EU energy ministers talk geothermal in Budapest

Geothermal energy is the first item on the agenda of an informal meeting of EU energy ministers on Monday and Tuesday (16-17 July) in Budapest, where they will discuss how to overcome barriers to the deployment of this under-exploited energy source.

Interest in geothermal is not confined to the Energy Council. In January 2024, the European Parliament adopted a resolution, calling on the European Commission to devise a ‘Geothermal Strategy’ to boost the exploitation of the resource.

Speaking to Euractiv, Sanjeev Kumar, head of policy at the European Geothermal Energy Council (EGEC), welcomed the Budapest discussion, noting that “for the very first time, the European Council is looking at geothermal energy. It’s never happened before.”

The term ‘geothermal’ covers several types of installations.

‘Shallow’ geothermal harnesses low heat close to the surface and couples this with a heat pump to warm individual buildings.

Conversely ‘deep’ geothermal requires drilling several kilometres into the ground, but harnesses temperatures high enough to warm entire districts or generate electricity.

The attention of EU leaders may be warranted – in spite of its promise, geothermal energy does not enjoy the same visibility and interest as other renewable energy sources

Geothermal energy represented just 0.5% of the global renewable electricity market in 2022 and produced 0.2% of the electricity in the EU.

The technology has struggled in particular with inherent deployment risks, which can make it challenging to secure financing.

A technology with many advantages

In the background document for energy ministers, geothermal energy is described as “a locally available source of renewable energy that can provide, in a cost-effective way, dispatchable electricity, heat or a combination of both”.

As Europe seeks to increase its energy security of supply and reduce fossil fuel dependency, the technology offers the possibility of both stable energy and prices, which provide greater autonomy and security for Europe.

“The good thing is that as energy prices rise, geothermal prices pretty much stay stable because we don’t have a fuel source,” explained Kumar.

Local authorities are increasingly turning to geothermal energy as fuel-based heating is becoming more expensive. On top of the gas price increases in 2022, authorities must increasingly contend with carbon-related levies on fuels, or bans due to negative impacts on air quality.

Shallow geothermal has the added advantages of being a very widely available heating source and secure as it is independent. For example, the new NATO headquarters in Brussels and the Elysée Palace in Paris are powered by geothermal energy.

The limits to its deployment

“Geothermal energy has never really been attractive because nobody really understands it,” Kumar noted.

Two key risks are holding back the widespread use of this technology in Europe.

The first is a financial risk: Investors cannot be sure what geothermal resource they will find before they start drilling at any given site, because of the limited visibility of subsoil potential and a lack of local geological data.

Drilling is costly, so if there is too little heat, or if the heat is difficult to extract, investors can end up out of pocket.

Secondly, geothermal energy can entail risks for the surrounding environment, such as the triggering of seismic activity, possible contamination of groundwater, and the over-exploitation of thermal water resources, according to environmental studies.

Strategies for developing geothermal energy

The 27 energy ministers will discuss how to encourage geothermal investments, raise public awareness and develop cooperation between European countries.

The document shared ahead of the meeting sets out a range of possible solutions to encourage geothermal’s deployment, such as “subsidies, loans convertible into subsidies, state-backed guarantees, exploration insurance and hedging mechanisms”.

In addition, the online publication of geoscientific data, information and maps can reduce risks by making it easier to assess geothermic potential and underground geological risks.

Finally, standard definitions and criteria for environmental impact assessment will be developed to provide clarity to project developers and permitting agencies.

Next steps

National roadmaps for the deployment of geothermal energy have been put in place in Germany, Poland, Austria, Ireland, Croatia, France (which wants to be the leader in this field), and Hungary.

Hungary already boasts the EU’s largest geothermal heating system in the southern town of Szeged, a project that supplies energy to 28,000 households and over 400 public buildings.

Budapest, which hold the rotating EU Council presidency until January, wants the Energy Council to adopt a geothermal energy strategy under its presidency and a Council working group will begin drafting text in September.

[Edited by Donagh Cagney/Zoran Radosavljevic]

Read more with Euractiv