1. Deep Geothermal Energy in Europe Barriers for market development Philippe Dumas, Manager, European Geothermal Energy Council 23/03/2012 - VILNIUS

2. 1)Electricity 2)Heating& Cooling: - Deep - Shallow

3. Deep Geothermal EGEC Deep Geothermal Market Report 2011

4. Summary of Key Conclusions Geothermal Electricity Total Installed Capacity in Europe: 1.6 GWe Producing 10,9 TWh of Electric Power State of Play in 2010 47 in EU Member States EU Installed Capacity of 0.9 GWe 59 Geothermal Power Plants 4

5. Installed Capacity per Country Geothermal Electricity 5 Looking to next 5 years…

6. Hot Facts on GeoElec Today, Italy dominates the market, with more than 50% of the European capacity. Turkey and Iceland are the two hottest markets in Europe. Geothermal development is also taking place in the Atlantic islands: Portugal, Spain and France An important new entrant to the market is Germany, with 16 plants under development. Greece seems to be the future newcomer to watch. 11 EGS projects are being developed in Croatia, France, Germany, Hungary, Ireland, United Kingdom, Slovakia, Slovenia, Spain 6

7. Looking to the future… 7

8. EGS in Europe… 8

9. Barriers to Geothermal Development ELECTRICITY 9 Specifically for EGS Lack of awareness about this technology, its potential and advantages, among policy makers, the general public and potential investors Limited research funds to develop new pilot projects and to progress down the learning curve Technical Barriers Lack of wide and detailed information on geothermal energy resources (information not available or not standardized and spread out in different ministries, universities, national institutes, oil & gas companies) Lack of high skilled professionals and training courses, notably on EGS Social & Environmental barriers Public acceptance (to be tackled by increasing the awareness among the general public)

10. Renewable Energies – on a level playing field ? Subsidies for energy (after IEA data published in the Guardian) + subsidies for nuclear energy

11. Barriers to Geothermal Development ELECTRICITY 11 Regulatory barriers Length and administrative burden of licensing procedures; Lack of clear rules for competition over underground sites Grid access (covered by Article 16.2 of Directive 2009/28/EC) Market distortions and unfair competition from conventional sources (taxes, non- complete internalization of externalities, infrastructures, etc.) Financial barriers Risk associated to the first drilling and its coverage (to be tackled through national, European and international risk insurance schemes); Given the high upfront costs* (high drilling costs and shortage of drilling rigs for geothermal energy) there is a lack of innovative financial mechanisms; For deep geothermal systems, fees and royalties for the use of underground resources; Lack of support schemes: very low financial support compared to other technologies,

12. One Solution: GEOELEC Project Objective of GEOELEC project is to * convince decision-makers about the potential of geothermal electricity in Europe: Create awareness and improve perception among policy makers * stimulate banks and investors in financing geothermal power installations. Work Program: Prospective for geothermal electricity in Europe Financing geothermal power projects Regulatory, social and environmental conditions Education and employment in the geothermal sector Promotion activties Visit www.geoelec.eu

13. Conclusion: 3 Factors Affecting Geothermal Electricity 13 Geothermal Resources Adequate regulatory framework & support Awareness of Potential

14. Summary of Key Conclusions Geothermal District Heating 14 212 GeoDH systems in operation in Europe Total capacity of approx. 4,700 MWth Increasing Momentum Competitive Can be installed everywhere Geothermal Attractive Option for H&C

15. Systems in Europe Geothermal District Heating 15

16. Hot Facts on GeoDH 16 Main GeoDH markets today are in France (42 systems), Iceland (33), Germany (26) and Hungary (16). Hot markets are mainly in Germany (64 new systems developed), France (22 new systems), Hungary (17) and Denmark (13). New entrants to the market are Bosnia-Herz., Bulgaria, Croatia, Ireland, Norway and Spain. CHP plants represent already a 500 MWth capacity for heating. EGS development with CHP systems provides further opportunity for GeoDH systems (more than a150 MWth capacity). Almost all European countries (29) have geothermal activity.

17. 17 Future of GeoDH in Europe Ca. 4,000 MWth 200 New Plants By 2015

18. Barriers to Geothermal Development District Heating 18 Technical barriers Lack of wide and detailed information on geothermal energy resources Lack of high skilled professionals Regulatory barriers Lack of national/regional/local geothermal regulatory framework and a favorable local planning Length and administrative burden of licensing procedures for exploration and drilling; Lack of clear rules for competition over underground sites

19. Barriers to Geothermal Development Heating 19 Financial barriers Risk associated to the first drilling and its coverage; high drilling costs and lack of drilling rigs for geothermal energy; Lack of new business models to make GeoDH economically viable despite the foreseen decrease in heating demand; For deep geothermal systems, fees and royalties for the use of underground resources; Fragmented and very limited support financial support; unfair competitive with conventional sources Insufficient statistics on h&c

20. Conclusion: 3 Factors Affecting Geothermal District Heating 20 Responsive Policy Environment Financing Awareness of Potential of GeoDH

21. 26-27 April 2012: Joint Annual Conference 21 With the support of:

22. Thank you ! 22