Geothermal energy is one of the silver bullets to accelerate the energy transition
24 March 2022
Geothermal energy is one of the silver bullets to accelerate the energy transition
Combatting climate change requires accelerated transition to renewable energy sources. The war in Ukraine highlights another reason to speed up the energy transition and wean Europe’s dependence on gas. Energy from geothermal heat will play an important role worldwide, this became evident during the Geothermal Conference in The Hague.
On March 9th ‘Experience Geothermal The Hague’, an event took place. At first it felt a bit strange to talk about the topic of energy transition while a war in Ukraine was unfolding 2,000 km away. Yet, the urgency of speeding up the energy transition is only increased by the war, said Alderman Liesbeth van Tongeren in her introduction. “The war in Ukraine shows that we need to get off fossil fuels as soon as possible,” said van Tongeren, referring to the dependence on oil and gas from Russia.
Sandor Gaastra, Director General of Climate and Energy at the Ministry of Economic Affairs and Climate Change came up with the same message in his presentation. “The climate crisis was until a few weeks ago the main reason for tackling the energy transition.” But now that Russia has invaded Ukraine, an argument is added. “Europe needs to become less dependent on Russian natural gas faster. I think geothermal energy is one of the silver bullets to accelerate the energy transition.”
Based on the current global situation, it is a good indication that the spotlight is turning towards geothermal energy. As the main theme of the event is the great potential that ‘geothermal energy’ has in speeding up the energy transition. The transition efforts are already in progress, as this is demonstrated through fast projects development in the Netherlands, China and Denmark. The participants of the panel discussion focused on the obstacles and challenges that impede the growth of geothermal energy: financing of projects and support from the local population.
Geothermal energy is a golden opportunity
“In the Netherlands, geothermal energy is essential for getting 1.5 million homes off the gas by 2030,” says Gaastra, Director General of Climate and Energy at the Ministry of Economic Affairs and Climate Change. Although geothermal energy is still in its infancy, it will succeed, the Director General sounded convincing. “We have shown before in the Netherlands that we can scale up quickly. For example, look at the growth and progress of the offshore wind projects.” In less than 20 years, wind turbines have risen in the North Sea with a total capacity of 11 gigawatts. “And by 2030 it will be twice as much as it is now,” Gaastra says. With geothermal energy, we will also experience such a growth curve, he predicts. “We have amended the Mining Act with geothermal energy in mind. It’s a golden opportunity to invest in it.”
This approach is not only used in the Netherlands. In Geneva with population of 500,000 people, the city is strongly focused on geothermal energy. It is becoming the core of their energy transition. According to Marie Lecompte, Head of geothermal projects for the Swiss city, the goal is to be climate neutral by 2050. Today, the heat supply still consists largely of gas-fired plants, Lecompte shared during her presentation at the event. “Since 2014 we have had a program to set up geothermal projects. Switzerland has no history of oil and gas extraction. We had no seismic data, so we really started with a blank page.”
This approach in Geneva is characterized by strong governmental support and involvement. A municipal utility company carries out the projects and is responsible for geothermal operations. This fits into the political system and culture of “direct democracy”. Informing and involving citizens is an essential part of the Swiss success. This, according to Lecompte, created support for a change in the law that gave the utility a monopoly to market geothermal heat.
On the flip side, an example of how a large-scale approach towards geothermal energy projects can be found in – China. Founder Haukar Hardarson of the company Arctic Green Energy talked at the event about the enormous strides his company was making: “We are the market leader in the world.” Without Chinese involvement, by the way, this would not have been possible. Arctic Green Energy was set up 15 years ago as a 50/50 joint venture with Chinese oil company Sinopec.
Hardarson effortlessly shares his impressive achievements. “We have projects underway in 70 cities, we have drilled 800 wells at an average depth of 2.2 km. The deepest well is 4.8 km.” Meanwhile, the company, which says it has a 35% market share, has more than 2 million customers. In 2021 alone, Arctic Green saved 4.2 million tons of CO2 emissions, Hardarson says during his presentation.
Geothermal is mainstream
“Geothermal energy has become mainstream in China,” Hardarson says. “It is a powerful source to further reduce CO2 emissions. We have internally agreed to increase our business fourfold in the coming years. So that soon we will be able to save 20 million tons of CO2 annually.”
Hardarson cites two “secret ingredients” that make geothermal success possible. The first is educating local governments about the impact geothermal power has on CO2 emissions and air quality. Local administrators in China receive CO2 emission targets from the national government. Other than that, local populations often suffers from poor air quality due to other industries. Because geothermal energy replaces fossil fuels (and thus reduces CO2 emissions and pollution), local leaders can kill two birds with one stone through geothermal projects, says Hardarson.
Second, the founder of Arctic Green Energy cites the cost. Although the initial investment is large, geothermal energy is cheaper than coal- or natural gas-based heat. “As a result, Arctic Green Energy is a profitable business,” he says. Not insignificant in his story is that Arctic Green has managed to work with lower and lower temperatures over the years. The Chinese company has enough with water of about 55 degrees Celsius, where in many European projects water of 80 degrees is still pumped. “That’s how we started,” says Hardarson. “But also in Europe, systems with lower temperatures are very useful. I therefore think that the potential of geothermal energy is greater than the 25% that many people are talking about,” Hardarson says.
Europe, according to the Arctic Green Energy founder, should not be afraid to get geothermal off the ground with solid subsidies. “That’s what’s been done with solar and wind, and it’s been a great success.” The lesson Hardarson draws from his Chinese experience is that cities cannot become climate-neutral without using geothermal energy for heat. “No city can do without it. Geothermal energy provides a significant part of the baseload that cities need in heat.”
In Denmark, too, the momentum is there. Samir Abboud is the CEO of the company Innargi, which is part of the conglomerate AP Moller Group, which also includes shipping company Maersk. The oil and gas business was sold four years ago, Abboud tells in The Hague. Since then, Aarhus-based Innargi has focused entirely on geothermal energy. “In our business model we take on all risks, both in the development phase, the construction phase, and the operation phase.” That integrated approach allowed Innargi to create scale and reduce costs. “That was necessary to be able to sell heat at competitive rates,” Abboud says.
Aarhus has a population of just under 350,000 and is Denmark’s second largest city after Copenhagen. “By now we have seven geothermal plants in the city,” Abboud says. A lot of thought went into the design of those plants. “It has to look aesthetically beautiful,” the CEO believes, so that support among the population is assured. “And if you inform citizens well, you also ensure that the community views the project with a lot of pride, as it contributes to resolving the climate issue.”
The Danish city has the ambition to be climate neutral by 2030. Unlike Hardarson, Abboud does not see geothermal energy as a base load. “You start with waste heat from waste incineration. Because you always have waste. Then you start supplementing with other sources as cheap as possible.” Starting with geothermal.
The Danish government is keeping up the pressure on the development of geothermal energy. Abboud: “If you get a permit and then you don’t make any headway, you have to turn that permit back in. That’s what happened to us and I think that’s a good thing. That way nobody sits on their permit endlessly without anything happening.”
In the Netherlands, the government and companies are also not sitting still, and developments are following fast. Last December, the company Haagse Aardwarmte put a geothermal installation near the Leyweg facility into production. Eventually, four thousand ‘home equivalents’ will get their heat from this. “Leyweg facility is operational. It was our first project. We are still learning from it every day,” says Jan Willem Rösingh, Director of The Hague Geothermal Heat.
Master plan for the Hague region
Now that that first project is up and running, the company is ready for the next steps. “We have developed a comprehensive master plan for the entire Hague region,” says Rössingh. To begin with, the company has created a 3D model of the subsurface. “In the Hague region, there is a potential to develop 18 ‘doublets.” A doublet is a set of two wells; one to pump hot water uphill, the other to inject the used and cooled water back down.
The Hague Geothermal Heat’s expansion plans also require other investments. After all, Rössingh’s company may be pumping the hot water up, but a heat network is needed to distribute it to homes, offices and businesses. “The current network is suitable for four doublets,” he says.
The Hague Geothermal sees Eneco as the perfect partner to lay the necessary pipes and deliver the heat to the final consumers. Jinny Moe Soe Let, ‘City manager of heat The Hague’ at Eneco, says that her company’s ambition matches the vision of The Hague Geothermal. “We have an ambitious goal with Eneco. Namely, we want to be climate neutral by 2035.” Many companies have goals for 2050, notes Moe Soe Let. “That feels far away. While for 2035 we need to get to work today.” So Eneco wants to take steps quickly. “We already supply heat to the King’s Palace,” she says with a wink.
“We need companies like Eneco to build heat networks,” also says program manager Herman Exalto of Energie Beheer Nederland (EBN). “There are still only 400,000 homes connected to a heat network in the Netherlands. That has to be 1.1 million by 2030, and 2 or 3 million by 2050. That’s a gigantic task that requires a lot of knowledge and capital.”
Exalto says he is “optimistic” about the opportunities for geothermal energy in the Netherlands. “We are aiming for 200 projects in 2030, and 700 in 2050. Then we will make an impact on the energy transition.” Financing will not happen by itself, says Exalto. “I’m assuming normal gas prices for a moment. Then subsidies are needed because geothermal is still relatively expensive.” Like Hardarson of Arctic Green Energy in China, Exalto says much innovation is needed to make geothermal both cheaper and more reliable.
To give the market a helping hand, the government has launched the so-called Scan program to seismically map the entire Dutch subsurface. To begin with, the EBN manager explained during his presentation, it involves “reprocessing” existing data from the oil and gas industry. But a series of new scientific drillings are also being carried out.
A second government incentive is that EBN will invest in geothermal projects on behalf of the state. In the past, EBN represented the Dutch state in all oil and gas projects in the Netherlands. So now that is shifting to the area of geothermal energy. “We will take 20% to 40% of the shares in projects. In Hague Geothermal we have acquired a 25% share,” said Exalto. “It gives confidence in the market when the government participates.”
As in other countries, public support is essential. Informing and involving people is important. One important detail is to make sure that the geothermal installations are blended into city surroundings, to maintain an attractive cityscape, as they do in Denmark. Keeping in mind the previous earthquakes in Groningen, concerns about drilling plans quickly arise in the Netherlands. The Hague Geothermal has therefore installed seismic measuring equipment to detect any quakes immediately. “We don’t expect any consequences, but we do have that equipment to prove that nothing is happening,” says Rössingh. According to Rössingh of The Hague Geothermal, it is “logical” for residents to ask questions about this. Because all the water that is pumped up is also injected back in, on balance nothing changes in the subsoil. Rössingh expects that no earthquakes will occur.
At the end of the event, visitors were dizzy from all the information and new projects. Funding, seismic 3D models, support, innovation, doublets, scale, heat grids, aesthetics. Alderman Van Tongeren, however, said in her introduction that there is no choice. “We need to develop local renewable energy sources to become less dependent on Russia.” The Hague City Council has been fully committed to geothermal energy for years. Companies, knowledge institutions, laboratories and financiers are joining forces there. Van Tongeren invited parties at the conference to do their part: “Come work with us.”