Across the globe, momentum is building behind geothermal energy. In the US, the Biden-Harris administration identified it as one of the crucial components of facilitating a carbon-neutral grid by 2035, recently committing a further US$31mn to six geothermal projects across the country.
East Africa has long been a hotspot for driving geothermal deployment (meeting nearly half of Kenya’s current energy needs); Europe is continuing to scale-up (with 395 geothermal district heating systems operating by the end of 2022); and interest continues to build in Asia owing to the substantial geothermal potential that some countries in the region boast (Indonesia, for instance, is estimated to have a geothermal capacity of nearly 30GW).
It is in this context and in support of the market that the IEA has published ‘The Future of Geothermal Energy’, report, detailing the role the resource can have in meeting the spiralling global electricity demand and how this can be achieved.
Drilling deeper to drive growth
As outlined by the organisation, in today’s world, geothermal meets around 1% of global electricity demand but, if project costs continue to decline, it could meet 15% of global electricity demand growth between now and 2050 through the deployment of as much as 800GW of capacity worldwide.
But the fulfilment of this massive potential is not set in stone and, in order to do so, the IEA has drawn attention to the importance of new technologies which could “open new horizons for energy across the globe”, according to remarked IEA Executive Director Fatih Birol.
While conventional geothermal is largely location-specific, niche technology deployed in countries that have volcanic activity or straddle tectonic fault lines, new technologies could make geothermal accessible for nearly all countries. In fact, the IEA reports finds that the full technical potential of next-generation geothermal systems to generate electricity is second only to solar PV among renewable technologies and would be sufficient to meet electricity demand 140-times over. Potential energy increases as developers access higher heat resources at greater depths, and new drilling technologies exploring resources beyond 3 km depth could open the potential for geothermal in nearly all countries. Further, using thermal resources at depths below 8 km would deliver almost 600TW of geothermal capacity with an operating lifespan of 25 years.
Here, the oil and gas industry could play a key role by providing its expertise, existing drilling techniques and equipment to go deeper under the earth’s surface. Moreover, the IEA indicated that up to 80% of the investment required in geothermal involves capacity and skills that are transferrable from the oil and gas industry.
Such an advantage in this area could provide a long-term lifeline for many businesses currently operating within the fossil-fuel sector. It represents an opportunity for them to develop new business lines in the fast-growing clean energy economy and also would protect against commercial risks related to likely declines in oil and gas demand.
But support from the oil and gas sector would not be enough for geothermal to truly take flight, with the IEA also drawing attention to the urgent need for greater governmental support. Its findings show that more than 100 countries have policies in place for solar PV and onshore wind, but only 30 have them for geothermal. Much ground would be made if geothermal was moved up on national energy agendas with specific goals, alongside support for innovation and technology development. This would help to reduce project risk perception and unlock new investment.
Further, clear, long-term regulatory visibility for investors would help mitigate risks in early-stage development and provide visibility on investment returns. This would help to improve cost competitiveness of geothermal projects and, in doing so, would help costs fall by 80% by 2035 to around US$50 per MWh. This would make geothermal the cheapest source of dispatchable low-emissions electricity and, at such price levels, would make it highly competitive with solar PV and wind paired with battery storage.
With an estimated US$1 trillion of total investment on the table by 2035, and a further US$2.5 trillion by 2050, the race is truly on to maximise the potential of geothermal and capitalise on the enormous potential that it can offer for (potentially) every country across the globe.