Tuscan Geysers That Inspired Dante Can Fix Europe’s Energy Bind
Geothermal is an infinite source of power once used by the Roman Empire
By Petra Sorge and Alberto Brambilla
(Bloomberg) — The steam and geysers rising from the valleys of Tuscany inspired Dante Alighieri’s vision of hell in The Divine Comedy. Centuries later, they’re providing Italy with an inexhaustible supply of renewable energy.
Larderello is home to the world’s oldest geothermal power site, where Enel Green Power turns heat released by the Earth’s core into electricity. The facility started powering light bulbs in 1904 and now the whole site generates more than 5% of the nation’s clean power production.
The same could be done in countries across Europe, which thirsts for green energy to uncouple itself from fossil fuels and become climate-neutral by 2050. The US government posits that geothermal could meet global energy demand twice over, and BloombergNEF calls it a “possible game changer” in the business of renewable power.
The Enel Green Power Sasso 2 geothermal plant in Larderello, Italy, on June 28.
Even with all that, the technology is underfunded and marginalized in the European Union’s blueprint for addressing global warming. While the bloc pours billions of euros into wind, solar and hydrogen, it commits just a fraction of that to exploit underground reservoirs of hot water for power and heat — something even the Roman Empire did.
The Bruciano 2 drilling well at the world’s oldest geothermal power site.
“Geothermal is the Cinderella of renewable-energy sources in Europe,” said Bruno Della Vedova, chairman of the Italian Geothermal Union. “Despite its huge potential, investors are wary of the risk of exploration. Pioneers aren’t backed by a proper European fund.”
The bloc spent about €700 million ($763 million) on research subsidies for geothermal energy in the decade to 2020, according to a European Commission report.
By comparison, solar energy technology received €30 billion in subsidies in 2020 alone, followed by wind’s €21 billion, a separate report said.
What’s holding geothermal back from widespread adoption are its upfront capital costs (at least €20 million for drilling); the risks versus returns (one in five searches fails); and technological challenges (utilities typically can’t map the subsurface), according to industry officials and analysts.
Global geothermal power capacity was about 16 gigawatts as of 2021, according to BNEF, and the EU’s share was about 1 gigawatt, primarily thanks to Italy.
A demonstration geothermal well at Enel Green Power’s geothermal plant. The site was first exploited about 200 years ago to extract boric acid from mud.
“Solar and wind energy have it easier because everyone can see the sun, feel the wind,” said geologist Inga Moeck, vice president of Germany’s geothermal association. “No one can sense underground geothermal energy.”
An EU working group calculated that €937 million was needed to promote deep geothermal for power and heating by decade’s end, and it said half of that money should come from private industry.
The catch is that insurers shy away from backing the risks of exploration. HDI Global SE, one of Europe’s largest insurers for geothermal projects, only covers damages to the drilling site and equipment, a spokesman said.
Without guarantees, lenders and investors are reluctant to fund the initial work. No venture capital investments for deep geothermal have been recorded by the EU, according to last year’s status report.
“This initial phase has to be subsidy-driven before you can get commercial lenders on it to secure the risk,” said James Carmichael, an energy equity analyst with Berenberg Bank in London. “In order to grow, some sort of help from the EU and governments will probably be needed.”
Hungary, the member most dependent on Russian energy, is seeking bloc funds to boost capacity. Ancient Romans used geothermal to heat Budapest, and the country now has about 900 wells primarily used for the same function.
Magyar Bankholding Zrt., its second-largest commercial bank, previously loaned money to three companies with geothermal plans and covered the exploration risks. Now, though, it wants any borrower to assume the risk because a failed drilling may jeopardize the return on a loan, according to a statement.
The European Investment Bank has supported geothermal energy projects since the late 1970s but generally only after the exploration phase, when there’s certainty about a project’s viability, budget and schedule, a spokesman said.
That puts the onus on governments, said Rolf Bracke, a geologist and chairman of the Fraunhofer IEG research institute in Bochum, Germany.
“Why don’t we set up a state guarantee or a fund of €2 billion to €3 billion with our development banks, like we do with all our geothermal projects in Africa and Latin America?” Bracke said.
An artificial lagoon of water and steam, a reconstruction of Francesco Larderel’s invention for the extraction and processing of boric acid.
The Geothermal Risk Mitigation Facility, organized by the African Union in 2012, has contributed $131 million toward projects such as surface studies and drilling programs. Most are in Kenya and Ethiopia.
Participants include Germany’s KfW Development Bank, which said it’s in talks with the government to develop a similar tool at home. Funding for exploration isn’t part of the nation’s €212 billion Climate and Transformation Fund.
Oil and gas producers have the know-how and equipment to drill into the Earth’s crust, but they’re reluctant to spend more on geothermal exploration when they’re earning record profits from fossil fuels. Shell Plc, BP Plc, Eni SpA and Chevron Corp. are accelerating investments in natural gas.
The majors also are loath to share underground data, said Moeck, who helped build Germany’s largest database on geothermal energy.
“The municipalities are left completely alone,” she said.
The German oil, gas and geoenergy group BVEG said it releases whatever information is required by law.
The plant from the hilltop village of Sasso Pisano. While the EU pours billions of euros into wind, solar and hydrogen, it commits just a fraction of that to exploit underground reservoirs of hot water for power and heat.