Geothermal technologies which generate electricity will be eligible for the next allocation round of the UK Contracts for Difference (CfD) scheme.
Minister for Business, Energy and Corporate Responsibility Lord Callanan, in a letter published by the Environmental Audit Committee (EAC), noted that the Government continues to monitor progress of geothermal heating technologies, to understand better its potential as part of the UK’s energy mix.
On conclusion of the EAC’s work examining this issue, members argued that there is the potential to fulfil much of the UK’s heating needs using geothermal energy.
The CfD scheme is the government’s main mechanism for supporting low-carbon electricity generation.
The fifth allocation round is expected to open to new applicants in March 2023: the auction parameters for the round will be announced in January 2023.
In practice these parameters will determine whether any geothermal power projects will be in a position to apply.
The Government has not yet indicated whether a ringfenced pot is to be made available for geothermal power.
Environmental Audit Committee Chairman Philip Dunne said: “As the UK re-examines its energy mix in an effort to reduce dependence on fossil fuels, it is promising to have confirmation that the Government is open to supporting geothermal technologies.
“The Committee heard that geothermal energy could potentially fulfil much of the UK’s heating and power needs without damaging emissions of oil and gas.
“The Committee voiced concerns that the Government was failing to send the right signals to industry about its overall backing for geothermal technologies. In April’s British Energy Security Strategy the Government said it would ‘aggressively explore’ the renewable opportunities, including geothermal, provided by the UK’s geography and geology. But the letter we publish today does not on its own send a particularly encouraging message to the sector.
“While it is encouraging to learn that geothermal power is in the mix for the next round of Contracts for Difference auctions, in practice the auction parameters will determine whether geothermal power projects will actually benefit from this support. The announcement of these parameters early in 2023 will be a litmus test of the Government’s commitment to supporting geothermal power by establishing a ringfenced pot for electricity generated from geothermal.
“Current Government support for small-scale geothermal heating, in the form of domestic heat pumps, is welcome: but Ministers must now accelerate the pace at which they are evaluating the potential for large-scale geothermal to contribute to the nation’s heating needs.”