In October, the Department of Energy & Climate Change (DECC) said £6 million would be available to fund exploration for natural energy under the ground. Deep geothermal uses underground heat to generate non-intermittent electricity, and the funding if part of DECC’s low-carbon investment fund that supports exploratory work to find viable sites for the technology.

“Deep geothermal energy is an exciting and innovative technology that could provide clean, low carbon and renewable power and heat for the UK,” said energy minister Lord Hunt at the time. “Deep geothermal power from the southwest of England alone could meet 2% of the UK’s annual electricity demand, potentially creating thousands of jobs in the building and running of new power plants.”

There currently is only one geothermal energy station in Britain in Southampton. A district energy station uses hot water pumped from a depth of 1.8 km as part of the city’s district heating network and has operated successfully for 20 years, avoiding the emission of 11,000 tonnes of CO2 each year.

There are 5,000 ground-source heat pumps currently installed in the UK, with 2,000 more being installed each year. They are eligible for grant support under the Low Carbon Buildings Programme, and are expected to make a significant contribution to achieving the UK’s share of the 2020 EU target for renewable energy.

The three projects will be funded from the Deep Geothermal Challenge Fund and include:

• £2m to EGS Energy for an exploratory borehole at the Eden Centre in Cornwall;
• £1.5m to Geothermal Engineering for an exploratory borehole at Redruth, also in Cornwall; and
• £461,000 to Newcastle University to recase an existing 1 km borehole and to bore a new 410 m borehole that will provide heat to the proposed Eastgate eco-village in County Durham.

The awards will be subject to compliance with State Aids regulations. Funding for the programme is £4m this year and £2m next financial year, with bids being assessed by by panel established by DECC. The closing date for bids in the first round was 20 November.

Following the banding of the Renewables Obligation in April 2009, electricity generated from geothermal technology falls into the ‘innovative’ technology band and is eligible for support at a rate of 2 Renewable Obligation Certificates (ROCs) per MWh generated. Heat from deep geothermal boreholes would be renewable heat and DECC is developing a Renewable Heat Incentive (RHI), with a consultation to be announced soon that will cover treatment of all forms of renewable heat, including deep geothermal sources.

Projects for deep geothermal energy exploitation will be judged on factors, such as the scale of plant (projects are expected to generate electricity at 2 MW or more, or produce 5 MWth of heat within five years), plausible assumptions on power and heat outputs in the medium and longer term, evidence of financial planning and financial due diligence, and potential for the project to contribute to the long-term development of the UK deep geothermal sector, among others.