Hot springs

06 Jul 2023

Geothermal Energy – hot springs eternal

Harold Hutchinson | Managing Director, Alternative Energy at Investec

In today’s blog, Harold Hutchinson, Managing Director for Alternative Energy at Investec, takes a ‘wide lens’ look at geothermal power. He argues that the path to commercialisation is long and arduous. As an energy source, its beauty lies in that fact that it is the property of our earth.

 

Geothermal energy refers to heat below the earth’s surface, from depths of a few meters to many kilometres. At shallow depths, ground heat is largely derived from absorption of the sun’s radiation. This allows the earth’s ‘near surface’ to act as a sort of solar battery, suitable, for example, for ground-sourced heat pumps.

However, we often refer to geothermal energy in a narrower sense, meaning only the heat stored deep below the earth’s surface, where temperatures are much higher than near the surface. This heat comes from two sources: the decay of radio-active elements within the earth’s crust, and from heat seeping through the mantle of the earth’s core itself. Heat from these origins can be harnessed for many purposes: bathing, district heating, and to generate electricity using a steam turbine.

Heat comes from two sources: the decay of radio-active elements within the earth’s crust, and from heat seeping through the mantle of the earth’s core itself. Heat from these origins can be harnessed for many purposes: bathing, district heating, and to generate electricity using a steam turbine.

All these applications have a long history. Energy from natural springs has been used over millennia for bathing and cooking. The first documented geothermal district heating system opened in the fourteenth century at Chaudes–Aigues in France. The prize for the first demonstration of geothermal energy to produce electricity belongs to Italy, when Prince Piero Ginori Conti used heat from a field near his palace in Tuscany to power several light bulbs, early in the twentieth century.

Today’s geothermal systems are sometimes integrated to provide both heat and power (CHP).  For example, the Hellisheidi power station outside Reykjavik in Iceland does just that - hot steam from a well turns the power station’s turbines, while simultaneously supplying hot water through underground pipes to the city.

In the UK, Southampton had a district heating system commissioned in 1986 as part of a city council plan to become self-sustaining in energy, with the main heat station subsequently adding several CHP engines. Recently, the FT reported that the UK’s first deep geothermal energy since Southampton had been switched on in Cornwall (near St. Austell), providing heating for nearby greenhouses. GT Energy has various projects including one in Stoke-on-Trent, a partnership with SSE and the council.

So, is there a bright future for geothermal across our islands? As with many emerging technologies, policy support will assume a critical role. Various parliamentary questions have attempted to seek clarification on UK government support for geothermal. The response has been that an evaluation of the opportunities and barriers is ongoing. Pending final policy decisions, what we can say is that there are a nuanced set of pros and cons which, in practice, have implied decades-long waxing and waning political support for UK geothermal.

The main advantages of the technology are that it is sustainable (in principle – see later); it is available all year round, unlike intermittent sources of energy; and it can be used directly as heat and/or converted to electricity in some circumstances, as in Iceland. Moreover, within a diversification context, deep geothermal does not rely on the sun’s energy, distinguishing it from solar, wind, and hydro, all of which ultimately depend on solar rays directly, or indirectly in the case of wind and hydro.

Within a diversification context, deep geothermal does not rely on the sun’s energy, distinguishing it from solar, wind, and hydro, all of which ultimately depend on solar rays directly, or indirectly in the case of wind and hydro.

Challenges for geothermal are that it requires specific geological conditions, complicating ‘scaling’ potential. Typically, the best geothermal conditions are to be found in volcanic areas near tectonic plates. This is not the situation in the UK and Ireland, although early carboniferous limestone found here may also be a relatively attractive source for geothermal systems. Further, pipe drilling may have adverse environmental effects. Furthermore, to date, costs remain in a discovery phase, at least in a UK context, and are almost certain to be very location-dependent.

More controversially, geothermal may not always be sustainable. The slow rate at which deep heat naturally travels through solid rock limits the rate at which this heat can be sustainably drawn out of the earth’s interior.  Understanding this requires some knowledge of thermodynamics, but a simple metaphor may help.

Imagine a crushed-ice cocktail. You put a straw into the glass and enjoy an initial mouthful of cold liquid. However, if you suck too quickly, all you will draw in is air, as you’ve extracted all the available liquid near the bottom of the straw. The initial rate of sucking was not sustainable. Similarly, if heat is extracted from rocks faster than they are naturally replenished with heat from the earth’s core and radio-active minerals, it amounts to the mining of heat, rather than a sustainable circular process.

Overall, the outlook for geothermal will depend crucially on location and policy. If supportive policies emerge, a range of projects near suitable rock foundations may flourish in parts of the UK, supported by local communities, benefitting from the diversification and ‘always on’ aspects to the technology.

Then again, why not build an interconnector between Iceland and the UK, a proposal that has been suggested before? In fact, in the 2019 UK General Election, the Democratic Unionist Party included in its manifesto a proposal for just such a link to make landfall in Northern Ireland, providing an even larger giant’s causeway. At least for now, this seems an unlikely project, without a fairy-tale return of Finn McCool to Ireland’s shores.

As with many emerging energy technologies, reality is usually a lot more mundane than the headlines suggest, and development slower. Geothermal is no exception. That said, there is nothing wrong with thinking creatively in the energy world – without the imagination of the likes of Faraday, we might never have had electricity in the first place.

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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.