P21
CURRENT SITUATION Presently, there are more than 5,000 district heating systems in Europe, the majority of which are in Western and Eastern Europe as well as Scandinavia. Only 280 of those utilise geothermal energy, although the potential for developing geothermal district heating networks is much greater than this. Iceland produces the most geothermal energy for district heating networks by far, reaching production levels of 6,421 GWh in 2015. France is in second place with 1,335 GWh produced in 2015, leaving Germany, ranked no. 3 with 662 GWh, far behind. TOP 7 COUNTRIES (production in GWh, 2015 data) 1 Iceland 6,421 2 France 1,335 3 Germany 662 4 Hungary 380 5 Austria 272 6 Italy 249 7 Serbia 243
Additionally, geothermal energy projects carry an initial risk because the potential resource may not be suitable for economic extraction. The overall entrepreneurial risk of a project can be managed by avoiding certain risks entirely (e.g. by only realising projects with positive seismic results), curtailing risks, minimising risks (e.g. obtaining various insurances, such as construction insurance, drilling risk insurance, lost-in-hole insurance, etc.) and passing on some risks to, for instance, the contractor. Another challenge developers face is a complex sea of regulations: Depending on the respective country, relevant legislation ranges from environmental to mining law and, when exploring hydrothermal geothermal reservoirs, water resource law. Developers might require a variety of different permits, for which the application and granting process may be lengthy and subject to strict deadlines. Sound project management can ensure that deadlines are met and permits obtained in due time. The public may be fairly sceptical towards geothermal energy; although newspaper articles cover upsets in geothermal energy projects as much as they cover success stories, negative coverage is what people tend to remember. Because of fear for earthquakes people have been known to mobilise to stop geothermal projects in their tracks. In order to counteract potential resistance among the population, communication on part of the project developer is essential; this involves holding informational talks for the public and providing them with a forum to voice any concerns they may have. Acceptance can then be built sustainably and allow for this innovative technology to be developed further. In the present climate, geothermal energy, it is argued, is not competitive with district heating from conventional fuel sources because commodity prices are fairly low. In the long term, however, prices for commodities and CO2 emissions are predicted to increase and geothermal district heating will both be far more competitive and provide consumers with more predictable stable prices.
Table 1: Production of geothermal district heating in 2015 (Source: EGEC, 2017)
POTENTIAL FOR FUTURE DEVELOPMENT IN EUROPE Although currently still underdeveloped in much of Europe, geothermal district heating has the potential to futureproof Europe’s heat supply. While development is at least partially underway in Western Europe, Eastern Europe lags behind this development, despite the region’s enormous potential for geothermal district heating systems. Delving deeper into the data provided by GeoDH’s heat map of Europe reveals that in Hungary, Slovakia, Croatia and Slovenia alone there are over 120 district heating networks that currently run on fossil fuels but that are located above geothermal resources with temperatures of over 90 °C at 2,000 m depth that are ideal for geothermal district heat extraction. The following
figure shows the distribution of these networks across the respective countries:
High initial capital expenditure -
Complex regulations spanning several fields of law
Need for various studies to determine suitable drilling location
High initial risk (uncertainty concering
Public resistance
Financing relatively challenging
the exploitable resource, etc.)
Detailed risk management, incl. the obtaining of various insurances (e.g. construction & drilling risk, lost-in-hole insurance, etc.)
Assessment of different financing options incl. various combinations of equity and debt
Build on exisiting data and focus additionaly seismic on the most
Strategy of clear and integrative communication as an essential part of the project
Sound project management, incl. wholesome legal advice
promising locations
Figure 2: Challenges involved in deep geothermal energy project development and potential ways of dealing with these
© Rödl & Partner
07/03/18
1
Figure 3: Distribution of the 121 DH networks with high geothermal energy potential by country
www.dbdh.dk
J O U R N A L N 0 . 1 / 2 0 1 8
Made with FlippingBook - professional solution for displaying marketing and sales documents online