Some companies are already exploring geothermal energy as a sustainable energy source. Lanchester Wines, a family-owned wine importer and merchant near Gateshead, is pioneering world-changing heat pump technology using the energy in water from disused mine workings at its warehouses in Gateshead. 

Working with organisations including the Coal Authority, Environment Agency and academics, Lanchester Wines claims to be the first business in the UK to draw heat from disused coal mines.

“Companies could develop their own geothermal sources. It’s been mostly councils up to now because the costs are long term, and councils typically find it easier to find capital than they do operational expenditure,” says Professor Jon Gluyas, Orsted/Ikon Chair in Geoenergy, Carbon Capture and Storage in the Department of Earth Sciences at the Durham University.

For organisations with data centres, warehouses or factories, geothermal solutions for heating and/or cooling could be ideal. The footprint of a geothermal well is very small, and although the capital costs can be hefty, the operational costs are minimal, providing significant investment opportunities for forward-thinking businesses. Financing solutions for geothermal are growing, too.

Anne Murrell, CEO of UK GeoPower Ltd and founding member of the National Geothermal Centre (NGC), is bringing together investors and other stakeholders to enable financing solutions for geothermal.

Murrell says: “For businesses, even small businesses, geothermal can be a great option for heating, cooling and manufacturing or agricultural processes. Beyond the obvious advantages of being a green, renewable and long-term solution, geothermal can be financially interesting for CFOs.”

Murrell has many years’ experience in the industry in Germany. She is currently engaging with banks, private equity investors, local authorities and the insurance industry to unlock geothermal funding in the UK.

The German example

German company MTU Aero Engines AG is the most recent example of an industrial company in Germany using deep geothermal energy as a source of heat at its main site in the north of Munich. Based on preliminary studies, it is estimated the geothermal source will cover up to 80% of MTU’s heat requirements at its site.

MTU’s Stefan Lange, Senior Manager, Geothermal, says: “Once in service, we expect to save around 70% of our costs for natural gas, which is currently our main source of energy, with the geothermal heating.”

Other benefits MTU points to include CO2 savings and climate protection and independence from gas markets, as well as a positive impact on its share valuation, which is listed on DAX, the German stock market.

The project was self-financed with MTU investing “a mid-double-digit-million amount in the geothermal energy plant”, which could run for 50 to 100 years. 

“We expect it to pay off after just seven years, after which we will benefit from cheaper heat. We do not see this solely as a climate protection project; it must also be economically viable and it shows how climate protection and economic efficiency go hand in hand,” Lange says.

As for advice for CFOs in the UK considering geothermal, Lange says: “Encourage initial exploration and seismic surveys to identify geologically favourable areas. Be courageous. Perhaps in the aviation industry we always think a bit more long term; after all, aircraft models are also planned to be in the air for several decades.”

MTU also encourages the UK government to carry out the first exploration phase of geothermal energy with other stakeholders to “share the initial risk”.

A growing industry

Paul Newcombe, Finance Director, Eden Geothermal, adds: “We have seen the level of interest in deep geothermal grow enormously in the past five years, as people look to improve energy security and price stability, and a demonstration system makes a big difference to their understanding of what is involved.” 

He says that what CFOs should understand is that this is a staged process. The first couple of stages are a relatively small cost, but they give you go/no-go decision points, reducing risk before investing a big capital cost. Recently, there are also significant reductions in drilling costs driven by development in the US, improving the economic case. 

“Taking the right advice from experienced geothermal advisers is essential to manage both risk and cost. Come to see us and our site in operation, you too will be a geothermal convert,” Newcombe says.

There remain challenges to fully exploit the potential of geothermal in the UK, but with all parties pushing in the right direction now and some concrete examples to learn from, the possibility to cut carbon emissions, reskill workers and create a just transition that would see the UK energy independent is significant. The UK’s CFOs should not ignore this.

Read our previous article: Why CFOs should invest in geothermal energy