Risk deflection: geothermal energy: drill faster with insurance

The Federal Government wants to take Germany’s communities the fear of the risk of expensive geothermal bores with state-funded insurance. The “Foundability Insurance” in cooperation between the federal support bank KfW and the reinarian Munich Re is intended to offer financial protection. The federal budget in the Bundestag is currently in consultation. “The start depends on it,” says a spokeswoman for the Federal Ministry of Economics.

The deep geothermal energy – hot water from layers located for miles under the surface of the earth should play a larger role in German energy supply than before. By 2030, a geothermal potential of 10 terawatt hours is to be opened up and the feed-in into heat networks from this source should be tenfold, as the reasoning of the also planned geothermal acceleration law states. Finding insurance and the legal schedule are the heirs of the pasted traffic light coalition, which the current federal government continues to pursue.

For the generation of electricity by geothermal energy, 80 to 90 liters of flow quantity per second with a water temperature of 110 degrees, as geologist Matthias Tönnis explains, the geothermal specialist of Munich Re. Lower flow quantities and 60 to 70 degrees of water temperature are sufficient for heat use. According to geological studies, preferential areas are the Bavarian Molasse basin, the Oberrheingraben and the North German Basin.

Inhibition shoes costs and bureaucracy

But effort, bureaucracy and costs are high: “Until a project starts to drill at all, sometimes five years,” says Tönnis. “Every drilling day-and we are not talking about work, but of calendar days-costs around 80 .,000 euros.” Until the first hole is below, according to Tönnis’ words, preliminary costs of 20 to 30 million euros can arise. “If the hole does not bring what it expected, the money is gone.” Under certain circumstances there is still an open borehole that has to be closed again. “That costs another and a half million euros.”

Municipalities are not mining or energy companies that deliberately take risks. And unlike companies, mayors cannot have drilling elsewhere if the first attempt was unsuccessful. “With oil and gas, it is sufficient if every tenth bore is a hit,” says Tönnis. “A municipality cannot afford a single flop.”

At this point, the insurance should step in, which pays when the hole remains “dry”. “We cover part of the risk, the rest takes over the KfW,” says Tönnis. The pilot project is scheduled to run three years after the start.

How expensive does the insurance company become?

According to the Federal Association of Geothermal energy, commitment to just under 50 million euros are planned for the next four years in the Federal Association for 2025. This should meet 65 projects with an investment volume of two to three billion euros. “From our point of view, the planned model of finding is fundamentally promising,” says Gregor Dilger, the general manager of the Geothermie Association.

In diplomatic words, however, Dilger warns that the finding insurance should not become too expensive: “Like every new system, this will also have to prove itself in practical implementation. It will be crucial how the specific contract negotiations between Munich Re and the policyholder will be and which premiums are agreed.” It is also important to the Federal Association that projects from all over Germany can be secured.

Hemmschuke Bureaucracy – approval processes take years

The insurance is part of the plan to accelerate geothermal energy. The financial risk is not the only obstacle. “At the moment, the approval procedures are partly associated with several years and with a high bureaucratic effort,” says the reasoning of the planned Geothermal acceleration law.

A mining concession is required for the deep holes. The official procedure should be significantly accelerated in the future. “So there should be an introduction of maximum periods for approval procedures in the mountain law, for example the authority must decide on approval within a year,” says the spokeswoman for the Federal Ministry of Economics.

“Everyone is always talking about electricity,” says Tönnis at Munich Re. “But electricity only makes up a quarter in the end of the energy consumption. The greatest part – 52 percent – is warmth, but wind and sun basically do not help.”

Because the conversion of electricity into warmth is inefficient, as the energy man says. “A fan of heating needs a kilowatt hour of electricity to produce heat from 0.3 kilowatt hours.” Even a heat pump for house builders can generate four to six kilowatt hours of heat with one kilowatt hour. “The deep geothermal energy is much more efficient.”