Finnish geothermal heat player QHeat secures €3.3m loan for drilling rig
Finland’s Climate Fund has provided a €3.3 million loan to Finnish geothermal heat exchanger QHeat to acquire a more efficient drilling rig for targeting mid-depth geothermal resources.
The Finnish Climate Fund has granted a capital loan of 3.3 million euros to Quantitative Heat Oy (QHeat) which will be mainly allocated to the purchase of new and more efficient drilling equipment for drilling heat wells (geothermal) of medium depth. The funding can support the development of the geothermal heating sector as well as accelerate the implementation of alternative solutions for combustion in the real estate energy sector.
Geothermal heating is a developing industry with great potential for climate action in applications such as low-emission heating solutions, balancing seasonal variations in energy production and the development of district heating networks. local.
It offers more alternatives to combustion and is thus part of the solution to moving away from the use of fossil fuels for heating. Heat sinks generate heat efficiently and without combustion. Mid-depth heat sinks can also be used to cool real estate and they can store energy to smooth out seasonal variations.
QHeat is to date the only Finnish operator to have successfully drilled medium-depth heat sinks. Their solution is particularly suitable for large, densely built properties, such as residential areas dominated by apartment buildings, shopping malls, hospitals, airports and industrial facilities. The company also aims to create local heat networks, where buildings and operators joining the network could exchange energy through medium-depth heat sinks.
”Decentralized solutions are needed to combat climate change, and our solution applies this concept to the production of heating energy. With the new equipment, we will be able to cut drilling times in half, making investments in renewable energy profitable for our customers as well.Says QHeat CEO Erika Salmenvaara.
”The industry still carries obvious risks, for example with regard to the profitability of the drilling process, which makes it difficult to obtain financing on market terms. QHeat’s solution is based on Finnish expertise and cooperation. Our investment can support the creation of a geothermal cluster in Finland, also supporting its export potential“says the CEO of the Climate Fund Paula Laineclarifying the context of the investment decision.
Mid-depth heat sinks harness geothermal energy originating from the earth’s core and bound deep within bedrock. In addition to heating, they can be used for cooling real estate and as flexible seasonal underground storage for energy. The stored heat can consist of waste heat from waste incineration, cooling condensate or process heat.
QHeat drills its wells with air hammer technology, which is well suited to Finland’s harsh soil. There is no depth limit for pneumatic hammer drilling and compressed air pushes loose soil to the surface through the boreholes. A single well, approximately 1.5 kilometers deep, generates heating or cooling for approximately 10,000 to 15,000 square meters of floor space and is an excellent choice for densely built-up areas with large heating requirements. In December 2021, the company announced a collaboration with Geomachine Oy to develop the world’s first well drilling rig designed for drilling geothermal heating wells.
The company also aims to enable the creation of local heating networks in which buildings and operators joining the network heat and cool themselves from medium-deep heat sinks and exchange energy via pipes. These networks would also allow the storage of excess waste heat. Drilling for the first project and construction of the network in the Finnoo district of Espoo began in December 2021.
The benefits of geothermal heat sinks include predictable capital costs due to the long life of the solution as well as energy efficiency during use. A single moderately deep heat sink has a capacity equivalent to about 30 to 40 regular 300 meter heat sinks.
A medium-depth heat sink will provide an estimated annual emission reduction of 41 t CO2e. If the company’s business plans are successful, they will generate a calculated cumulative emissions reduction potential of 115 kt CO2e over ten years. The reduction in emissions will be attributed to the Finnish effort sharing sector and has been calculated assuming that 85% of the solution will replace municipal heating and 15% process heat generation. The calculations concerning urban heating take into account the achievement of carbon neutrality objectives by 2030, the average emission factors of urban heating being retained as the reference mode of production.
The company’s total funding requirement is €7.7 million, and QHeat has raised approximately €2 million in private equity funding and €1 million in shareholder loans.
The capital loan of €3.3 million from the Climate Fund will be used to purchase new drilling technology to increase the company’s current drilling capacity. Interest on the capital loan from the Climate Fund is calculated at the market rate indicated in the table of EU reference interest rates. In other words, the Climate Fund is entitled to the market rate on its capital loan. The capital loan also includes a conversion right.
Source: Ilmasto Rahasto/ Climate Fund