A new report from the UK energy regulator, Ofgem, has signalled a cautious but notable shift in the nation's energy strategy: geothermal power, a resource long considered too costly and geologically marginal for Britain, is being re-evaluated as a potentially vital component of the country's net-zero transition. The assessment, described internally as a 'prospectus for deep heat', acknowledges the resource's abundance while confronting its primary obstacle: cost.
Geothermal energy harnesses heat from the Earth's crust. In regions with volcanic activity, such as Iceland or East Africa, that heat is close to the surface and easily tapped. Britain, geologically stable, is not so fortunate. Its geothermal resources reside at depths of 3 to 5 kilometres, requiring advanced drilling techniques similar to those used in the oil and gas industry. The capital expenditure is substantial: a single deep geothermal plant can run to tens of millions of pounds, with no guarantee of adequate flow rates or temperatures.
Yet Ofgem's analysis, released on Tuesday, points to a convergence of factors that may tip the scales. The cost of drilling has fallen by roughly 20 per cent over the past five years, driven by innovations in horizontal drilling and hydraulic fracturing technologies. Meanwhile, the UK's energy crisis, exacerbated by the war in Ukraine, has pushed wholesale electricity and gas prices to historic highs. Against that backdrop, geothermal begins to look competitive.
The regulator's report identifies two primary applications: deep geothermal for electricity generation and shallower 'ground source' heat pumps for district heating. The latter is already deployable today, with numerous pilot projects across the country, including in Southampton and the Eden Project in Cornwall. The former, larger-scale electricity from deep geothermal, remains developmental but promising. Ofgem estimates that geothermal could meet up to 10 per cent of UK electricity demand by 2050, assuming aggressive investment and supportive policy.
‘The heat under our feet is a constant, baseload resource,’ said Dr. Helena Vance in a recent interview. ‘It doesn't flicker with the wind or vanish at night. That reliability is invaluable for grid stability, especially as we phase out gas.’ Vance, a climate correspondent with a PhD in astrophysics, has long advocated for a diverse energy mix. She notes that geothermal's intermittency profile is superior to solar and wind, though its upfront cost remains a barrier.
The key challenge, as Ofgem's report frames it, is the mismatch between the long-term returns and the short-term risk profile. Unlike a wind farm, which can be built in a year and produce revenue within months, a geothermal project requires years of exploration and drilling before any energy is sold. Investors are skittish. Ofgem has proposed a suite of support mechanisms: contracts for difference, a la offshore wind; a dedicated geothermal development corporation; and streamlined planning permissions.
Environmental groups have largely welcomed the report, though with caveats. Greenpeace UK called it ‘a sensible recognition of a neglected resource’ but warned against conflating geothermal with fossil fuel extraction methods. The drilling process itself, however, has a lower carbon footprint than gas extraction, and the operational phase produces negligible emissions. Once built, a geothermal plant runs for decades with minimal maintenance.
There is also the question of distribution. The best geothermal resources in the UK lie beneath Cornwall, Yorkshire, and the Midlands. Connecting those plants to the grid will require new transmission infrastructure, a slow and politically fraught process. Ofgem's analysis suggests that geothermal could be paired with energy storage, such as hydrogen or batteries, to maximise its value.
The report concludes with a call for a national geothermal strategy, co-ordinated with the newly formed Great British Energy company. ‘It is time to stop treating geothermal as an exotic curiosity,’ it states. ‘The geology is there. The technology is maturing. The question is whether we have the will to dig deep.’
For Dr. Vance, the calculus is clear. ‘We are running out of time,’ she said. ‘Every year of delay locks in higher emissions. Geothermal won't solve everything, but it is one of the few baseload options that is actually compatible with a stable climate. The price must be paid.’
