While solar and wind continue to primarily lead the global energy transition, new energies are also spicing up the mix, with geothermal gaining much traction. As administrations across the globe are announcing funding and studies on this area, its adoption is, however, still at a nascent stage.
According to major energy research bodies, currently installed geothermal power generation capacity totals around 16 gigawatts electric (GWe), which is merely a fraction when considered in context of installed solar and wind capacities. This number, according to Rystad Energy, is expected to rise in the near future by almost 800 megawatts electric (MWe). "In the longer term, Rystad Energy estimates global installed capacity to reach 28 GWe by 2030 and upwards of 110 GWe by 2050, marking a significant ramp-up from current levels,” said Shruti Raghuram, Senior Analyst, Geothermal Research, Rystad Energy.
Based on the present approximate of US$7.9bn value, Spherical Insights & Consulting sees the geothermal market progressing at a compounding annual growth rate (CAGR) of 4.44% to reach around US$12.2bn in 2033. These findings are based on the responses of survey participants such as Sumitomo Corporation, Turboden, Reykjavik Geothermal, KenGen and Halliburton, to name a few.
When considered another couple of decades or so, GlobalData predicts the CAGR might record a 13% growth to 54 GW of geothermal generation from today’s 16GW. To make these predictions a reality, the industry needs more investments with a risk-sharing approach. Much like oil and gas, the feasibility of geothermal projects depends on ideal subsurface environment and the quantity of recoverable resources. The risk of such uncertainties can be borne only when they are evenly distributed amidst multiple stakeholders. But once these projects get off the ground, geothermal electricity promises high capacity and consistency at low costs of operation. This justifies an increased focus on brownfield developments with production optimisation for the short-term until greenfield project start-ups gather steam.
Grand View Research largely classifies today’s geothermal power market into 5MW-limit applications and those beyond 5 MW. While residences and mid-sized plants can be driven by 5MW power or less, industrial plants or baseload applications that require more than 5MW, are currently leading the market at a 56.4% revenue share. Industrial demand for geothermal is thus set to see the fastest growth, followed by residential and commercial use.
Binary cycle plants that have high technological benefits while requiring lower temperature geothermal resources compared to dry steam or flash steam plants, have recorded the largest revenue share at 30.5% in 2023.
The geothermal market is currently dominated by the Asia Pacific region, with start-ups worth US$6.9bn coming from Indonesia and New Zealand. A recent report by the International Energy Agency has predicted India and China to have the greatest geothermal market potential besides the United States. As tepid demand from China continues to affect oil prices, and India’s renewable shift becomes more pronounced, will the growing geothermal industry carve a niche in the energy segment?