Utrecht, The Netherlands Dutch banking group Rabobank has highlighted the growing use of geothermal energy to heat commercial greenhouses in the Netherlands. In a new analysis, the bank sees increasing geothermal energy use as a major and relatively cheap way to improve the financials and the stability of the Dutch greenhouse industry.
"Geothermal energy is a particularly suitable primary energy source because of the greenhouse industry’s concentrated and high heat demand. We anticipate that more and more greenhouse growers in the Netherlands will be investigating the case for using geothermal energy." -- Clara Van Der Elst, Rabobank analyst
Rabobank analyst Clara Van Der Elst explains: “The sector is currently facing declining profit margins, two of the main reasons being its high energy demand and rising natural gas prices. As a highly energy intensive industry, the sector accounts for 10% of the country’s total natural gas consumption. Geothermal energy provides an opportunity to combat rising costs and can lower energy costs by up to 50 percent.”
According to the bank, geothermal energy could replace an estimated 2 percent (22 PJ) of national natural gas consumption at an estimated cost of €1.6 billion, the report finds.
For the greenhouse grower, the switch to geothermal energy implies both fixing and hedging heating costs. Dutch policy measures provide a top-up on the gas price to a fixed total technology cost level. The hedge is on gas prices going up, and in many cases on gas prices going down to some extent. The Dutch greenhouse sector currently benefits from both energy tax reductions as well as an alternative carbon dioxide emissions scheme. If either changes, the advantages of geothermal energy would increase substantially, the analysis adds.
Other advantages for geothermal over natural gas are its low variable costs combined with a technical life that is 20 to 25 years longer than combined heat and power (CHP) installations. As a result, the bank believes it is easier to forecast the financial characteristics of geothermal, and it is more sustainable than natural gas thanks to its much lower emissions. Comparing geothermal energy to other mainstream renewable energy sources, the bank finds it is relatively low cost, has no intermittency and is fairly concentrated.
Considering the economics of geothermal, Rabobank concludes that for heat-intensive crops such as tomatoes and cucumbers, geothermal energy can be considered on a stand-alone basis from an area of above 6 ha (15 acres). For most other greenhouse species a cluster of several greenhouses combined could be suitable.
Van der Elst says: “Geothermal energy is a particularly suitable primary energy source because of the greenhouse industry’s concentrated and high heat demand. We anticipate that more and more greenhouse growers in the Netherlands will be investigating the case for using geothermal energy. We expect the development of the current pipeline of granted applications to continue at a rate of three to five projects annually. To realise the full potential by 2020, we estimate that the project development rate would have to grow to ten projects annually”.
“The ongoing development of geothermal energy reflects a win-win for the Dutch greenhouse industry,” Van Der Elst concludes.
Image: Commercial greenhousing, via Shutterstock