By Mark Jaffe, EUCI energy writer
Geothermal investments are growing across the globe with capital expenditures projected to climb 20% annually for the next five years, reaching nearly $9 billion in 2030, according to industry analyst Rystad Energy.
Activity is no longer only in mature markets such as Southeast Asia and the U.S., but also growing in Africa and Europe, “contributing to a steady broadening of activity worldwide,” the Rystad Energy analysis said.
Spending leaders by 2030 are projected to be Indonesia, the U.S., Kenya, and Germany.
Geothermal plants tap into thermally active geological formations with a combination of high heat and water, such as natural springs, to generate heat or electricity.
In the past, this limited activity to specific geological areas. New enhanced geothermal systems (EGS), however, drill deeper and inject water or fluid making a broader array of sites viable.
These technologies can tap the Earth’s natural heat for heating, cooling, or electricity generation. Different regions are using geothermal differently.
The European market is dominated by district heating, spurred by the region’s ambitious decarbonization targets and extensive municipal heating networks.
Asia, led Indonesia, and North America, both with abundant geological resources, are focusing primarily on electricity-generating geothermal projects to meet growing power demands.
District heating projects generally require about half the investment of geothermal power plants because, unlike electricity generation, heating systems do not need expensive turbine sets or complex surface infrastructure.
Rystad Energy calculates geothermal power projects, with more extensive facilities and complex designs, cost about $6 per watt for power versus $3 per watt for district heating.
ESG also shows long-term promise for cooling applications. Pilot projects in the Middle East are exploring its use for data centers, including the United Arab Emirates’ first geothermal cooling plant.
“Beyond regional deployment differences, geothermal energy’s role as a clean, reliable source of baseload power is gaining importance,” Rystad Energy said. “EGS reduces site dependence by requiring only hot rock rather than aquifers, unlocking additional clean power potential and providing stable baseload heat.”
A little more than half of total spending goes toward surface facilities, while an estimated 47% is directed to subsurface work, and about 2% is allocated to cost before final investment decisions (FID) are made.
“This distribution is broadly consistent across most markets, making this cost structure a defining aspect of geothermal development,” Rystad Energy said.
The early investments costs before FID can be key. “Even the relatively small share devoted to pre-FID work can represent a significant risk, as early exploration determines whether a project advances or is halted altogether,” Rystad Energy said.
“Global investment in geothermal energy is gaining momentum as more projects move toward FID,” Alexandra Gerken, Rystad Energy vice president for new energies analysis, said in a statement.
“Our research shows that geothermal energy is increasingly being tailored to regional needs, reflecting its dual role as a source of clean, reliable power and a provider of heat,” Gerken said.
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