More than half of Germany's energy requirements are used for heating or industrial purposes. Around 85 percent of this heat has so far been generated using fossil fuels such as oil, gas and coal[1] . This is set to change. In addition to familiar forms of renewable energy generation such as wind power, solar energy and biomass, geothermal energy is increasingly coming into focus.
Geothermal energy uses the heat that is stored below the earth's surface and ultimately comes from the earth's core - the deeper you go into the earth's interior, the warmer it gets. In Central Europe, the temperature increases by around 3 degrees per 100 meters[2] . The conversion of geothermal energy into electricity and useful heat is free of CO2 and flue gas emissions. Another benefit of geothermic energy is that is also considered to be gentle on the landscape because the majority of the required pipeline systems are laid underground, and the surface can be renaturalized or used for other purposes once the drilling has been completed. Experts estimate that 50 to 75 percent of the heating requirements in Germany could be covered by geothermal energy in the future. [3]
There are two different ways of using geothermal energy. The first is near-surface geothermal energy, where boreholes are drilled up to 400 meters deep[4] . It is used by heat pumps, primarily in detached and semi-detached houses. The other variant is deep geothermal energy. It is used to tap into heat reservoirs at depths of up to five kilometers. The systems operated with it are significantly more efficient: they supply heat for heating networks and supply entire city districts[5]. Near-surface geothermal energy and deep geothermal plants complement each other. So far, these plants have mainly been found in northern Germany, along the Rhine and Ruhr, in the Upper Rhine Graben and in the Munich area[6] .
A geothermal energy project is being built in Bavaria that is breaking new ground - and has the potential to change the way geothermal energy is used in the future. In Geretsried, not far from Lake Starnberg, the Eavor-Loop™ is a geothermal power plant that will supply the entire region with district heating in the medium term. The Eavor-Loop™ is a self-contained system that functions like a gigantic underground heat exchanger. Two vertical boreholes are connected to 24 parallel horizontal boreholes at a depth of 4,500 to 5,000 meters, forming a circuit of 12 loops. A fluid circulates in this circuit, which is heated in the ground. Due to its physical properties, the heated fluid rises to the earth's surface through one of the vertical pipes. The heat can be fed directly into the district heating network or with the help of a power plant converted into electricity. The liquid from which the heat has been extracted sinks back into the circulation system through the second pipe.
As the circuit is self-contained, the Eavor-Loop™ does not require thermal water - and can therefore be used at more locations where energy is required than conventional geothermal energy. The process also offers further advantages. In conventional geothermal energy, the heated water is brought to the earth's surface with the help of pumps and later fed back into the rock. With the Eavor-Loop™, the heated liquid flows upwards solely due to the temperature difference, which requires no further energy input and reduces operating costs. As no fluids are extracted from layers of earth and pumped back in the closed system, the risk of seismic movements is non-existent.
The technology has been successfully tested in Canada since 2019; the project in Geretsried is the first commercial deployment. The project is being financed by a consortium of various banks. ING plays a key role in this. Since 2019, it has been pursuing the goal of reducing the CO2 emissions of its own loan book to zero by 2050 with its Terra approach. In the "Renewables & Power" area, emissions are to be reduced by 53% by 2030 as an interim target. Accordingly, financing is being redirected from fossil fuels to sustainable energy sources.
In the case of Eavor Erdwärme Geretsried GmbH, ING is one of the Senior Lenders, leads the syndicate as Mandated Lead Arranger, manages the facilities including Japanese ECAs as Agent - JBIC/NEXI Agent and collateral provided by the borrower as Security Agent[S(2] . At the same time, as Sole Sustainability Coordinator, ING supported the client in structuring the loan as a green loan in line with the Green Loan Principles. Compared to the financing of wind or solar energy, geothermal energy plays a minor role in ING's loan book. [S(5] ING’s ambition on financing geothermal projects remains unchanged, whether via conventional or new technology. This would be a further step towards a renewable and CO2 -free energy supply.
Society is transitioning to a low-carbon economy. So are our clients, and so is ING. We finance a lot of sustainable activities, but we still finance more that’s not. See how we’re progressing on ing.com/climate.
[1] www.deutschlandfunk.de, Development potential of geothermal energy in Germany,02.02.2022, retrieved 14.05.2024
[2] www.geothermie.de, Entry into geothermal energy, accessed on 15.05.2024
[3] www.geothermie.de , FAQ near-surface geothermal energy, retrieved on 15.05.2024
[4] https://www.umweltbundesamt.de/themen/klima-energie/erneuerbare-energien/geothermie
[5] https://www.umweltbundesamt.de/themen/klima-energie/erneuerbare-energien/geothermie#oberflachennahe-geothermie
[6] https://www.deutschlandfunk.de/geothermie-in-deutschland-roadmap-zeigt-entwicklungspotenzial-100.html