Geothermal information for landholders
Who is this information for?
If you own or occupy land that is subject to commercial geothermal exploration or extraction, this information is for you.
Geothermal energy – heat energy contained within the earth – belongs to all Victorians and is therefore owned by the Crown.
This means that the Victorian Government is responsible for facilitating the development of geothermal energy resources, which it does through the Geothermal Energy Resources Act 2005 (Vic) (GER Act).
The GER Act, which is administered by the department authorises the government to grant exploration permits, via a public tender process, and to allocate extraction licences where viable.
With these authorities to industry come obligations to landholders. They include:
- consultation with landholders
- public safety and environmental planning
- minimal interference with regular landholder activities, and
- maintenance of structures, equipment and property.
This information answers the what, where and why questions related to geothermal energy development and provides important information about your rights as a landholder.
This information should not be used as a substitute for the GER Act, or for professional legal advice.
Almost everything we need in life starts with primary industries. Our food, clothes, energy, and even building materials begin with natural resources. The department is committed to the balanced development of natural resources for use by all Victorians. Diversifying our energy sources is a good example of this.
Geothermal energy – heat energy contained within the earth – belongs to all Victorians and is therefore owned by the Crown. This means that the Victorian Government is responsible for facilitating the development of geothermal energy resources, which it does through the Geothermal Energy Resources Act 2005 (Vic) (GER Act).
The GER Act, which is administered by the department, authorises the government to grant exploration permits, via a public tender process, and to allocate extraction licences where viable.
With these authorities to industry come obligations to landholders. They include: consultation with landholders; health, public safety and environment planning; minimal interference with regular landholder activities; and maintenance of structures, equipment and property.
This information answers the what, where and why questions related to geothermal energy development and provides important information about your rights as a landholder.
This information should not be used as a substitute for the GER Act, or for professional legal advice.
Almost everything we need in life starts with primary industries. Our food, clothes, energy, and even building materials begin with natural resources. The department is committed to improving the development of natural resources for use by all Victorians. Diversifying our energy sources is a good example of this.
Legislation and landholders
The Victorian Geothermal Energy Resources Act 2005 (GER Act) creates a framework to facilitate and regulate the exploration and extraction of geothermal energy resources in Victoria.
It applies to significant, commercial activity only; where the energy resource is located more than one kilometre below ground and at temperatures greater than 70 degrees celsius.
The legislation aims to:
- Release acreage for geothermal exploration, via a public tender process.
- Facilitate sustainable exploration, extraction and use of GER.
- Facilitate and regulate investment in the GER industry.
- Ensure transparent, fair and efficient land access processes.
- Clarify landholder rights.
- Manage environmental and land-use concerns.
- Provide effective controls to manage public safety and environmental performance.
To do this, the legislation establishes the following authorities:
- Exploration permits – exclusive rights to explore in an area, subject to conditions.
- Ownership of land does not provide any inherent right to explore for, or extract, geothermal energy resources.
- Retention leases – where resources have been discovered, but are not yet commercially viable.
- Extraction licences – exclusive rights to utilise (produce) geothermal energy from an area, subject to conditions. Available to exploration permit and retention lease holders only.
The role of the department
The department administers the GER Act by:
- The GER Act requires consultation with landholders before any exploration or extraction activity can commence.
- Providing technical information and advice to companies and individuals on geothermal exploration in Victoria.
- Releasing acreage for exploration, via a public tender process.
- Allocating exploration permits, retention leases and extraction licences, subject to conditions, to eligible commercial enterprises.
- Regulating the operational aspects of geothermal exploration (enforcing adequate management of public safety, environmental impact, and land rehabilitation).
- Regulating the upstream operations of the extraction of geothermal energy.
- Sharing knowledge and collaborating with national and international partners.
- Supporting commercialisation of national geothermal resources through involvement with the Australian Geothermal Energy Group (AGEG).
Legislating for landholders
The GER Act requires consultation with landholders before any exploration or extraction activity can commence.
Following landholder consent, holders of exploration permits and extraction licences are obliged to:
- Minimise interference with regular landholder activities on the land.
- Follow public safety and environment planning and regulation.
- Maintain in good condition and repair all structures, equipment and property used in connection with geothermal energy operations.
Further details on the outcomes for landholders are provided in the Landholder questions and answers section of this information.
The GER Act applies only to the exploration and extraction of the resource. The use of geothermal energy (i.e. electricity production) is regulated through existing planning and environment law.
Small-scale, commercial geothermal energy projects, such as fish farms and the heating of municipal swimming pools, are unlikely to be affected by the GER Act.
These projects will continue to be developed and managed under existing statutory requirements – including the Water Act 1989 (Vic) and the Environment Protection Act 1970 (Vic) – and reforms resulting from the government's white paper: Securing Our Water Future Together.
The basics of geothermal energy
What is geothermal energy?
Definition: geo (Greek word meaning earth), therme (Greek word meaning heat); of, relating to, or utilising the heat of the earth's interior.
Geothermal energy is the energy contained as heat within the earth's interior. This heat comes from the natural decay of radiogenic minerals.
Temperatures are hottest at the earth's core, with the heat moving outward towards the surface. This can sometimes emerge naturally in the form of volcanoes, hot springs and geysers.
Where the heat is more concentrated – usually in rocks and hot water reservoirs underground – it can be used for a number of different purposes.
1 km3 hot granite (250°C) = 40 million barrels oil
The geothermal energy advantage
Geothermal energy is a renewable power source with enormous potential to:
- Generate environmentally clean and sustainable power that produces virtually no greenhouse gas.
- Help Victoria reach its Renewable Energy Target (VRET): 10 per cent of the state's energy to come from renewable sources by 2016.
- Produce base-load electricity 24 hours a day, 365 days a year.
- Broaden Victoria's energy resources mix and provide supply and pricing security.
- Reduce dependence on the depleting supply of fossil fuel energy.
Australian scientists claim just by harnessing one percent of the country's untapped geothermal energy from underground could produce 26,000 years worth of clean electricity.
How is geothermal energy used?
Geothermal energy has been used for thousands of years for a multitude of purposes, beginning with simple tasks like bathing and cooking. Advancements in technology have enabled us to diversify these uses, which since 1904 have included the production of electricity.
There is a small Hot Sedimentary Aquifer geothermal power station operating in Birdsville, western Queensland.
Today, geothermal power is generated in more than 20 countries around the world including the United States, Italy, France, Germany, New Zealand, Japan, Russia, Iceland, the Philippines and Indonesia.
Different temperatures determine different uses for geothermal energy, as indicated in Figure 1.
Typical uses of geothermal energy include:
- aquaculture (fish farms)
- agriculture (greenhouses)
- bathing (hot spas and springs)
- domestic heating and cooling
- electricity generation
- heating of municipal swimming pools
- industry (e.g. pasteurisation)
The GER Act is concerned only with the energy located more than one kilometre below ground and at temperatures greater than 70 degrees celsius. This is where geothermal energy is hot enough to be harnessed for the production of electricity.
Where is Victoria's geothermal energy?
Australia's geological environment and temperature is considered ideal for significant, commercial development of geothermal energy.
Research and data collected from boreholes throughout Australia indicate a number of areas boasting geothermal potential across Victoria. These, combined with the compact geography of the state, the close proximity between the resource and the electricity grid, and low energy costs, make Victoria ideal for geothermal energy exploration.
Already, naturally-occurring warm groundwater is used in several parts of Victoria including spas on the Mornington Peninsula and in Warrnambool, an abattoir also in Warrnambool, Mt Buller Chalet and fish farms just across the border in Robe, South Australia.
In the interest of diversifying the state's power supply, the GER Act has allowed for the state-wide release of acreage for geothermal exploration.
Figure 2 above shows the Geothermal Exploration Permits (GEPs) covering the state of Victoria. In May 2007 12 GEPs were awarded with an additional 11 GEPs awarded in November 2008.
How does a company explore for geothermal energy?
Initial exploration for geothermal energy is confined to the earth's sub-surface, where geological assessments determine the location of potential sites. Further testing determines the economic viability of extracting the resource.
Exploration is concentrated in small areas and is relatively unobtrusive with limited environmental impact. It can be broadly divided into these categories:
Review of existing well temperature and thermal conductivity data held by government from previous petroleum and mineral exploration. This is used to model temperature at depth and locate areas of geothermal potential.
Gravity and magnetic surveys
Gravity surveying is typically done on the ground with a hand-held device that measures the earth's gravity field in that area. Magneto-tellurics is a non-invasive, electromagnetic, geophysics technique used to delineate the distribution of hot water in subsurface geothermal heat reservoirs. This is achieved by measuring naturally occurring electric (telluric) currents that are induced in the earth by natural variations in the earth's magnetic field.
Seismic (or sound) waves are sent underground and reflected by rock layers back to the earth's surface. Data is recorded by receivers (geophones) placed along roads or across fields, therefore no land clearing is required. The most common method of seismic surveying is vibroseis, which generates sound waves using ground pressure disbursed from large, truck-mounted plates.
Drilling may be conducted to measure temperatures and thermal conductivity to allow some modelling of termperatures at depth. A geothermal well is created using a drilling rig, which may be required on site for several weeks. On completion, the surface section of the well is temporarily capped or permanently plugged with cement, leaving no visible trace of its existence.
Before any of these activities can commence, the company must obtain a geothermal exploration permit from the department and discuss the implications of its GER operations with the landholder. Read about Consents, controls & compensation in the Landholder questions and answers section of this information.
How is geothermal energy extracted?
Using geothermal energy is all about how it is harnessed. The basic elements to start with are:
- a heat source
- permeable rock
- fluid (to transport the heat to the surface).
There are three main types of geothermal energy systems which represent a combination of these elements:
1. Hydrothermal systems
Hydrothermal systems consist of water (hydro) and heat (thermal), which can be extracted directly from the ground and used to turn electricity generator turbines. Also known as conventional geothermal energy, this natural occurrence of hot water or steam is limited to active volcanic zones (e.g. New Zealand, Italy, Philippines).
2. Hot Sedimentary Aquifers (HSAs)
When rainwater is absorbed into the ground it is heated at temperatures that increase with depth or by contact with hot rocks. In both instances the water can collect in layers of porous rock. This is called an aquifer, or reservoir, from which hot fluid may be extracted, usually by drilling. The temperature and pressure of the extracted fluid will determine its final use.
3. Hot rock systems
Also known as enhanced (or engineered) geothermal energy systems (EGS), hot wet rock (HWR), hot fractured rock (HFR) and hot dry rock (HDR).
Hot rocks, containing the concentrated heat of radiogenic mineral decay, are found in the form of granites at depths of more than 4 kilometres. These granites are usually blanketed by sedimentary rock, which in some places insulates the heat to temperatures exceeding 200 degrees celsius.
Unlike the hydrothermal system, in which fluid flows easily through naturally porous rock, the hot rock system often relies on artificial circulation. This is achieved when high pressure fluid is used to fracture the hot granite, thereby allowing water to flow through and pick up heat before it is pumped back up to the surface.
At the surface, the heated fluid is propelled through a heat exchanger, which produces steam to drive a generator turbine and finally produce electricity. This is called a binary power generation system (Figure 3). The water used in the process is then recycled and sent back down beneath the earth's surface to start the process over again.
Before any extraction activity can begin, the company must obtain a geothermal extraction licence from the department and discuss the implications of its GER operations with the landholder.
Read more about consents, controls and compensation.
Advancing Victoria's geothermal potential
Connecting geothermal energy to Victoria's electricity grid relies on several factors:
- size, volume and area of the resource
- temperature and geological conditions
- access to the resource
- cooperation from landholders
- efficiency of production
- proximity to state power supply lines
Technology is progressing at a rapid rate in the geothermal industry. The Victorian Government has allocated $500,000 towards creating a Geothermal Atlas – a map of where it's hot and where it's not. To do this, scientists from GeoScience Victoria are collecting heat flow and thermal conductivity data, which will help reduce uncertainty for geothermal exploration companies and identify where companies should concentrate their efforts.
Seven geothermal exploration companies across Victoria are collecting similar data on their specific exploration sites.
Collaborations with researchers and government agencies such as Geoscience Australia, Monash University and the University of Melbourne are further increasing geoscience knowledge in Victoria.
This, along with commercial exploration and extraction activities, promises to broaden Victoria's geothermal resource base and propel us towards a clean, reliable and renewable energy future.
Can geothermal energy be used domestically?
On a domestic scale, geothermal energy can be used for:
- water cooling
- hot water
- floor and panel heating
- central heating and cooling
- heating of swimming pools and spas.
These direct-use applications extract heat from relatively shallow ground using a geothermal (ground source) heat pump. This heat is transferred into buildings during winter and then returned back into the earth or into hot water tanks during summer.
The GER Act is concerned only with the larger-scale, commercial development of geothermal energy resources. Sustainability Victoria provides more information about using renewable energy at home.
Contact details are provided in the Further information section.
Landholder questions and answers
The GER Act establishes a coherent framework for the exploration and extraction of geothermal energy in Victoria. The framework includes:
- Competitive state-wide release of acreage for exploration announced via public tender.
- Applications for exploration permits accepted.
- Exploration permits allocated, subject to conditions.
- Prior to any activity commencing, an operation plan must be accepted by the department. An operation plan details public safety, community engagement,
environmental impact and rehabilitation concerns.
- Rehabilitation bonds and insurance required from permit holders.
- Landholders engaged.
- Consent provided by landholder (and/or compensation agreed).
- Exploration activity undertaken.
- Applications for extraction licences accepted where geothermal energy is considered commercially viable.
This process may raise questions for landholders, which are addressed in the following question-and-answer sequence.
Under the GER Act:
Exploration refers to the process by which geothermal energy resources are found and the commercial viability of their extraction determined. Activities include geological, geophysical, hydrogeological and geochemical surveys, as well as sampling and the drilling of geothermal wells.
Extraction refers to the process by which geothermal energy resources are extracted from the ground and their heat energy captured.
No, exploration does not always lead to commercial extraction. A geothermal energy resource must first be determined as economically viable for extraction before any further activity can proceed.
This will depend on a variety of factors including the size of the resource, its temperature, accessibility, expected efficiency of production, proximity to power infrastructure, and marketability.
All areas in Victoria, unless specifically exempt (e.g. wilderness Crown land), are open to exploration permit applications.
The department maintains a 'geothermal energy register' of authorities permitting exploration and production of geothermal energy. This is a record of the approvals, agreements, transfers, surrenders and cancellations of tenements.
The geothermal energy register and associated documents are available for inspection upon payment of a small fee. Contact details are provided in the Further information section.
Holders of an exploration permit or extraction licence must ensure that their operations minimise, as far as possible, interference with other activities on the land.
Geothermal exploration activity is temporary and should be contained within a relatively small area, with limited environmental impact.
In the event of interference with regular property use, compensation will apply. Exploration companies are also obliged to maintain in good condition and repair all structures, equipment and property used in connection with geothermal energy operations.
If geothermal energy resources are discovered during exploration, the holder of the exploration permit can apply for a retention lease or an extraction licence.
A retention lease allows the company to retain rights to continue exploration in that area for up to 15 years if the resource is not immediately commercially viable but is likely to be within 15 years.
An extraction licence provides exclusive rights to extract geothermal energy from the specified area for as long as it is commercially viable.
Geothermal energy is the property of the Crown until it is extracted, at which time it becomes the property of the person extracting it.
Consents, controls and compensation
Yes. The permit/licence holder must obtain landholder consent, which may be subject to a compensation agreement. This must occur prior to the permit/licence holder commencing any activity on the landholder's land.
Notice of consent must be given within 28 days after it is sought.
Compensation is only payable for loss or damage that has been, or will be, sustained to the landholder's interests in the land as a direct, natural and reasonable consequence of the geothermal operation. It is not payable for the value of any geothermal energy in or under the surface of any land.
Most companies will present a contract proposing conditions of access to your property for the purpose of exploring or extracting geothermal energy. The content of any contract is subject to agreement by each party.
We recommend you seek legal advice before you enter into any binding contract.
We recommend you seek legal advice before you enter into a compensation agreement. Compensation is payable for:
- deprivation of possession of the whole or part of the surface of the land
- damage to the surface of the land
- damage to any improvements on the land
- severance of the land from other land belonging to you
- loss of amenity including recreation and conservation values
- loss of opportunity to make any planned improvement on the land
- any decrease in market value of your interest in the land
- reasonable incidental expenses in obtaining and moving to replacement land
- intangible and non-pecuniary disadvantages – limited to an additional 10 per cent.
Where a compensation agreement does not exist, compensation claims must be made within three years of the loss or damage being incurred or within the three years following the permit/licence completion; whichever comes first.
If a landholder does not provide consent and an appropriate amount of compensation cannot be agreed, then either party may refer to the Victorian Civil and Administrative Tribunal (VCAT).
VCAT does not determine the right to access land, rather the amount of compensation to be paid to the landholder.
VCAT is available where conciliation between the parties has failed to achieve a satisfactory settlement negotiation and should be used as a last resort.
Any amount of compensation paid, agreed to be paid, or determined is not affected by any subsequent change in the ownership or occupancy of land. New owners or occupiers cannot seek a greater total amount of compensation.
However, disclosure of the existence of a consent or compensation agreement may be required by section 32 of the Sale of Land Act 1962: Statement of matters affecting land being sold.
Before exploration or extraction work starts on private land, the exploration permit holder must give written notice to the landholder at least 21 days before geothermal activities are due to start.
The landholder may waive all or part of the 21-day notice period, but is not obliged to do so.
No work can start on the ground until the department has accepted the company's operation plan, which includes management strategies for public safety, environmental impact and land rehabilitation during exploration and extraction activities.
Landholders must be engaged in the preparation of the operation plan, which becomes binding when accepted by the department.
Extraction operations also require planning approval, or assessment under the Environment Effects Act 1978.
The Minister has the power to make, revoke or vary conditions of the permit or licence; and transfer, surrender or cancel it.
Exploration operations require an exploration permit, but not a planning permit.
A planning permit is only required for extraction operations except where an Environment Effects Statement has been prepared and assessed under the Environment Effects Act 1978.
Before carrying out any geothermal energy resource operation the company must take reasonable steps to ensure that the operation does not contravene the Aboriginal Heritage Act (AHA) 2006 (Vic).
The AHA seeks to ensure the protection of sites of significant Aboriginal cultural value in a way that involves the Aboriginal community and to provide greater integration of heritage issues with the land planning process.
In accordance with the AHA, holders of an exploration permit or extraction licence must prepare a Cultural Heritage Management Plan (CHMP) for areas of cultural heritage sensitivity, where there has not been significant prior ground disturbance and where the activity is deemed to be 'high impact'.
Agricultural activities are not considered prior disturbance for the purposes of the Act.
Native title matters in accordance with the Commonwealth Native Title Act 1993 (NTA) must also be addressed by the licensee before the necessary authority can be obtained.
The department do not administer the AHA or NTA, however it is concerned about compliance with those Acts.
Scientific research and geoscience data collection are regularly conducted to anticipate and minimise the environmental risks of GER activity.
Before any geothermal operation can commence, an operation plan addressing environmental risks must be approved. This ensures adequate and effective monitoring and protection of the environment.
Further, all geothermal energy projects in Victoria are subject to the government's Native Vegetation Management framework, which strives for net vegetation gain via protection, enhancement and revegetation of the state's native flora.
To reinforce these responsibilities, the department requires every exploration permit holder to lodge a rehabilitation bond of a specified amount. The rehabilitation bond represents security of payment for any rehabilitation work, clean-up work or pollution prevention work that may be necessary as a result of a geothermal energy operation.
Other approvals may also be required under the Environment Protection Act 1970 and the Water Act 1989.
If you suspect that a company is not meeting its obligation to minimise risk to people, property, the environment and the energy resource, you can contact the department and register a complaint, which will be investigated by a department inspector. This investigation may result in the issue of a notice, which includes:
- A prohibition notice barring the permit/licence holder from carrying out or continuing to carry out any activity related to geothermal resource operations.
- Directions of measures that must be taken to remove or reduce the risk.
After steam and water from a geothermal reservoir have been used, they may be injected back into the earth. With re-circulation techniques and continuing advancements in technology, this is unlikely to impact on surface eco-systems.
The water from this depth is half the salinity of sea water and therefore is too salty to have a beneficial use.
Water allocations affected by geothermal operations may be subject to the Water Act 1989, while regulation of the quality of water discharges (e.g. water injected back into groundwater) is influenced by the Environment Protection Act 1970.
Regulation of groundwater use is coordinated between government agencies.Any issues regarding groundwater management are examined by the department in partnership with the Department of Environment, Land Water and Planning.
The geothermal activities regulated under the GER Act involve geothermal resources located more than one kilometre underground and do not compete with near-surface use of heat or hot water.
Water use is considered high value and geothermal operators must compete with other water users for access to groundwater.
Water allocation, pricing, use and discharge requirements for the geothermal energy industry should be level with those that apply to other water users.
|Australian Geothermal Energy Association (AGEA)||Cooperative of industry members of AGEG committed to developing and advocating for policy outcomes that facilitate national geothermal industry growth.|
|Australian Geothermal Energy Group (AGEG)||Collaboration of government, industry and higher education sectors committed to fostering the commercialisation of Australia's geothermal energy resources through cooperation in research and dissemination of information to interested parties.|
|Authority||Exploration permit, retention lease or extraction licence.|
|Base-load power||Power produced to provide electricity to the grid throughout the year. As compared to peak power which provides electricity on days of high demand.|
|Community engagement||Discussion whereby the permit/licence holder informs the community about activities and impacts related to the geothemal energy resource, and the community is given the opportunity to provide feedback.|
|Essential Services Commission (ESC)||Independent economic regulator responsible for enforcing the VRET legislation through auditing procedures and the imposition of penalties.|
|Geothermal energy||The heat energy contained or stored in rock, geothermal water or any other material occurring naturally within the earth.|
|Geothermal energy exploration|
The heat energy contained or stored in rock, geothermal water or any other material occurring naturally within the earth.
The carrying out of one or more of the following activities for the purpose of finding geothermal energy or geothermal energy resources:
|Geothermal energy extraction|
|Geothermal energy resources||Geothermal water, rock or any other material occurring naturally within the earth, containing heat energy.|
|Geothermal water||Water, water vapour or steam heated within the earth by natural phenomena.|
|Landholder||Owner, occupier or person or body responsible for the management of the land.|
|Permit/licence holder||Person or entity named on the permit or licence. This person or entity may be represented by a geothermal company delegate, agent or contractor.|
|Rehabilitation bond||An instrument acceptable to the Minister (under section 100 of the GER Act) securing the payment of a specified amount of money for any rehabilitation work, clean-up work or pollution prevention work that may be necessary as a result of a geothermal energy operation.|
|Renewable Energy Action Plan (2006)||Victorian Government initiative to drive demand for and remove barriers to the development of renewable energy as part of its ongoing commitment to a sustainable and secure energy supply.|
The Geothermal energy resources Act
Geothermal energy resources exploration and extraction
Domestic options for sustainable energySustainability Victoria
Victorian climate change program
Compensation dispute guidelines
Victorian Civil and Administrative Tribunal – Land valuation list
Page last updated: 07 Apr 2020