Geothermal energy isn't something most small business owners think about. But as energy costs stay high and more businesses look for ways to cut their carbon footprint, it's worth understanding what it is and whether it could work for you.

This guide explains how geothermal energy works, what the real benefits are and what to consider before going down that route.

What is geothermal energy?

Geothermal energy is heat that comes from the ground. The earth holds a huge amount of thermal energy just below the surface, and geothermal systems tap into that to heat and cool buildings.

In the UK, the most common form for businesses is a ground source heat pump. A network of pipes is buried in the ground near your premises. A liquid circulates through those pipes, absorbs heat from the ground and carries it into a heat pump inside the building. The pump then increases the temperature and distributes it as heating or hot water.

In summer, the process can be reversed to provide cooling.

On a much larger scale, some parts of the world drill deep into the earth to reach superheated rock or water and generate electricity directly. The UK has limited capacity for this kind of deep geothermal, but research and investment in it is growing.

How is it different from solar or wind?

Solar and wind energy depend on the weather. Geothermal doesn't. The temperature a few metres underground stays relatively stable all year round, which means a ground source heat pump can work consistently regardless of what's happening above ground.

That consistency is one of the main reasons businesses find it attractive. You're not relying on sunny days or strong winds to keep your heating running.

The benefits for your business

Lower running costs

Ground source heat pumps are highly efficient. For every unit of electricity they use to run the pump, they typically produce three to four units of heat. That ratio, called the coefficient of performance, means your heating costs can be significantly lower than with a gas boiler or electric heating.

The savings vary depending on what you're replacing, how well insulated your building is and how much heat you need. But for businesses with high heating demands, the difference can be substantial.

Reduced carbon emissions

Geothermal systems produce far fewer carbon emissions than gas or oil heating. If you're working towards net zero targets or reporting on your environmental impact, switching to a ground source heat pump can make a meaningful difference to your numbers.

Price stability

Once your system is installed, your running costs are largely tied to electricity rather than gas. If you're also generating your own electricity through solar panels, you can reduce your exposure to energy price changes even further.

Long lifespan

Ground source heat pump systems are built to last. The pipework buried in the ground can last 50 years or more. The heat pump itself typically lasts 20 to 25 years with regular servicing. That's a longer lifespan than most boilers.

Potential income through government schemes

The government's Boiler Upgrade Scheme offers grants to help with the upfront cost of heat pump installation. Eligibility and grant amounts can change, so check the current position on GOV.UK before factoring this into your plans.

What to think about before installing

Space

Ground source heat pumps need land. The pipes can be laid horizontally in trenches, which requires a reasonable amount of outdoor space, or vertically in boreholes, which takes up less surface area but costs more to drill. If your premises are in a town centre with no outdoor space, this may not be a practical option.

Upfront cost

Installation is a significant investment. Costs vary widely depending on the size of the system, the ground conditions and whether boreholes are needed. Getting a few quotes from accredited installers gives you the clearest picture.

Building suitability

Geothermal heating works best in well-insulated buildings. If your premises lose heat quickly, the system has to work harder and the efficiency gains are smaller. It may be worth addressing insulation before or alongside any installation.

Planning permission

Depending on your premises and the scale of the installation, you may need planning permission. Check with your local authority before committing.

Is geothermal energy right for your business?

It's a good fit for businesses that:

• Own or have a long lease on their premises
• Have outdoor space for pipework or boreholes
• Have high or consistent heating demands
• Are looking to reduce energy costs over the long term
• Have sustainability targets to meet

It's less suitable for businesses in rented premises, those with limited outdoor space or businesses that don't use much heating.

If you're unsure, an accredited installer can carry out a feasibility assessment. This will tell you whether your site is suitable and give you a realistic picture of the costs and savings involved.

How to finance a geothermal installation

The upfront cost is the main barrier for most businesses. There are a few ways to approach it.

• Use available grants, such as the Boiler Upgrade Scheme, to reduce the initial outlay
• Spread the cost through a business loan or asset finance
• Explore green finance products, which some lenders offer specifically for energy efficiency improvements

It's worth running the numbers carefully before committing. A good installer will be able to give you an estimated payback period based on your current energy costs and projected savings.