The European Investment Bank (EIB) is offering a loan of approximately $48.5 million for an innovative geothermal heating project called Eavor-Loop in Bavaria, Germany.
Canada-based Eavor will implement its closed-loop geothermal technology at a commercial scale in the Bavarian town of Geretsried. Unlike conventional geothermal heating, the Eavor-Loop technology does not capture heat from subsurface water or steam reservoirs but drills and harvests the heat directly from underground rocks.
The Eavor-Loop system resembles an underground radiator. Two vertical wells are drilled to a depth of 4,500 to 5,000 meters, and 12 pairs of horizontal laterals - 3,000 to 3,500 meters long - are drilled from the bases of each of the two wells for a total of about 90 km of drilling (about 320 to 360 km for four loops) and the radiator is filled with fluid.
The system operates naturally on a thermosiphon. The water at the bottom of the system is heated by the underground rock and is brought to the surface to be used directly for district heating or to generate power.
The system emits fewer greenhouse gases than conventional geothermal systems as there is neither a reinjection of new fluids nor any extensive use of pumps. A specific kind of subterranean rock is required to operate the system using thermal conductivity.
“In addition to wind and solar energy, geothermal heat provides a natural, steady, and reliable source of clean, renewable energy. The Eavor-Loop, therefore, supports the transition to a carbon-neutral energy system in Germany and helps the country to get independent from fossil fuels while adding to energy security for the people and businesses," said Nicola Beer, EIB Vice-President.
Initially, Eavor built a pilot - the Eavor-Lite - in Alberta, Canada, which had been operational for the past five years before the project in Germany began.
Eavor's total investment is expected to reach $376.8 million. The Eavor-Loop will provide heating to households and businesses, and a power station on site will convert the geothermal heat to electricity.
"This project will provide low-carbon heating to thousands of households and businesses. It is an example of the role the geothermal industry will play on the road to net zero. Switching from fossil fuels to geothermal energy can help decarbonize the EU population's energy needs and reduce our energy bills," said Wopke Hoekstra, Commissioner for Climate Action.
Eavor has signed an offtake contract with the local heat provider and intends to start heat delivery in 2026, increasing the supply in steps. Eavor-Loop has also started developing a second project in Germany to supply 15-20% of the demand for district heating in Hanover in the German state of Lower Saxony.
The commercial-scale Eavor-Loop will be built with the additional support of a $98.6 million grant from the EU Innovation Fund. The EIB loan is guaranteed by the European InvestEU program.
The project is co-financed by Japan Bank for International Cooperation (JBIC), ING Bank N.V. (ING), and Mizuho Bank, Ltd. (Mizuho) and is insured by Japan's Export Credit Agency, Nippon Export and Investment Insurance (NEXI). It qualifies as a green loan in accordance with the Loan Market Association's Green Loan Principles.
The combined support from the EIB, JBIC, ING, and Mizuho totals $140 million. Green Giraffe Advisory acted as the borrower's sole financial advisor to structure the debt financing package.
