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Energy Bill

We, too, are grateful to the noble Lord, Lord Teverson, for bringing this issue before us. We agree that geothermal energy is renewable. It is within the scope of the definition of renewable source in proposed new Section 32M. We are not aware of any geothermal electricity generation in the UK, although I am led to believe that it is comparatively common in other countries—for example, Italy and Iceland where hot geological formations lie closer to the surface. We recognise that it is important that we are aware of developments that might make this type of technology an attractive option. I would be happy to ensure that any organisations interested in developing this technology on a commercial scale should have the facility to meet officials from my department to discuss the issues further. I make that offer at this stage. I know that this is a probing amendment, so, on the history of geothermal energy, the Government have previously assessed the potential geothermal resource as part of a broader strategic evaluation of indigenous energy supplies during the late 1970s and throughout the 1980s, ending early in the 1990s. The results of work on geothermal heat from aquifers—one way that this can happen—revealed that the resource was limited because surface temperatures or the permeability of the rocks were lower than expected. The noble Lord will know about Southampton, the one area that was found to be sufficiently promising, where a demonstration scheme was developed. Today, it partially supplies a city centre district heating scheme. Between 1977 and 1994, we also attempted to develop hot dry rock technology—the second way that this can happen—at a disused Cornish granite quarry. Two wells were drilled to a depth of approximately 2.6 kilometres and water was injected, naturally heated and then recovered from the granite. The development of the technology revealed a number of problems. As a result of these difficulties, it was decided to re-evaluate the costs and performance of hot dry rock systems in combination with collaborative participation in the European programme, and work on that programme is ongoing. Since that project, there have been no further large scale studies of deep geothermal energy in the UK. The DTI, and now BERR, have not been approached by companies looking to explore the potential of this energy source. However, I want to be clear that the lack of geothermal developments in the UK in no way represents any government antipathy towards the technology, merely a lack of proposals from the market at this stage. Briefly, the noble Lord’s Amendment No. 38A would give specific provision in primary legislation for the support of heat and electricity generated from geothermal sources, underpinning the RO. There are two reasons not to support this. First, it is unnecessary, as it would duplicate provisions that are already in the renewables obligations. Secondly, we need a fully rounded, co-ordinated approach in developing mechanisms to support renewable heat. The amendment would rather pre-empt our work in this area. The purpose of the renewables obligations—commonplace now, but introduced in 2002—has been to incentivise the generation of electricity from renewable sources, which is why it already supports the generation of electricity from geothermal. Our banding proposals will double the incentive to develop geothermal electricity generation by awarding two ROCs per MWh. This higher level of support reflects its costs relative to other technologies—the higher costs will be part of the reason that there are currently no such projects in operation. As geothermal electricity is already within the scope of the definition of renewable sources in the Bill, it would be inconsistent with the treatment of all other renewable technologies, as well as unnecessary, to require in the primary legislation that the order may make specific provisions for geothermal electricity. Our approach is to use the Renewables Obligation Order to specify eligible technologies. The amendment also seeks support for the use of heat from geothermal. The issue of how best to support renewable heat is an important one, but before we can make decisions on the best way to incentivise the deployment of renewable heat technologies, we frankly need more evidence and understanding of how we could ensure that a market for heat develops. Currently, no such wider market in heat exists. Most consumers, whether domestic or business, purchase fuels such as gas or oil rather than heat. An exception is combined heat and power. The noble Lord will know that we have already published a call for evidence on heat generation; that was announced in January; and we will shortly be building on the useful information provided by publishing a consultation on our renewable energy strategy before the Summer Recess, as I said. I hope that the Committee is reassured that geothermal is properly supported under the renewables obligation with regard to the generation of electricity from geothermal heat. Although we are sympathetic to seeking methods to support the use of heat from that source, decisions have to be taken in the context of support for all heat technologies in the renewable energy strategy. I think that in the course of my answer to the noble Lord, I have answered the noble Lord, Lord De Mauley, about where we are on progress and the Government's attitude towards it.