Global geothermal investment is entering a rapid expansion phase, with capital expenditure projected to rise by roughly 20% each year through 2030, based on Rystad Energy’s latest geothermal economics model.
This growth reflects the sector’s shift beyond established strongholds in Southeast Asia and the United States, as interest steadily increases in regions including Africa and Europe. Activity is widening globally, yet spending patterns remain consistent across development stages due to stable cost structures in drilling, surface facilities, and steamfield infrastructure.
At present, slightly more than half of all investment is allocated to surface facilities, around 47% goes to subsurface operations, and close to 2% is directed toward pre final investment decision (FID) work. These proportions are relatively uniform among most markets, forming a core characteristic of geothermal development. Even the modest share reserved for pre FID work carries significant risk, as early exploration determines whether a project proceeds or is abandoned. This cost distribution helps explain why project timelines and financing requirements look similar across regions, even as global development accelerates.
“Global investment in geothermal energy is gaining momentum as more projects move toward FID. 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. In the US, growth is being driven by the expansion of enhanced geothermal systems (EGS) and rising demand for baseload power from data centers. Europe, on the other hand, is focusing on decarbonizing heat, while Southeast Asia is turning to geothermal to meet growing electricity demand. The sector’s longer-term potential in cooling applications is growing as well, a market set to expand alongside global data center activity that’s less considered,” says Alexandra Gerken, Vice President, New Energies Analysis, Rystad Energy.
When examining geothermal deployment across different continents, Europe emerges as a region where district heating dominates, supported by strong decarbonization goals and well established municipal heating networks. In comparison, Asia, particularly Indonesia, and North America emphasize electricity generating geothermal projects, driven by rising baseload power requirements and favorable geological resources. This contrast influences both capacity installation and investment strategies. Europe places more emphasis on subsurface development for heating despite lower surface facility costs, while Asia and North America show a more even distribution between drilling and surface infrastructure.
Beyond these regional distinctions, geothermal energy is increasingly recognized for its value as a clean, dependable baseload resource. EGS technology minimizes geographic constraints by requiring only hot rock rather than natural aquifers, opening additional opportunities for clean power generation and stable baseload heat. The technology also holds growing potential for cooling applications. Pilot initiatives in the Middle East are assessing its suitability for data centers, including the UAE’s first geothermal cooling installation, the G2COOL project.
Rystad Energy’s latest analysis takes a bottom up view of geothermal economics by evaluating each asset individually, breaking down costs into drilling, equipment, and surface infrastructure rather than assessing only overall project expenditure or subsurface work. Geothermal developments are mainly deployed for district heating or electricity generation, and the resource remains one of the few energy options capable of delivering clean, steady baseload power.
Project costs are commonly measured in “dollars per watt,” reflecting the capital needed to generate one watt of energy. Using this metric, district heating projects typically require about half the investment of geothermal power plants. The gap exists because heating systems do not rely on costly turbine packages or complex above ground facilities required for electricity production. By comparison, geothermal power developments demand more sophisticated surface installations and detailed engineering, leading to costs of roughly US$6 per watt for power projects versus about $3 per watt for heating.
These distinctions are critical for policymakers, investors, and developers as they evaluate project viability, select appropriate technologies, and map out long term geothermal strategies. A clear understanding of comparative costs supports better decision making on which projects to advance and how to optimise the value of geothermal resources.