Geothermal energy set for rapid global expansion with new technological and regional breakthroughs

Global investment in geothermal energy is poised for sustained and accelerated growth through the end of the decade, with spending projected to increase by around 20% annually until 2030. According to a recent analysis by Rystad Energy, this expansion reflects geothermal energy’s evolving role beyond traditional strongholds in Southeast Asia and the United States, now gaining traction across Africa and Europe as well.

Geothermal power, which harnesses heat from beneath the earth’s surface, is increasingly recognised not only as a source of clean, reliable baseload electricity but also as an effective means to decarbonise heating systems. Rystad Energy’s detailed cost and asset analysis reveals that investment is fairly evenly split between surface infrastructure, such as power plants and steamfield systems, and subsurface activities like drilling, with a small but critical portion allocated to early-stage exploration that determines project viability.

Regionally, investment patterns and project focuses differ markedly. In North America and Southeast Asia, where geological conditions favour electricity generation, geothermal projects predominantly target baseload power, including emerging enhanced geothermal systems (EGS). This technology reduces dependency on natural aquifers by exploiting hot rock underground, potentially unlocking vast new resources. The US, for instance, is witnessing an uptick in EGS development to meet the growing electricity demand of data centers, an industry increasingly vital due to the rise of artificial intelligence.

Meanwhile, Europe is leading efforts to integrate geothermal energy into district heating networks as part of broader municipal decarbonisation strategies. Countries like Germany are actively legislating to accelerate geothermal heat expansion by simplifying approvals, underscoring geothermal’s crucial role in phasing out fossil fuels from heating by 2045. This focus on heat rather than power generation generally entails lower capital costs, with district heating projects requiring about half the investment per watt compared to electricity-focused facilities.

Africa’s geothermal sector, though nascent today with roughly 1 gigawatt (GW) installed capacity, is set to rapidly expand. Rystad Energy projects that by 2030, Africa’s geothermal capacity will surpass Europe’s, buoyed by major projects in Kenya and Ethiopia that could account for nearly 90% of the continent’s geothermal output. Long-term investments on the continent are expected to reach at least $35 billion by 2050, reflecting rising energy demands and the continent’s strategic emphasis on clean energy development.

This global momentum is further reflected in landmark projects such as the planned “Hell’s Kitchen” geothermal power facility at California’s Salton Sea. Partnered by Baker Hughes and Controlled Thermal Resources, this project aims to deliver 500 megawatts, enough to power approximately 375,000 homes, predominantly supporting high-energy data centers demanded by the AI sector’s growth. Such projects exemplify how geothermal energy can offer stable, continuous power supply where intermittent renewables may fall short.

Despite widespread optimism, challenges remain. The International Energy Agency recently revised down its renewable energy capacity growth forecasts due to policy uncertainties in key markets like the US and China, which could pose indirect risks for geothermal development despite its distinct technical profile. Furthermore, early-stage exploration remains a critical risk factor, as unsuccessful drilling can halt projects before significant capital is deployed.

Nonetheless, innovations emerging from other energy sectors are contributing positively. Improved drilling technologies, initially developed for unconventional oil and gas extraction such as hydraulic fracturing, are now being adapted for geothermal applications, enhancing the feasibility and reducing the cost of accessing subterranean heat. This crossover exemplifies how investments and technical progress in one sector can catalyse advances in another, accelerating industrial decarbonisation goals.

Looking forward, geothermal energy’s capacity to provide consistent baseload power while addressing heating and cooling needs positions it uniquely within the clean energy transition. With investments rising, supportive policies evolving, and technological breakthroughs underway, geothermal is poised to become a cornerstone of industrial decarbonisation strategies worldwide. This growth trajectory offers considerable opportunities for investors, developers, and policymakers aiming to harness geothermal resources’ full potential in the global energy landscape.