By Colleen O’Hanlon
The International Energy Agency has released The Future of Geothermal Energy, a special report highlighting the potential of geothermal as a versatile renewable energy resource with vast untapped potential.
New technologies and innovative financing models are making geothermal more accessible and cost-effective, with techniques from the oil and gas industry helping to drive costs down further.
However, challenges such as project development risks, permitting processes, and environmental concerns need to be addressed to scale up geothermal energy effectively.
Seequent Energy Segment Director Jeremy O’Brien and Marit Brommer talked about the potential for geothermal in the energy transition when announcing a strategic partnership in November.
International Geothermal Association Chief Executive Marit Brommer said as the energy transition accelerated, geothermal energy was emerging as a promising but underutilised solution which offered reliable and low-carbon always-on power.
“The International Energy Agency’s latest report on the future of geothermal energy arrives at a pivotal moment in our collective efforts to address the urgent need for decarbonisation,’’ she said.
“The path forward is clear. Policymakers must prioritise geothermal energy within broader renewable energy strategies, ensuring that fiscal incentives, regulatory reforms, and risk-sharing mechanisms attract the necessary capital. The private sector, too, must be engaged to take advantage of these opportunities and drive commercialisation.
Seequent Energy Segment DirectorJeremy O’Brien said the report highlighted the need for the industry to advocate for the streamlining of permitting and policy frameworks, which could be costly to adhere to, in order to enable the projected power capacity growth to a minimum 60 GW by 2050.
“Geothermal could benefit from the support that solar and wind have had, however the baseload nature of the power/heat means that the additional costs associated with intermittency need to be considered up front, just like the abandonment of a mine site or oil and gas wells,” he said. “This needs to be clearer.”
The utilisation hours of geothermal energy, known as capacity factors, are high compared with other renewable energy sources.
Here are some of their key takeaways from the report:
The undeniable capacity factor
When compared with other renewable sources, the utilisation hours (known as capacity factors) of geothermal energy are high. A typical geothermal plant can produce up to six times as much energy as a solar photovoltaic (PV) plant with a similar installed capacity.
The people problem
The future expansion of the geothermal sector relies on a robust workforce of skilled engineers, geologists and specialised tradespeople experienced in drilling operations. Many professionals in geothermal energy have historically come from the oil and gas industry, where the skillsets overlap significantly.
However, the sector faces a critical challenge in ensuring a pipeline of skilled workers, with a limited number of specialised geothermal university and training programmes and declining enrolment in fossil fuel-related degrees – particularly in advanced economies.
Government goals
Twenty-two countries have explicitly announced a plan for their renewable goals for 2030. These countries’ combined geothermal-specific goals add up to 22 GW, 50 per cent higher than global geothermal capacity today.
In 2023, investment in geothermal power and heat reached almost USD 48 billion, the report stated.
The investment landscape
In 2023, investment in geothermal power and heat reached almost $48 billion (USD), heating applications for residential and commercial buildings including ground source heat pumps account for over 95 per cent of global geothermal investments. Out of that China invested 70 per cent.
Lithium gets a mention
If projects in the geothermal pipeline materialise, they could produce around 47 kt/year of lithium by 2035, corresponding to 5 per cent of global 2035 demand in the APS, particularly benefiting two regions of the United States and Europe.
Storage gets a (vague) mention
Some new and not technically mature technologies like the surface based thermal storage and next generation nuclear-SMR seem to be possible competitors. Surface based thermal storage is not far from geothermal storage and could face similar challenges such as low round-trip efficiency. The space requirement for surface-based thermal could limit the reservoir size, but also make it possible to do in it many locations.
A paucity of pioneering start-ups
Most investment in innovation and startup company growth is concentrated among few pioneering companies in EGS and AGS since 2021 – Fervo for Enhanced Geothermal Systems (EGS) and Eavor for Advanced Geothermal Systems (AGS). Together these closed financing for almost USD 850 million, almost almost 55 per cent of global investment since 2021.
Ownership
Publicly traded or private firms own or are planning to develop the majority of geothermal operations for power, accounting for over 70 per cent of installed, under construction or planned capacity today.
Geothermal projects in the pipeline could produce up to 5 per cent of the world’s lithium by 2035, if they go ahead.
Next gen is coming, but it’s not here yet
The market potential for next-generation geothermal is concentrated in a few large markets. China, the United States and India account for almost three-quarters of the global market potential.
Lessons from oil and gas
Broader adoption of oil and gas technologies could bring down the overall cost of geothermal tech significantly. The report estimates a high level of knowledge transfer and productivity gains from oil and gas could slash geothermal costs for conventional technologies by as much as 40, and by as much as three quarters for next-generation technologies. This would bring next-generation technology costs down to competitive levels and would be a key factor in future growth.