Licensing, Regulation and Environment Agency Requirements

Open loop geothermal isn't just a technical solution. It's a regulated activity, and in many cases, regulation is what ultimately determines whether a scheme can proceed.

Before any drilling, testing or operation takes place, a project must sit within a defined legal framework covering groundwater abstraction, reinjection and environmental protection. If those requirements are not understood early, they will not simply influence the design, they can stop a project altogether.

In England and Wales, open loop geothermal is regulated by the Environment Agency through abstraction licensing and environmental permitting.

Abstraction is governed at catchment level through CAMS, while discharge and reinjection fall under the Environmental Permitting Regulations - meaning a scheme must satisfy both water availability and environmental impact requirements to proceed.

The Core Regulatory Framework

Open loop geothermal schemes typically require three separate permissions, each covering a different stage of the project.

First, a consent to investigate a groundwater source is required before drilling and test pumping can begin. This allows a borehole to be constructed and the aquifer to be assessed, but it doesn't grant any right to operate a system.

Second, an abstraction licence is required if more than 20 cubic metres of water per day is to be abstracted. This licence defines how much water can be taken and will often include conditions on timing, monitoring and reporting. It authorises abstraction but does not guarantee the volume or quality of water available.

Third, an environmental permit is required to discharge water, whether that is reinjected to the aquifer or discharged to a surface water body. Each route is assessed separately, and the conditions attached will depend on environmental risk. Where discharge is to sewer, approval from the relevant water company is also required.

These permissions are not administrative formalities. They are designed to ensure that groundwater resources are protected, that other users are not adversely affected, and that ecosystems are not damaged by changes in flow, chemistry or temperature.

Abstraction: What You Are Allowed to Take

Abstraction licensing is governed at catchment level. The Environment Agency assesses whether water is available in a given area and whether additional abstraction can be supported without environmental harm.

This means that even if a site appears technically suitable, a licence may not be granted, or may be restricted, if the catchment is already under pressure.

Licences are also time-limited, typically aligned with catchment management cycles. They may include conditions such as maximum daily volumes, seasonal restrictions or monitoring requirements. Renewal is not automatic; it depends on continued environmental sustainability, demonstrated need and efficient use of water.

For non-consumptive schemes, i.e., where water is returned to the same aquifer, impacts are often localised. However, if water is discharged elsewhere, the scheme may be considered consumptive. In such cases, licensing becomes significantly more difficult, particularly in water-stressed regions.

Discharge and Reinjection: What You Must Return

Returning water to the environment is as tightly controlled as abstraction. Where water is reinjected into the same aquifer, a bespoke environmental permit is usually required. This is because groundwater conditions vary significantly from site to site, and standardised permits cannot account for those differences.

If water is discharged to surface water, a standard permit may be possible, but only if strict criteria are met. These include limits on temperature change, absolute discharge temperature, proximity to sensitive ecological sites, and the absence of pollutants.

Where those conditions cannot be met, a bespoke permit will again be required, supported by site-specific data and risk assessment.

In all cases, the Environment Agency will consider not just the immediate discharge, but its wider impacts, including temperature changes, chemical composition and the potential effect on nearby abstractions or ecosystems.

Pump Testing: Where Regulation Meets Reality

Pump testing is a critical part of proving an open loop system, and it is also one of the most tightly constrained stages from a regulatory perspective.

Testing requires temporary abstraction permissions and a compliant discharge route. Volumes, rates and durations must be agreed in advance. In many cases, environmental permits are also required for the discharge of test water.

This is where projects often encounter practical difficulty. A system may be technically viable, but if there's no acceptable way to discharge water during testing, or if discharge volumes are restricted, the scheme cannot be properly proven. In this instance Drift can communicate with the Environment Agency and negotiate a design change to the test pump regime based on localised constraints such as a limit to the discharge consent issued by the incumbent supplier. There is always a solution, but understanding the issue early on can ensure the project remains on programme.

The Environment Agency guidance makes clear that environmental protection takes precedence. Without compliant testing, there is no basis for licensing. Without licensing, the scheme cannot proceed.

Environmental Risk and Site Sensitivity

Regulation is driven by risk. Certain locations introduce additional scrutiny and constraint.

Sites within groundwater source protection zones, near potable abstractions, or in proximity to sensitive ecosystems require more detailed assessment and may be subject to stricter conditions. Similarly, contaminated land introduces additional regulatory complexity, as drilling and abstraction can mobilise pollutants.

The Environment Agency expects developers to assess these risks early and, where necessary, adapt or relocate schemes. In some cases, proposals may be refused if the environmental risk cannot be adequately controlled.

Timescales and Programme Risk

Regulatory processes do not always align with construction programmes.

Licences and permits can take time to secure, particularly where supporting data, environmental assessments or stakeholder consultation are required. Additional information requests can extend timelines further.

Importantly, many regulatory constraints only become fully apparent once detailed investigations are underway. Issues around discharge, temperature limits or environmental impact are often identified during or after testing, not at initial feasibility stage.

This creates a common risk: projects that appear viable early on but are delayed or constrained later by regulatory requirements that were not fully anticipated.

Why Regulation Has to Come First

The Environment Agency's position is consistent: environmental protection is the priority, and compliance is not optional.

That has a simple implication. A scheme that cannot be licensed is not a viable scheme, regardless of how well it performs on paper.

The most robust projects treat regulation as a core part of feasibility. They engage early with the Environment Agency, align testing strategies with permitting requirements, and build realistic timelines around approvals.

Handled this way, regulation becomes a defined process to work through. Left too late, it becomes a constraint that is far harder to resolve.

We work closely with the Environment Agency and groundwater specialists, so if you're not sure what comes next, we can help you understand the process and options available.

FAQ

What licences are required for open loop geothermal in the UK?

Open loop geothermal systems typically require three separate permissions:

• Groundwater investigation consent (GIC) – to drill and test a borehole
• Abstraction licence – if more than 20 m³/day is taken from the aquifer
• Environmental permit – to discharge or reinject water

All three are regulated by the Environment Agency in England and Wales, and each must be secured before a system can be proven and operated.

Do you need an abstraction licence for open loop geothermal?

Yes, if you abstract more than 20 cubic metres of groundwater per day, an abstraction licence is legally required.

This licence:

• Sets how much water you can take
• May restrict when abstraction can occur
• Often requires monitoring and reporting

It does not guarantee that the water will be available at the required volume or quality.

Do you need permission to reinject water?

Yes. Returning water to the ground or discharging it elsewhere is regulated under the Environmental Permitting Regulations.

In most cases:

• Reinjection to groundwater requires a bespoke environmental permit
• Discharge to surface water may be allowed under a standard permit, but only if strict conditions are met (temperature limits, no pollutants, distance from sensitive sites)

If those conditions cannot be met, a bespoke permit is required.

Can you install open loop geothermal without Environment Agency approval?

No. You cannot legally drill and test a borehole designed to take more than 20 m³/day (without a GIC), or abstract groundwater above 20 m³/day (without a licence) - or discharge or reinject water (without a permit).

Open loop geothermal is a regulated groundwater activity. Approval is mandatory at each stage.

What is groundwater investigation consent (GIC)?

Groundwater investigation consent allows you to:

• Drill a borehole designed to abstract more than 20 m³/day
• Carry out full pump testing
• Assess yield and aquifer behaviour

It is a pre-licensing step. It does not allow long-term operation, only investigation.

What can stop a geothermal licence being approved?

The most common regulatory constraints are:

• Water availability in the catchment (CAMS restrictions)
• Impact on other users (nearby boreholes, public supply)
• Environmental risk (wetlands, rivers, protected sites)
• Discharge limitations (no viable route for test or operational water)
• Temperature impacts on groundwater or ecosystems

A scheme that cannot meet these requirements will not be licensed.

How long do geothermal licences take?

There is no fixed timeframe, but delays are common where:

• Additional hydrogeological data is required
• Environmental risk assessments are needed
• Discharge routes are unclear
• Multiple stakeholders are involved

Regulatory timelines often extend beyond construction expectations, particularly if issues are identified during testing.

Why pump testing is critical for licensing

Pump testing is required to:

• Prove yield
• Understand aquifer behaviour
• Support abstraction licence applications

However, testing itself must be permitted and managed. It requires:

• Temporary abstraction approval
• A compliant discharge route
• Agreed volumes and durations

If testing cannot be completed compliantly, the project cannot progress.