Geothermal energy can help break the link between fossil fuels and electricity prices - Dr David Barns & Fleur Loveridge

Even though UK electricity is now mostly generated by cheap renewables, current market mechanisms mean that the most expensive generation at any time controls the price point. It doesn’t matter if 99 per cent of our electricity comes from cheap solar and wind, if 1 per cent comes from expensive gas generation, we all pay the higher gas price. This is why we have yet to feel the benefit of low-cost renewables that the UK has been deploying so successfully.

To those who claim we can “drill, baby, drill” our way to cheaper gas, it’s not that simple. Oil and gas prices are set by international markets and the UK’s reserves would have almost no impact on prices. To enable cheaper renewables to set electricity prices they need to supply all the power needed, without expensive gas top-ups. This would break the link between electricity and gas markets and feed through to lower bills for us all.

However, even though we have lots of renewable capacity, we often can’t use all the low-cost power because it’s generated a long way from where we need it (such as offshore) and at different times to peak demand. Our grid was set up long before the development of offshore wind and wasn’t designed with storage in mind, or to accommodate energy generation spread out in so many remote locations. Official data shows grid congestion cost British consumers a staggering £1bn in 2024, with 8 TWh of renewable electricity which couldn’t be used. That is enough energy to have powered every home in Yorkshire for over one year.

So, what can we do? We need to move to a more flexible energy system which is not reliant on gas. The system also needs to better store energy when it is generated and reduce demand on the grid at times of lower generation. At the University of Leeds, we are building a shallow geothermal energy demonstrator system. It uses stable temperature groundwater in wells drilled to 150m depth beneath the campus as a source of renewable heat. This will help transition away from burning gas for heating, which for households is typically 80 per cent of energy consumption.

While the system will still need to consume electricity to operate, it will be three to four times more efficient than burning gas. Additionally, one important feature of geothermal energy is that it can also help break the link between fossil fuels and electricity prices. This happens because we will be able to store excess energy under the ground, meaning we can use electricity when there is plenty available, at lower cost, and cut demand on the grid when generation drops, for example when the wind stops blowing.

Dr David Barns is a research fellow in Geosolutions, School of Earth and Environment at the University of Leeds and Fleur Loveridge is professor of Geo-Energy Engineering, School of Civil Engineering at the University of Leeds.