GEL awarded the first-ever Contracts for Difference for geothermal

Rig on site of United Downs Deep Geothermal Project (source: GEL)

Carlo Cariaga 8 Sep 2023

Geothermal Engineering Limited (GEL), together with its investors Kerogen Capital and Thrive Renewables, is pleased to announce that it has been awarded Contracts for Difference (CfD) in the UK Allocation Round 5 (AR5) process for three projects. Underwritten by the UK Government, these are the first ever CfDs allocated to geothermal and will run for 15 years.

The United Downs, Manhay, and Penhallow projects of GEL were able to secure 15-year deals. These three projects are expected to contribute 12 MW of installed capacity to the grid, supplying the power requirement of up to 2 million households.

The successful CfD allocations are a significant milestone for the company as it progresses its geothermal portfolio in Cornwall. GEL’s flagship site at United Downs is the first geothermal project in the UK, forecast to deliver electricity by 2025. GEL is targeting 25 MWe of baseload electricity and 100 MWh of heat energy across its geothermal portfolio by 2028, enough heat and power for 70,000 homes.

CfDs are financial agreements between renewable power generators and buyers of electricity. A CfD provides revenue stabilization, protecting both parties from market price fluctuations and ensuring a predictable revenue stream.

This increasing momentum in the UK’s geothermal industry will enable further innovation, cost reductions and crucially generate new highly skilled and green jobs, benefitting local communities. The Renewable Energy Association and Arup have estimated that the development of deep geothermal projects in the UK could fulfil the UK’s entire residential heat demand for 100 years and create as many as 10,000 direct and 25,000 indirect jobs by 2050.

“We are very pleased for GEL to have been awarded CfDs and achieve another first for the company in the UK. This is a hugely significant milestone in our push to extend the boundaries of what’s possible with geothermal power and heat. Securing these CfDs will also provide the necessary financial foundation to allow more substantial investment in the multiple projects that we have planned in the UK. This is exciting news for the whole geothermal industry in the UK, and we look forward to playing our part in delivering much needed baseload power and heat at this crucial time,” said Ryan Law, Managing Director of Geothermal Engineering Ltd.

“We are delighted that GEL has been successful in securing the CfDs and extend our congratulations to the whole team working on these industry-leading projects. As an investor in geothermal in the UK, we recognise the contribution this can make to the development of a low-carbon, home-grown and reliable energy source,” added Jason Cheng, CEO and CO-Founder of Kerogen Capital.

“Today’s news is a crucial first step in successfully scaling-up the industry to leverage the abundant and largely un-tapped source of geothermal energy in the UK. We are pleased to be part of this significant step in the UK’s transition to a cleaner energy system, in line with our mission to accelerate decarbonisation.”

We had previously published an interview with GEL Managing Director Ryan Law where we discuss GEL’s development strategy and how they have attained success in securing funding for their geothermal projects in the UK. Read the interview here.

Source: Email correspondence