What is geothermal energy? The benefits it can have on your business

Geothermal is a type of natural, renewable energy that can be used for heating and generating electricity. It uses heat from beneath the earth’s surface to provide low‑carbon heating, cooling and electricity. In the UK, it’s mainly accessed via ground‑source heat pumps and heat networks rather than big power plants.

Sounds complicated. And could it really be a cost-effective option for your small business? Read on to find out.

Five-point summary of geothermal heating for UK businesses 

1. Geothermal energy is heat from beneath the Earth’s surface that can be used to provide low-carbon heating, cooling, and electricity. In the UK, it is mainly accessed via heat pumps and heat networks rather than large power plants.
2. It is renewable, available 24/7 and has low greenhouse gas emissions, but up‑front costs, location constraints and complex project development mean it still plays a small role in the UK energy mix.
3. Most UK businesses will use “geothermal” via ground‑source or water‑source heat pumps, which can offer high efficiency and stable running costs if the building and site are suitable.
4. Geothermal and heat pump projects usually need careful design, space for ground loops or boreholes, and sometimes planning permission and fabric upgrades to perform well.
5. Funding programmes such as the Green Heat Network Fund and other heat pump grants can help eligible organisations, and Bionic can support businesses in comparing greener energy options.

What is geothermal energy?

Geothermal energy refers to the heat that’s beneath Earth’s surface. Deep down, near Earth’s core, there is an abundance of heat and steam from hot rocks that can be harnessed and turned into power above the surface.

Geothermal is a great, low-carbon, renewable energy source. Every day the planet continues to absorb heat from the sun, so it’s unlikely to completely run out like traditional non-renewable sources of energy like oil, coal and gas. 

In practice, most UK businesses will get “geothermal” through ground‑source and water‑source heat pumps or by connecting to low‑carbon heat networks, rather than by building their own deep geothermal power plants.

And because it’s low-maintenance, you would think it would play a larger part in our energy mix. But the latest research shows that it only makes up 0.3% of the UK’s annual heat demand. 

Why? Historically, government funding for geothermal has been limited, but this is slowly changing. 

Grants such as the Boiler Upgrade Scheme and capital support through the Green Heat Network Fund can help eligible organisations with the upfront costs of low‑carbon heating. For instance, the government's Boiler Upgrade Scheme offers the following:

• £7,500 towards an air source heat pump
• £7,500 towards a ground source heat pump (including water source heat pumps and those on shared ground loops)
• £5,000 towards a biomass boiler

Domestic energy users will be eligible for thousands of pounds' worth of solar panels and other green tech to lower their energy bills via the Warm Homes Plan.

How is geothermal energy produced?

There are three main types of geothermal power plants:

Dry steam

These plants have been used for decades. They use hydrothermal liquids that are so hot they are almost steam. The stream drives the generator, which produces electricity. When the steam condenses, it’s put back into the reservoir as cool water - ready to be heated up again. 

Flash steam

These types of geothermal plants are now the most common. They work by pumping hot fluids at high pressures, which causes the fluid to quickly turn (or flash) into vapour. The hot steam is used to push a turbine and make electricity.

Binary cycle

This is the only power plant that is designed for creating geothermal power at lower temperatures. This means these plants are better designed to be placed all over the world, not only in places where sub-earth temperatures are extremely hot. 

Low-temperature fluids pass through a heater exchange with another fluid (or binary fluid). The fluid that’s added has a lower boiling point than water and causes the fluid to turn into steam. Like the other plants, this then drives a turbine which powers up a generator to make electricity.

In the UK, the focus is more on using shallow geothermal heat for ground‑source heat pumps and low‑temperature heat networks rather than building large electricity‑only geothermal power stations.

How is geothermal energy used?

Geothermal energy is harnessed and used heavily in countries situated near tectonic plates, where the earth’s surface (plates) often move. These areas have the highest sub-ground temperatures and include countries like New Zealand, Iceland and Italy. 

But that doesn't mean in the UK we don’t use geothermal. New technologies that allow for low boiling points - like binary cycle plants mean we can make use of the power below the earth’s surface in other areas of the world.

And because geothermal energy never switches off, we commonly use it in the UK through ground-source heat pumps. These are used to power up heating and cooling systems in homes and commercial buildings across the UK. 

A heat pump is a renewable energy system that works by transferring heat from one place to another, rather than burning oil or gas. Using systems like these is becoming more popular because they are getting more affordable. Businesses adopting this type of technology are paving the way for us to hit our net-zero target.

Learn how to power your business with heat pumps. 

Air‑source heat pumps currently dominate UK installations, but ground‑source systems are growing in certain commercial and high‑performance projects where space and ground conditions allow.

Geothermal heat is also increasingly being explored for supplying heat networks that serve multiple buildings or whole districts, providing stable, low-carbon heat over many decades.

Is geothermal energy renewable?

Yes, geothermal energy relies on the heat below the earth’s surface and this is available 24 hours a day, seven days a week, so it’s unlikely to ever run out - making it a great renewable energy source for powering businesses across the country.

Individual geothermal reservoirs must be managed carefully so that heat extraction and re‑injection stay in balance, which helps maintain long‑term performance.

What are the advantages of geothermal energy?

As with all forms of renewable energy sources, there are a number of advantages, including:

Renewable and sustainable power

Geothermal is not dependent on weather conditions like the amount of sun we get or wind like other renewables, making it sustainable for use all year round. It also doesn’t take up a lot of space and has the smallest land footprint of any energy source in the world. 

Low greenhouse gas emissions

Geothermal is a low-carbon and low-polluting option compared to traditional fossil-fueled power plants, which we still rely on. It also uses less water on average than most power generation technologies because it utilises the natural heat from the earth’s core. So it isn’t a big contributor to rising temperatures and greenhouse gases.

Long life cycle

Because of the way geothermal works, some of the steam used to power the turbines is returned back underground to be reused and heated up again in another cycle. This repeated, seamless process gives geothermal a long life cycle.

Low operating costs

Although power plants are expensive to build, they tend to have relatively low running costs once installed, because the “fuel” (underground heat) is free and maintenance is mainly focused on pumps, controls and distribution equipment.

Energy independence

Most of the energy consumed in the UK is used for heating purposes. A 2015 study by Durham University suggests that if we use geothermal properly, we could have up to 100 years of supply. This could cover a large amount of the country’s heating needs and further relieve our dependence on fossil fuels.

For businesses, using heat pumps or connecting to a geothermal heat network can also reduce exposure to volatile gas prices and help support long‑term net-zero targets.

What are the disadvantages of geothermal?

Although loaded with plus points, there are some downsides to geothermal energy, including:

High initial costs

The costs involved in building large geothermal plants and heat schemes are high, and can run up to several million pounds. Although running costs are low, it would still take up to 20 years for deep geothermal installations to pay back the initial investment.

For individual commercial buildings, ground‑source heat pump systems can typically cost from the low tens of thousands of pounds upwards, depending on size, drilling and groundwork required.

Location restraints

Not every location in the UK is suitable for geothermal energy production. And if your business is located away from the power source, it’s then difficult to use it. This creates lots of logistical issues for geothermal expansion in the UK. 

Ground conditions, available land, local planning rules and the presence of existing heat networks all affect whether geothermal is viable for your particular site.

Resource depletion and cooling

When cool water is injected back into the reservoirs during geothermal production, it’s depleting the natural heat resource we have. If we continue to do this at scale, we may end up cooling our reservoirs so much that they become unusable. 

Land use and visual impact

Power plants are an eyesore. This leaves speculation as to where they should be built. However, geothermal plants don’t use too much land, compared to traditional power plants, making them a better option.

Environmental issues

During the process of extracting heat and steam from the hot rocks below the earth, small amounts of other (harmful) gases are released into the atmosphere. But these emissions aren’t as harmful as the amount of CO2 we're currently emitting and can be offset by the amount of geothermal that could be produced. This is much better than using fossil fuels.

Smaller-scale ground‑source heat pump systems have much smaller above‑ground impact than large plants, but still need careful design to avoid issues such as noise from plant rooms or drilling works.

Is geothermal energy safe?

Geothermal is a relatively safe form of energy production for both our planet and the people on it. The main concerns are around escaping gases during production and potential deterioration of the heat used in the extraction process.

Occasional concerns include minor induced seismicity or ground movement in deep projects, but these risks are managed through site investigations, monitoring and regulatory controls.

How can businesses use geothermal energy?

Since geothermal energy is such a small part of our energy supply in the UK, the main option for businesses to make use of it is by installing geothermal heat pumps themselves.

Investing in a commercial heat pump could help you save on your business energy bills, cut your carbon footprint and make your business more attractive to environmentally conscious customers. 

For example, you could install a heat pump to help heat your business premises in the winter. If you own an office, restaurant, café or any customer-facing business, then you likely need heating in the colder months. 

Likewise, a heat pump-powered cooling system could work for hot kitchens in takeaways, hair salons or any business in the summer. It’s an investment that would pay off, all year round.

A typical commercial ground‑source heat pump can easily run from around £20,000 upwards, with many larger or more complex systems falling in the £25,000 to £40,000+ bracket once drilling and groundwork are included. But high efficiency and stable running costs help improve payback over the system’s lifetime.

Air‑source heat pumps remain cheaper and simpler to fit, with many UK commercial installations starting in the low‑five‑figure range and often costing significantly less than ground‑source. Businesses should compare both options against their building, budget and any planning constraints.

Are there any disadvantages to businesses adopting geothermal energy?

We've been through the overall pros and cons of geothermal energy and looked at how it could benefit your business in this guide. Here's a breakdown of some of the main blockers business owners experience when considering this type of energy:

It’s expensive to install

Depending on the type of system installed and the size and scale of your business, heat pumps can cost anything from £4,000 to £35,000, which can be a lot for business owners to stump up front.

There is no one-size-fits-all

Because of the complexity of heat pumps, there is no standard fitting for commercial buildings. Every business has different heating and cooling needs, so the system will be unique to that property. This means it'll need a bespoke solution using either an air heat pump or a ground source heat pump. 

You might need planning permission

If you install a heat pump unit that exceeds 0.6 cubic metres, you might need permission to build the infrastructure. And getting planning permission can be a time-consuming process. But if you do get permission, the rewards will likely pay off in the long run once you pay off your initial investment.

You might struggle to relocate

Once you install a bespoke heat pump, the infrastructure is built into the ground. So if you move premises, you will likely have to leave it behind. This means it’s only really suitable if you know your business is unlikely to move.

You may also need to upgrade insulation and emitters— for example, improving building fabric or installing larger radiators or underfloor heating to get the best efficiency from low‑temperature systems.

Is there any support for businesses using geothermal energy?

In 2026, support for business‑scale geothermal and heat pump projects mainly comes through heat network funding and broader low‑carbon heating schemes, rather than a single “geothermal grant”.

Green Heat Network Fund (GHNF) – England

• The Green Heat Network Fund continues to offer capital grants for new and existing low‑carbon heat networks in England, including schemes that use ground‑source or deep geothermal heat.
• It is open to public, private and third‑sector organisations that are legal entities responsible for developing heat or cooling networks, such as local authorities, companies, NHS bodies and registered charities. Individuals, households and sole traders are not eligible.
• GHNF funding can be drawn down until the 2027–2028 financial year, with application rounds run via Triple Point Heat Networks Investment Management; the next round is expected in 2026.
• Projects need to meet minimum carbon and commercial criteria, provide match funding and show that the scheme would not go ahead without government support.

Individuals, households and sole traders cannot apply for this grant. If you are unsure if your business meets the criteria, you can contact enquiries@tp-heatnetworks.org and they will be able to advise.

If you are not eligible for this funding, you might be able to get some relief on green taxes - like the Climate Change Levy. Read more in our guide to understanding green taxes.

Boiler Upgrade Scheme and small non‑domestic buildings

• The Boiler Upgrade Scheme (BUS) runs until April 2028 and provides grants of up to £7,500 towards eligible air‑source and ground‑source heat pumps in homes and small non‑domestic buildings in England and Wales.
• This can help smaller business premises, such as shops or offices that meet the “small non‑domestic” criteria, but it is not designed for large commercial or campus‑scale geothermal systems.

Other support and green tax reliefs

• Businesses may be able to benefit from local or sector‑specific grants, loans or business rates support where heat pumps or heat networks form part of a wider decarbonisation project, so it is worth checking your local authority or devolved‑nation schemes.
• Some firms can also access reliefs on environmental levies, such as reduced Climate Change Levy rates, if they meet eligibility requirements through schemes like Climate Change Agreements.

If your project does not qualify for these schemes, it is still worth speaking to installers and finance providers about phased upgrades or asset‑finance options to help spread the cost of geothermal and heat pump systems.

How Bionic can help

If you need some advice on upgrading to green energy, our energy experts will be able to help you compare business energy suppliers to find a solution. We are also on hand to discuss wider business needs including options for business broadband and VoIP systems.

Want to discover more content? Head over to our energy guides page for a range of topics covering renewables to understanding your business energy bills, straight from the Bionic team.

FAQs on geothermal energy and your small business

Here’s an at-a-glance guide to some of the most frequently asked questions about geothermal energy and UK small businesses:

What is geothermal energy for UK businesses?

Geothermal energy for UK businesses means using heat stored underground, usually via ground‑source heat pumps or heat networks, to provide low‑carbon heating and cooling.

Can my small business in the UK install a geothermal heat pump?

A UK small business can install a ground‑source heat pump if it has suitable ground space, heat demand, budget and planning approval for the required boreholes or trenches.

How much does a commercial ground‑source heat pump cost in the UK?

Commercial ground‑source heat pump systems in the UK can easily run into tens of thousands of pounds, with typical installations often in the £20,000–£40,000+ range depending on size and groundwork.

Is geothermal energy cheaper to run than gas heating for UK businesses?

Geothermal systems powered by efficient heat pumps can offer lower and more stable running costs than gas for many UK businesses, but this depends on system design, tariffs and building efficiency.

Do UK businesses need planning permission for geothermal heat pumps?

Some UK heat pump projects, particularly those with large external units or boreholes, may need planning permission, so it is important to check with your local authority before installing.

Are there UK grants for geothermal or heat pump projects in 2026?

There is capital support for qualifying low‑carbon heat networks through the Green Heat Network Fund and separate grant schemes that can help with some heat pump installations.

Is geothermal energy really renewable in the UK?

Yes, geothermal heat is effectively renewable in the UK when reservoirs and ground loops are managed properly so that extraction and re‑injection stay in balance.

How can Bionic help my UK business with geothermal and heat pumps?

Bionic can explain how heat pumps and geothermal fit into your business energy strategy, and help you compare greener tariffs and options as part of your net zero plans.