My Lords, as my noble friend Lord Teverson has said, he has a longstanding interest in geothermal technologies. The Government share much of his enthusiasm and recognise that deep geothermal will have a part to play in the UK’s energy mix. We are keen to explore and to help realise this overall potential, both deep geothermal for direct heat use and those projects that are primarily about power generation.
Geothermal energy for direct heat use is a clear strategic fit with the Government’s planned transition to low-carbon heating. The Government’s heat strategy
identified heat networks as having an important role to play in providing low-carbon heat to dense urban areas. Heat networks can have multiple sources of heat supply. Cities such as Manchester and Newcastle have identified deep geothermal as a possible future heat source for their networks. DECC is helping those cities to develop their heat network plans, including grant support for feasibility work and by creating a new heat networks delivery unit to add capacity and expertise to project teams in individual local authorities. The Government are also proposing a higher renewable heat incentive tariff for deep geothermal heat projects to support such developments.
The noble Lord, Lord Grantchester, and my noble friend Lord Teverson will recall that in 2011 the Environment Agency introduced changes to the abstraction licence procedures to provide greater certainty to deep geothermal investors for those projects accessing groundwater resources. This light-touch amendment to existing regulations was welcomed by the industry.
The department has been considering what additional support might be possible for deep geothermal power to help explore and test the resource for power generation. However, despite grant awards and eligibility for the renewables obligation, no deep geothermal power projects have commenced in the UK.
In response to this, the department has initiated a two-stage process to try to move the deep geothermal power sector forward. The first phase is an expert feasibility study to draw together all the evidence to explore and test the case for additional government support. Subject to the outcome of this first step, and taking into account value-for-money considerations, the various options for further support will be then analysed. The feasibility study, which is being undertaken by Atkins, will conclude shortly. We will need further analysis to help gauge the realisable potential of deep geothermal power and the extent of any support it may need.
My noble friend and, I know, many in industry argue that a licensing regime is required to underpin the expansion of this technology and to ensure that it can approach its full potential in the UK. At present the UK sector is at an early stage of development, which makes it difficult to gauge the impact of a licensing regime. The Government accept my noble friend’s argument that the impact is likely to be positive. The question is one of proportionality. At present, all parts of UK law are essentially silent on the subject of heat from deep below the earth’s surface. Any legislation would therefore proceed from a blank page, and full licensing regimes are complex to create. The legislation to do this in the Australian state of Queensland runs to more than 500 pages of primary legislation, which suggests that the call on the time of this House would not be trivial. The Atkins report will guide the Government’s position on how best we may be able to help support the geothermal sector, which will help to steer a future position on any new regulatory approaches.
I hope that my noble friend will agree with me that we must be guided by the Atkins report’s outputs and recommendations to help inform the Government’s
position and next steps. I hope that on that basis my noble friend will feel reassured and withdraw his amendment.
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