Geothermal energy could contribute to the UK’s net zero ambitions, but its role is uncertain due to high costs, according to a new report prepared by Arup for the Department for Energy Security and Net Zero.
The levelised cost of electricity (LCOE) for geothermal in the UK ranges from £136 to £852 per megawatt hour, making it more expensive than other low carbon technologies such as wind and large-scale solar.
The review says high capital costs and relatively modest output per well are the main reasons for geothermal’s high costs. A typical well produces 2 to 3 megawatts of electricity, compared with 8 to 12 megawatts from a single offshore wind turbine, or 0.5 megawatts per hectare of solar.
Advantages of geothermal
Despite the higher costs, the report highlights several benefits. Unlike wind and solar, geothermal can provide constant baseload power, helping to stabilise the grid. It can also deliver large amounts of heat, something electricity-only renewables cannot do.
The study notes that wind and solar costs have dropped sharply in the past decade thanks to global investment and rapid deployment. Solar’s LCOE, for example, fell by 89% between 2010 and 2022. Geothermal, with far fewer projects worldwide, has not seen similar reductions.
Heat sales could improve economics
Additional revenue from heat sales could reduce geothermal’s LCOE by 40% to 60%, the report estimates. Costs also vary by geology. Granite-rich areas such as Cornwall generally offer better performance and lower overall costs than sedimentary basins, despite requiring deeper and more challenging drilling.
Wider context
The research is part of wider efforts to achieve the UK government’s goal of at least 95% clean power by 2030.
Geothermal energy remains largely absent from core government strategies, and this lack of policy focus has slowed development of the sector. According to the Association for Renewable Energy and Clean Technologies, the UK could support as many as 360 geothermal plants by 2050, collectively producing around 15,000 GWh of heat annually – enough for 2 million homes – and approximately 400 GWh of electricity.
The report, UK Geothermal Review and Cost Estimations, is available from the Department for Energy Security and Net Zero.
