Today’s Independent reports that the government is preparing the ground for meeting the renewables target for home heating. Geothermal energy is to play a part in this. Treacy Hogan gets the numbers right, but does draw the obvious inference. Would anyone invest in a project with a payback period of 12-36 years? In a country that is desparately short of capital?
A friend of mine used to sell heat pumps. He had a brilliant marketing ploy: “The payback period is 40 years.” Most of his customers thought you need to maximise the payback period, so he sold loads.
As with most renewables, for geothermal energy, the fuel comes for free, but the capital does not. Compared to fossil fuels, the price risk is gone, but the interest rate risk is higher.