Geothermal Energy Poised to Nearly Double in Value by 2034

Geothermal power, which harnesses the Earth’s natural heat for electricity generation, heating, and industrial processes, is recognized within the energy sector for its high capacity factor. This reliability is a key differentiator, enabling geothermal plants to provide consistent baseload power, unlike intermittent sources such as solar and wind, according to industry analysts. This positioning makes geothermal a critical component in building resilient, low-carbon electricity grids.

The global geothermal power market is projected to nearly double in value over the next decade, driven by increasing global demand for stable, continuous renewable energy sources, according to a report published by Allied Market Research (AMR).

The market was valued at $7.4 billion in 2024 and is estimated to reach $14.5 billion by 2034, reflecting a Compound Annual Growth Rate (CAGR) of seven point zero percent (7.0%) from 2025 to 2034, the research firm stated.

Market expansion is being facilitated by technical advancements aimed at accessing a wider range of subterranean heat resources. Progress in exploration and drilling technologies, including those used for Enhanced Geothermal Systems (EGS), are cited as major factors boosting efficiency and reducing operational expenses. EGS technology, in particular, works by injecting fluid deep underground under controlled conditions to create new fractures and increase rock permeability, which allows for heat extraction even in regions lacking naturally occurring hydrothermal reservoirs.

The geothermal industry relies on three primary power station configurations for electricity generation: dry steam, flash steam, and binary cycle.

• Dry steam power stations, the oldest type, use steam drawn directly from the Earth.

• Flash steam power stations use high-pressure hot water, flashing it into steam to drive turbines. The binary cycle segment, which uses a secondary working fluid with a lower boiling point to capture heat from the geothermal fluid, currently holds the largest market share.

• Binary cycle technology is dominant due to its ability to utilize low-to-medium temperature resources, which are more geographically accessible and abundant than the high-temperature reservoirs required for dry or flash steam systems, according to AMR.

Financial and Regulatory Hurdles

Despite the favorable growth forecast, the market faces significant restraints, primarily related to high initial capital investment. Geothermal projects require substantial financial resources during the exploration and drilling phases, which often involve extensive geological surveys, seismic studies, and test drilling. The cost of drilling can reach several million dollars per well, depending on geological conditions and required depth. The risk associated with non-productive wells further contributes to the financial strain, often resulting in longer payback periods compared to other established renewable energy technologies.

However, increasing investment in clean energy infrastructure globally is creating opportunities that may mitigate these financial hurdles. Governments and international financial institutions are channeling more funds into renewables, including geothermal, to diversify the global energy mix and finance costly exploration.

Regulatory frameworks in major markets are also designed to support adoption. In the European Union, the Renewable Energy Directive encourages geothermal adoption to meet overall energy targets. In the United States, the Department of Energy (DOE) promotes geothermal projects under energy efficiency and sustainability mandates. Geothermal projects must comply with safety and environmental guidelines, including the U.S. Environmental Protection Agency’s (EPA) requirements under the Clean Air Act and the National Environmental Policy Act concerning emissions, water usage, and land disturbance.

Ultimately, while the geothermal power sector is projected for healthy growth due to its ability to provide consistent baseload power and technical innovation like EGS, its trajectory remains dependent on sustained investments and policies that overcome the inherent high upfront costs associated with accessing the Earth’s deep heat resources.

By Michael Kern for Oilprice.com

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