Evaluation recommendations State of the Sector Geothermal Energy

Last September, State Supervision of Mines (Staatstoezicht op de Mijnen), published the report "Evaluation recommendations State of the Sector Geothermal Energy". The report contains an evaluation of the recommendations as made by SSM in 2017 in the State of the Geothermal Sector report. A number of interesting issues from this evaluation.

SSM notes that further professionalization of the sector has taken place in recent years. Standards have been drawn up such as the industry standard Sustainable Well Design (industriestandaard Duurzaam Putontwerp), and a Code of Conduct on Environmental Responsibility for Geothermal Energy Projects (Gedragscode Omgevingsbetrok-kenheid bij aardwarmteprojecten) has been developed. In addition, it is to be expected that the participation of EBN in future geothermal projects, as provided in the proposed amendment of the Dutch Mining Act (Mijnbouwwet), will contribute to the enhancement of expertise and further professionalization within the sector. In addition to horticultural companies, (energy) companies with geothermal energy as their main activity are now also entering the sector. These companies are realizing multiple geothermal systems (portfolio approach) and are taking mining knowledge and experience with them. This is clearly visible in terms of expertise, risk and safety management and compliance with laws and regulations. It creates a dichotomy between horticultural companies with geothermal extraction as a secondary activity and the (energy) companies with geothermal as their main activity.

SSM has observed the business case for many geothermal projects to be thin and that there is a great dependence on the SDE+ subsidy. Meaning, without this SDE+ subsidy, geothermal energy is not yet profitable. SSM also concludes that not all companies have a financial reserve for unforeseen events, monitoring, incidents and abandonment of the wells and dismantling of the installations. By setting requirements for financial security, direct intervention in such situations can be assured and the government can be prevented from bearing these costs. At the same time, SSM recognizes that providing financial security can be difficult for less well-off companies because they cannot make their business case. This can also be an obstacle for potential financiers to get involved in geothermal projects. In addition, SSM has received signals that the current environmental and safety regulations are insufficiently clear, which is also seen as a risk to investing in geothermal projects.

SSM has noted that the procedural amendments to the Dutch Mining Act (Mijnbouwwet) and regulations and the clearing of backlogs for consent to extraction plans (winningsplannen) have not been taken forward swiftly. The amendment to the Dutch Mining Act (Mijnbouwwet) - including a new licensing system - was sent to the House of Representatives (Tweede Kamer) in July 2020 and the draft Mining Decree (Mijnbouwbesluit) was submitted for public consultation in July 2021. The amendment of the Mining Regulations (Mijnbouwregeling) is still in progress.

Following this evaluation SSM has decided to loosen the strict supervision on the entire geothermal sector. Read here the abridged conclusions of SSM for the geothermal sector and for the Ministry of Economic Affairs and Climate Change (ministerie van Economische Zaken en Klimaat). The full report is available here.