Cite report
IEA (2024), The Future of Geothermal Energy, IEA, Paris https://www.iea.org/reports/the-future-of-geothermal-energy, Licence: CC BY 4.0
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Executive summary
Technology breakthroughs are unlocking huge potential for geothermal energy
Advances in technology are opening new horizons for geothermal, promising to make it an attractive option for countries and companies all around the world. These techniques include horizontal drilling and hydraulic fracturing honed through oil and gas developments in North America. If geothermal can follow in the footsteps of innovation success stories such as solar PV, wind, EVs and batteries, it can become a cornerstone of tomorrow’s electricity and heat systems as a dispatchable and clean source of energy. For the moment, geothermal meets less than 1% of global energy demand and its use is concentrated in a few countries with easily accessible and high-quality resources, including the United States, Iceland, Indonesia, Türkiye, Kenya and Italy.
With continued technology improvements and reductions in project costs, geothermal could meet up to 15% of global electricity demand growth to 2050. This would mean the cost-effective deployment of as much as 800 GW of geothermal power capacity worldwide, producing almost 6 000 terawatt-hours per year, equivalent to the current electricity demand today of the United States and India combined
Geothermal is a versatile, clean and secure energy source
Geothermal can provide around-the-clock electricity generation, heat production and storage. As the energy source is continuous, geothermal power plants can operate at their maximum capacity throughout the day and year. On average, global geothermal capacity had a utilisation rate over 75% in 2023, compared with less than 30% for wind power and less than 15% for solar PV. In addition, geothermal power plants can operate flexibly in ways that contribute to the stability of electricity grids, ensuring demand can be met at all times and supporting the integration of variable renewables such as solar PV and wind.
The potential for geothermal is now truly global
The full technical potential of next-generation geothermal systems to generate electricity is second only to solar PV among renewable technologies and sufficient to meet global electricity demand 140-times over. This is a key finding of first-of-a-kind analysis of geothermal potential conducted for this report in collaboration with Project InnerSpace. Geothermal energy potential increases as developers access higher heat resources at greater depths. New drilling technologies exploring resources at depths beyond 3 km open potential for geothermal in nearly all countries in the world. Using thermal resources at depths below 8km can deliver almost 600 TW of geothermal capacity with an operating lifespan of 25 years.
Technical potential of selected renewable energy technologies for electricity generation
OpenGeothermal can also provide a continuous source of low- and medium-temperature heat for use in buildings, industry and district heating. Global geothermal potential from sedimentary aquifers at depths up to 3 km and temperatures greater than 90°C is estimated around 320 TW. This is consistent with the requirements of existing fossil fuel-fired district heating networks, which could be decarbonised by switching to geothermal heat. For lower temperature requirements, the potential for geothermal increases about tenfold.
Global technical potential for geothermal heat at different cutoff temperatures
OpenThe technical potential of geothermal would be more than enough to meet all electricity and heat demand in Africa, China, Europe, Southeast Asia and the United States. Geothermal holds particular promise in markets with rapidly rising electricity demand by complementing output from other low-emissions technologies such as renewables and nuclear power while also bolstering energy security.
Investment in geothermal is growing
Governments, oil and gas companies and utilities are among those looking for investment opportunities in geothermal. If deep cost reductions for next-generation geothermal can be delivered, total investment in geothermal could reach USD 1 trillion cumulatively by 2035 and USD 2.5 trillion by 2050. At its peak, geothermal investment could reach USD 140 billion per year, which is higher than current investment in onshore wind power globally. As a dispatchable source of clean power, geothermal is also attracting interest from stakeholders beyond the energy industry, including technology companies looking to meet the fast-growing demand for electricity in data centres.
The market potential for next-generation geothermal is spread around the world
Cost-competitive geothermal would offer a much-needed source of dispatchable low-emissions electricity to markets around the world. Rising awareness of the potential for geothermal comes at a time when global electricity demand growth is set to accelerate due to both conventional uses, such as cooling, and newer ones, such as electric vehicles and data centres. The availability of geothermal would be particularly valuable to bolster electricity security in regions looking to transition away from coal-fired power, such as China, India and Southeast Asia, or to complement large amounts of solar PV and wind in regions such as Europe and the United States. China, the United States and India have the largest market potential for next-generation geothermal electricity, together accounting for three-quarters of the global total.
The oil and gas industry can play a key role in boosting the cost effectiveness of geothermal
Up to 80% of the investment required in a geothermal project involves capacity and skills that are common in the oil and gas industry. The industry has transferable skills, data, technologies and supply chains that make it central to the prospects for next-generation geothermal. Diversifying into geothermal energy could be of great benefit to the oil and gas industry, providing opportunities to develop new business lines in the fast-growing clean energy economy, as well as a hedge against commercial risks arising from projected future declines in oil and gas demand.
Share of investment in an advanced geothermal project that overlaps with oil and gas industry skills and expertise"
OpenTechnologies and resources are available but cost reductions are crucial
Policy and innovation support, together with the expertise of the oil and gas sector, can help to bring down costs for new next-generation geothermal projects to levels that make it one of the cheapest dispatchable sources of low-emissions electricity. Costs for next-generation geothermal are relatively high today compared with other low-emissions technologies. But engagement from policymakers and the oil and gas industry can lead to a significant fall in geothermal costs as new projects are commissioned, as has been proven possible by the rapid cost reductions for solar PV, batteries and EVs over the past decade. We estimate that, with the right support, costs for next-generation geothermal could fall by 80% by 2035. At that point, new projects could deliver electricity for around USD 50 per megawatt-hour, which would make geothermal one of the cheapest dispatchable sources of low-emissions electricity, on a par or below hydro, nuclear and bioenergy. At this cost level, next-generation geothermal would also be highly competitive with solar PV and wind paired with battery storage.
Levelised cost of electricity of geothermal and other low-emissions dispatchable technologies in the Announced Pledges Scenario, 2035
OpenChallenges related to permitting and environmental impacts need to be addressed
Permitting and administrative red tape mean that it can take up to a decade to commission a new geothermal project: a renewed effort to simplify project development while maintaining high environmental standards will be essential. Governments could simplify permitting processes by consolidating and accelerating administrative steps involved. Governments could also consider dedicated geothermal permitting regimes separate from minerals mining. Policies and regulations enforcing robust environmental standards are critical for the responsible development of geothermal projects.
Delivering widespread and competitive geothermal will require specialised labour
The geothermal industry provides around 145 000 jobs today and geothermal employment could rise more than sixfold to 1 million by the end of this decade, but there is a risk of a skills shortfall. Many people working in geothermal today came from the oil and gas sector, and future geothermal developments will hinge on having a skilled, appropriately sized workforce. Enrolments in degree programmes traditionally associated with the fossil fuel industry have fallen in many advanced economies in recent years and this could have knock-on implications for geothermal developments. Further support for university degrees, apprenticeships, training programmes, and regional and international centres of excellence is needed.
Government support is needed to encourage investment and help reduce costs of next generation geothermal
Policy support is lagging: more than 100 countries have policies in place for solar PV and/or onshore wind, but less than 30 have implemented policies for geothermal. If geothermal is to realise its potential, governments need to move it up the national clean energy policy agenda with specific goals and roadmaps and recognise its unique features as a source of firm, dispatchable low-emissions electricity and heat. Along with support for innovation and technology development, governments could design policies that de-risk project development. These could include policies focusing on risk mitigation measures at the early project development phase and on contracts ensuring long-term revenue certainty.