Geothermal energy in Europe

The main objective of this paper is to illustrate the main implications of the Energy Roadmap for the geothermal sector and to provide a valued input to the ongoing political discussion under the Danish EU presidency.

This European Geothermal Energy Council policy paper contains key recommendations for EU and national policy-makers to further improve the Roadmap and to elaborate a successful post-2020 energy framework.

Last December 2011, the European Commission published its Energy Roadmap 2050, which is intended to provide a framework to cut EU’s domestic energy-related CO2 emissions by 85% by 2050. This document will be followed by a further Commission’s Communication on Renewable Energy Strategy, expected in May 2012.

Bearing in mind the mere illustrative nature of the scenario analysis undertaken by the Commission, this EGEC policy paper on the European Commission’s Energy Roadmap 2050 serves the following three main purposes: a) to analyse in-depth not only the Communication, but also the Impact assessment of the Roadmap; b) to illustrate its main implications for the geothermal sector and; c) to put forward recommendations for EU and national policy-makers in order to further improve the Roadmap and to elaborate a successful post-2020 energy framework.

Over the last 100 years, the production of geothermal electricity has been concentrated in areas where rich hydrothermal resources were available. However, the development of advanced technologies has enabled the production of geothermal electricity in all European countries. For instance, Enhanced Geothermal Systems (EGS), a breakthrough technology already successfully demonstrated, allow the exploitation of geothermal resources all over Europe, also where hydrothermal reservoirs are not directly suitable for electricity.

As a result of technology developments and despite the limited financial support received, geothermal energy is now being developed anywhere in Europe with 109 new power plants under construction or under investigation in EU member states. Figure 4 below highlights how geothermal is already, and will be further, contributing to the EU’s security of electricity supply, with a total installed capacity amounting to 923 MWe in 2011 and with a minimum estimated capacity of approximately 1500 MWe expected already in 2018.

EGEC key recommendations for a successful post-2020 energy strategy

1. Member States should give the European Commission the mandate for setting ambitious binding renewable energy targets for 2030. Experience has shown that this is the right strategy in order to live up to commitments and to provide investors with the certainty they need.

2. Policy-makers should be aware of the huge potential of geothermal energy for both electricity and heating and cooling.

3. Starting from the current discussion on Horizon 2020 and persisting thereafter, Geothermal should be allocated higher RD&D funds to become more competitive.

4. A more balanced approach in the deployment of renewables would share and reduce investment requirements. Adequate support schemes should be set to incentivise geothermal and to reward its benefits for providing heat and power 24 hours a day as well as stability of the system.

5. Fair competition has to be the paramount priority before any serious discussion on the economics of the transition towards decarbonisation. Today, the price of energy does not include externalities (such as infrastructure and other costs incurred to society) and subsidies to mature technologies are often hidden to consumers’ eyes. These market distortions need to be removed urgently.

6. Heating and cooling is crucial to decarbonise the European economy. Hence, an ambitious and comprehensive EU heating and cooling policy is necessary. In the next updating of the Roadmap, figures for this sector should be reported and analysed in a detailed manner. Further investigation and improved statistical data and modelling are therefore indispensable for the successful elaboration of a post-2020 energy strategy.

7. Geothermal and other renewable technologies have the potential to cover the entire heating demand in 2050. In order to ensure an affordable and reliable energy system, electrification of the heating sector should not be encouraged as long as other truly renewable and market-ready technologies are capable of delivering better solutions.

It is the responsibility of policy-makers to provide affordable energy to everybody in a sustainable way. To this end, geothermal energy will clearly contribute to maintain reasonable costs for the entire society. However, it is crucial that there is a clear understanding of, and the convergence between, the prices to consumers and the costs to society, whereas the latter include system costs and other externalities such as environmental pollution and the resulting public health impact.