In 2020, the world had the capacity to generate 15.7 gigawatts (GW) of electricity from geothermal sources. In 2025, capacity is projected to reach 18 GW. That’s about a $7 billion global market for equipment and services. That’s progress…or at least it seems like it until you realize that total geothermal resources around the world could produce an estimated 600 GW of electricity, worth more than $100 billion. How can key players unlock all that potential? This report from the Boston Consulting Group describes how geothermal could become competitive with other means of energy production.
- Geothermal energy is reliable, renewable, and so far, underutilized.
- The upfront costs are daunting, but technological advances and mineral demand are making geothermal a more competitive option.
- Geothermal energy has great potential for economic growth, and governments and companies that brave the challenges and invest wisely will reap the benefits.
Geothermal energy is reliable, renewable, and so far, underutilized.
Demand for renewable energy will continue to grow during worldwide implementation of decarbonization policies. Estimates suggest that global adoption of geothermal energy production could generate around 600 gigawatts (GW) of power worth more than $100 billion.
“One key advantage of geothermal energy is its reliability, which means that unlike wind or solar it can play a role as a generator of baseload power.”
Geothermal energy is abundant, green, and boasts an advantage that most renewables don’t: reliability. Wind and solar strain the power grid due to their inherent inconsistency; solar provides ample power while the sun is shining, but none at night, and on still days, wind energy is hard to come by. The steady nature of geothermal energy makes it a good choice, particularly for countries that don’t want to rely on fuel imports to generate baseload power.
The upfront costs are daunting, but technological advances and mineral demand are making geothermal a more competitive option.
Geothermal has traditionally been used in “high-enthalpy” areas like Iceland, Turkey and the “Ring of Fire” nations like Indonesia, the Philippines and parts of the United States, because high-enthalpy areas have subsurface temperature gradients ideal for energy production. New approaches to geothermal allow energy production when steam is at a lower pressure and temperature, making it an increasingly feasible option, even in low-enthalpy areas. The brine from geothermal wells can further offset higher costs in low-enthalpy areas. Brine has agricultural and water utility uses, and contains valuable minerals like lithium and silicon. Extracting rare minerals from geothermal wells is more expensive than mining them from sand or rock, but it’s also more environmentally friendly, and burgeoning demand makes rare minerals valuable regardless of source.
“Mining lithium and silicon from geothermal wells has traditionally been ignored due to high extraction costs. But skyrocketing prices for these minerals are changing that.”
Waning use of fossil fuels means that investors, start-ups, and legacy oil and gas companies may turn their sights to geothermal energy, particularly as regional carbon prices climb above $50 per ton. Technological advances are still in development, but when paired with government incentives and well resource maximization, geothermal is increasingly competitive with other sources of energy production.
Geothermal energy has great potential for economic growth, and governments and companies that brave the challenges and invest wisely will reap the benefits.
Harnessing the potential of geothermal energy will prove a challenge. Companies should evaluate existing capabilities, then explore which geothermal services are most within their reach. From there, leaders need to secure financing, stay within regulatory and permitting processes, be aware of potential alternative revenue streams, and acquire or partner with key enablers throughout the value chain.
“Geothermal has huge potential. With greater investment, technological advances and more supportive policies, it promises to be an affordable source of energy.”
Humans have been enjoying the perceived benefits of hot springs for millennia; now, governments, companies, and other players will benefit when they harness the same geothermal power to generate sustainable energy.
About the Authors
Marko Lackovic, Kar Min Lim, Bryan Tam, Fachry Frisandi, Jaime Ruiz-Cabrero, Alex Dolya, Tomislav Corak and Ivan Kozak are professionals with the Boston Consulting Group.