter in Wales, as always I think we are better when we work together. This is an opportunity to bring forward innovation and create a scheme that can be incorporated into heat networks. I would be absolutely delighted to meet the Coal Authority or anybody else who is willing to help us think about how we can pull such a scheme together, because I want to see innovation proceed. Given the constituency interest of the hon. Member for Bishop Auckland, perhaps she is the person to lead that delegation.
We have the innovation route to market and the heat networks scheme. I have been given a number of “go away and look at them” actions, including looking at risk insurance and planning. As I said about the clean growth strategy, our building regulations must ensure that we do not put up new builds in off-grid areas that are dependent on current forms of fossil fuel heating.
We have an opportunity to make this very large latent resource, which was won so painfully over many years, part of our low-carbon future. We have spent tens of millions of pounds in this area. The UK is in a fortunate situation, because our renewables industry is powering ahead. Other countries look with envy at what we have delivered through other renewable sources of energy. We are one of two countries in the world doing enough to meet even a 2° rise in climate, due to what we have done in our energy industry. The opportunity to decarbonise heat, create local productivity and resource, and generate innovation that we can export elsewhere in the world is incredibly interesting.
Once again, I congratulate the hon. Member for Bishop Auckland on securing this debate. I thank all other Members who spoke—we had a marvellous conversation about the opportunities in the constituency of my hon. Friend the Member for Ochil and South Perthshire (Luke Graham). This is a very opportune time: there are routes to innovation, such as the heat networks investment, and I am in the lucky position of being able to make investment. I would like to see some of this innovation coming forward.
I am pleased that we have had this debate, and I am grateful to all hon. Members who have taken part, because the subject is extremely worthwhile and important. I am grateful to the Minister for her positive attitude to geothermal. She does not need to worry: we shall come back to her and pursue this, because geothermal is important and could be very productive for this country.
Question put and agreed to.
That this House has considered potential for geothermal energy resources in the UK.