Geothermal an income opportunity for the community of Pullach near Munich, Germanyt

Drilling rig on site in Pullach, Germany (source: Erdwerk)

Alexander Richter 8 Mar 2020

As reported locally, the municipality of Pullach near Munich, Germany sees geothermal as a great opportunity for income. If geologists are right and boiling water can be pumped to an almost inexhaustible extent under the survace of the municipality of Baierbrunn, Germany’s largest geothermal plant will be built there by 2026.

The price is also steep with investments expected of up to EUR 150 million. The investment would be carried equally by the two cooperation partners Stadtwerke München (SWM), the city utility of Munich and the geothermal company IEP of Pullach. On the other side of the Isar, Grünwald’s geothermal energy is planning a similar effort. It too has a big claim and it too is working together with the people of Munich, who want to cover the entire heating needs of the big city by 2040.

The municipality of Grünwald still makes a big secret of its project and, according to their managing director Andreas Lederle, are still in discussions with the Munich municipal utility about the further development of the project. On the other hand, Helmut Mangold, Managing director of Pullach’s energy utility IEP publicly shared details on the project and for the first time presented economic data in town council meeting. This though was done not entirely voluntarily: He was asked to do so by Mayor Susanna Tausendfreund (Greens) and the local council. “It is due to the election campaign that I stand here,” said Mangold freely. It would have been much better if he had been able to present the joint venture with the SWM, which was closed in October in a non-public meeting, at a later date.

Mangold’s presentation on the interim status of the IEP joint venture with SWM, praising geothermal energy, apparently served the purpose of relaxing the heated climate on the subject in the local council and correcting rumours and incorrect numbers circulating. The city’s Treasurer Director André Schneider was there for the same reason; he presented the financing of the project for the first time in public. The bottom line of both lectures: The Pullacher geothermal project presents low financial risks and great opportunities for the community.

Mangold countered fears expressed in the municipal council and in a local newspaper, in particular, that the municipality is investing horrendously a lot of money primarily to cover the heating needs of Munich, but not to securing the energy supply of Pullach’s population. Not only would their heat requirements increase, particularly through structural densification, the two largest industries in the area would also benefit. Refrigeration manufacturer Linde, for example, has so far been able to supply only half of its heating requirements due to the fact that conduit pipes are too small, and peroxide manufacturer United Initiators, by far the largest energy consumer in the city, would even take five to ten times as much from Linde for its heating and cooling needs, Chard explained. The fact that SWM buys the heat generated in Baierbrunn is also a guarantee of security. “Who has an investment project where sales are guaranteed from the start?” Says Mangold. This income also enables the IEP to repay the community’s loans and deposits more quickly.

Mr. Schneider, who puts the maximum risk for the community at the EUR 17.5 million that the municipality would transfer to the IEP over the next three years, pointed into the same direction. The bulk of the investment, 80 percent of the total cost of the project, will be obtained by the IEP on the free capital market. The municipal investment is attractive for Schneider as it reduces the assets of the community, for which it would have to pay penalty interest to the banks. “Now the IEP is even paying us interest on it,” said the treasurer, who also contested claims that investments in geothermal energy would jeopardize the planned school building in Pullach. “IEP and schools? Both are possible,” he said.

Source: Sueddeutsche Zeitung