Geothermal Power Market

Market Overview

The global geothermal power market size was valued at USD 8.39 billion in 2023. It is estimated to reach USD 12.10 billion by 2032, growing at a CAGR of 4.2% during the forecast period (2024–2032). The growing need for renewable energy, rising energy needs, technical improvements, government assistance, and a focus on energy security are all driving the market forward.

The demand for renewable energy is rising due to the adverse effects of thermal energy. Technological advancements have led to the introduction of electronic products that need electricity for domestic and commercial purposes, increasing the energy demand and simulating the geothermal power market. Geothermal power is the energy derived from the heat stored within the Earth's core. The natural heat produced by the Earth's interior is captured and used as a renewable energy source to produce electricity or provide heating and cooling. Geothermal power is typically generated by tapping into geothermal reservoirs, areas of the Earth's subsurface where hot water or steam is trapped. These reservoirs are usually located in regions with active volcanoes, geothermal hotspots, or areas with high geothermal gradients.

To harness geothermal power, geothermal power plants drill wells into the ground to access the hot water or steam reservoirs. These wells can reach depths of thousands of meters. Once the wells are in place, hot water or steam is extracted from the geothermal reservoirs through production wells. The high temperatures and pressure of the fluids make them suitable for generating power. However, geothermal power generation is location-dependent. It requires access to geothermal reservoirs, which are not evenly distributed worldwide. The initial development costs can be high due to the drilling and exploration required.

Market Dynamics

Global Market Drivers

Rise in Demand for Renewable Energy

Renewable energy is derived from natural processes like wind and sunlight. Solar, geothermal, wind, bioenergy, hydropower, and ocean are some of the major renewable energy sources. Renewable energy is utilized in heating, electricity, cooling, and transport. Renewable energy collectively provides around 7% of the world’s energy demands. Renewables are relatively more expensive as compared to fossil fuels. The International Energy Agency projects that during the next five years, renewable energy will increase in proportion to the total energy consumption of the world, reaching a 12.4% level in 2023.

This is attributed to the fact that several factors are responsible for driving the usage of renewable energies, the most crucial being the rise of global warming due to a rise in carbon dioxide emission from the combustion of fossil fuels. A worry is the need to reduce greenhouse gas emissions, the increase in the search for energy security, the aversion to traditional nuclear power, and the lack of progression in the application of nuclear power, which are anticipated to drive the demand for geothermal power during the forecast period.

Rise in Electricity Consumption

The electricity demand has increased immensely in recent years. This is attributed to technological advancements that have led to the introduction of electronic products that need electricity for domestic and commercial purposes. Furthermore, consumers' rising per capita disposable income and spending abilities have raised the sales of electronic devices such as refrigerators, televisions, and air conditioners. The modernization and development of the construction industry and the evolution of high-end residential buildings have increased the demand for power over the past few years. In 2012, the world electricity consumption was 20,900 TWh, which increased by 1.9% to 21,297 in 2013.

Renewable energy sources accounted for approximately 21% of the total electricity production in 2015. The increase in GDP and a rise in infrastructural development in emerging economies are the major factors fueling the demand for geothermal power. India and China recorded the largest increment in global electricity consumption between 2013 and 2015. The global GDP projection is projected to achieve the USD83 trillion mark by 2022. Consequently, there would be a greater need for power generation to meet the industries' and consumers' electronics' growing demand for electricity.

Global Market Restraints

High Cost for Establishment of Geothermal Power Plant

Building infrastructure is necessary for the development of new resources. These investments increase electricity costs, especially during the early years. Initially, the developers must find publicly acceptable sites with appropriate resources and access to transmission lines. Finding a potential solar site requires several years of monitoring to determine whether it is suitable for generating power. Moreover, the workers must be trained to install, operate, and maintain power plants. Some require operating experiences in certain climatic conditions before optimizing performance. All these factors raise the cost of installing geothermal power plants. This high cost is expected to hamper market growth as it limits the use of geothermal power.

Global Market Opportunities

Potential Growth Opportunities Offered by Emerging Economies

Economies like China and India are anticipated to drive the demand for geothermal power owing to a significant increase in energy demand. This is attributed to the rise in investment in renewable energy projects in these countries. The residential and industrial sectors are anticipated to consume more energy during the anticipated period in Asia-Pacific, attributed to an increase in population and a surge in demand for electricity generation.

Furthermore, India offers significant growth potential; however, due to its inconsistent policies and business environment regarding renewable energy generation in the past, the share in total energy production was less. India is one of the nations seeing strong expansion in the Asia-Pacific market due to rising investments in renewable energy projects. Thus, all these factors collectively are anticipated to offer remunerative opportunities for expanding the global geothermal power market during the forecast period.

Regional Analysis

North America Dominates the Global Market

Based on region, the global market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global geothermal power market shareholder and is estimated to grow at a CAGR of 4.2% over the forecast period. The growth of the North American geothermal energy market is driven by increased efforts taken by scientists and developers to meet the growing demand for energy in the Western U.S. and Mexico. Several geothermal projects are ongoing in the U.S. and Mexico, further fueling the demand for geothermal energy. At the end of 2013, the capacity of geothermal power was 3,440 MW in the Western U.S., with new or renovated power plants in Utah, Nevada, California, and New Mexico.

Furthermore, the Mexican Department of Energy will likely have 35% of Mexico's energy production from renewable energy sources by 2024. Mexico is making reforms such as Energy Reform 2013–2018 and Estrategia Nacional de Energía 2013–2027 to open the power market for private and outside organizations. Such initiatives are forecasted to drive the demand for geothermal power and thus contribute towards the market's growth. Moreover, Canada is making a significant contribution to boosting the market growth. For instance, GEA's April 2014 International Projects List has displayed nine current geothermal power generation projects at early or prospective stages. These projects include six geothermal plants in British Columbia, two in Saskatchewan, and one in Alberta.

Europe is anticipated to exhibit a CAGR of 3.6% over the forecast period. Europe's geothermal power market is analyzed across the UK, Germany, France, Italy, Spain, and the rest of Europe. The European Geothermal Energy Council (EGEC) stated that there was a steady growth of geothermal energy in Europe, with 16 new plants expecting to start their operation in 2017, with a combined geothermal power generation capacity of 33 MW. The installed geothermal electricity capacity per year amounts to 2.8 GWe, producing over 15 TWh of energy.

Furthermore, about 330 MWe of new geothermal electricity capacity will be online in Turkey in 2019. Europe is one of the global leaders in investments in renewable energy. One of the biggest research programs in the EU is "Horizon 2020," which allocated USD 6.7 million to renewable energy for 2014–2020. Europe has aimed to cut its greenhouse gas emissions by 80%. To achieve this, the share of renewables is expected to grow significantly, not only in power but also in the transportation, heating, and cooling industries. This factor is expected to contribute to the geothermal power market's growth significantly.

The Asia-Pacific market is analyzed across China, Japan, India, South Korea, Australia, and the rest of Asia-Pacific. The geothermal power market is strong in Indonesia. In addition, when the 330MW Sarulla geothermal power plant went online in May 2018, it denoted another achievement in Indonesia's geothermal power sector. The USD1.7 billion venture of over 2.1 million Indonesian family units is considered the nation's world's biggest single-contract geothermal power plant. Such a milestone is driving the growth of the Asia-Pacific geothermal power market.

The LAMEA geothermal power market is analyzed across Latin America, the Middle East, and Africa. In 2015, around 13% of Costa Rica’s energy was generated from geothermal power plants using the country’s abundant volcanic resources. With five million inhabitants, Costa Rica is the seventh largest geothermal producer out of 25 countries. As per the Inter-American Development Bank (IADB) and the World Bank, Latin America uses around 5% of its geothermal potential of 300 terawatt-hours per year. There is less scope for geothermal power generation in the LAMEA region; however, the market is expected to grow with growth initiatives and investment toward energy development.

Segmental Analysis

The global geothermal power market is bifurcated into power station type and end-use.

Based on power station type, the global market is bifurcated into dry steam power stations, flash steam power stations, and binary cycle power stations.

The dry steam power stations segment dominates the global market and is projected to exhibit a CAGR of 3.5% over the forecast period. Dry steam control plants draw steam from underground resources. The steam is piped from underground wells to the power plant, where it is coordinated into a turbine/generator unit. Two known underground resources of steam are available in the U.S. The Geysers in northern California and Yellowstone National Park in Wyoming, where Old Faithful is a spring. Since Yellowstone is shielded from advancement, The Geysers are home to most of the country's dry steam plants. 

Additionally, an increase in the use of dry steam power stations in Italy is expected to drive the market's growth. The first dry steam power station was built and used at Lardarello in Italy in 1904. Dry steam technology is still effective at the Geysers in Northern California, one of the largest single geothermal power sources. It is anticipated that most of the geothermal power plants in the future will depend on dry steam power generation technology, which is an important element that will fuel the growth of the global market during the forecast period.

Based on end use, the global market is bifurcated into residential, commercial, industrial, and others.

The residential segment dominates the global market and is projected to exhibit a CAGR of 4.2% over the forecast period. Geothermal power is used in the residential sector, mainly for heating, cooling, and electricity generation. In the residential sector, geothermal energy serves as an ideal alternative to fossil fossils and can be used to produce electricity. This is attributed to geothermal power ensuring less oil, coal, and gas use and considerably minimal discharge of greenhouse gasses. Geothermal energy is used in several homes to decrease electric bills and attain eco-friendly electricity generation practices.

Furthermore, the rise in the use of geothermal heat pumps in residential heating applications is expected to drive the market's growth. As demand for electricity increases, it is forecasted that the requirement for geothermal power will increase significantly, thereby driving the growth of the global market. Several businesses in the market provide geothermal energy to the residential sectors. Enel Green Power is one company that owns power plants at a complex serving approximately 2 million families, 8,700 residential and business customers, and 25ha of greenhouses.

Recent Developments

• January 2023- The International Renewable Energy Agency (IRENA) released a report forecasting global geothermal power capacity to reach 30 gigawatts (GW) by 2030. This is up from 16.6 GW in 2020. IRENA attributed this growth to several factors, including the increasing cost of fossil fuels, the need for clean and renewable energy sources, and the development of new technologies that make geothermal power more cost-effective.
• February 2023- The United States Department of Energy (DOE) announced a USD100 million investment in geothermal energy research and development. This funding will support projects that aim to improve the efficiency and cost-effectiveness of geothermal power plans and develop new geothermal exploration and drilling technologies.