"Geothermal energy could see transformative global growth thanks to advancements in technology and expertise from the oil and gas sector," the International Energy Agency (IEA) said in a report groundbreaking report entitled “the Future of Geothermal Energy” released in December. The IEA has decupled its estimate of the potential power generation capacity of geothermal to 800 GW – almost enough to power the entire EU or US economies.

According to Fatih Birol, Executive Director of the IEA, there is huge untapped potential in geothermal energy to provide clean and secure energy worldwide that also solves the most basic of the problems associated with renewable energy: providing a base load power supply when the sun is not shining or the wind is now blowing. Geothermal's greatest advantage is that the supply of power is constant and neither dependent on the weather nor the diurnal cycle.

With electricity consumption expected to surge due to the rising use of air conditioning, electric vehicles and data centres, geothermal energy offers a reliable alternative. “With electricity use set to grow strongly to run air conditioners, EVs and data centres, geothermal offers clean power round-the-clock,” Birol said.

800 GW potential

The potential of geothermal energy is massive. The IEA has upgraded its assessment of the total power available from the earth ten-fold to 800 GW – a bit less than the circa 1,000 GW the US or Europe generated last year – up from the 16.3 GW produced globally in 2023.

Geothermal will never replace solar and wind from amongst the renewables, which will remain cheaper to produce and easier to install, but the IEA says that it will make up 15% of the growth of new generating capacity to 2050 and nearly all that new capacity will be from investment into renewables. Geothermal’s anticipated rapid growth will be driven by the major advantages it enjoys over the other renewables.

First, it is entirely emission free, as it simply draws heat from the earth’s core that is caused by the residual heat from the planet’s formation, gravitational compression and radioactive decay of isotopes inside the core. By the same token, this energy is limitless.

Secondly, the energy produced is continuous and neither dependent on the weather nor the diurnal cycle. That makes geothermal the missing piece in the renewables puzzle; it can be the source of the baseload power supply that is missing from solar at night and wind when the weather is calm.

But to realise the IEA’s projected 800 GW of geothermal power governments and private investors will have to invest some $1 trillion over the next decade. Birol forecasted that “market opportunities for next-generation geothermal energy could attract investment totalling $1 trillion by 2035 and create over a million new jobs,” adding that geothermal could not only meet growing electricity demands but also provide industrial and building heating solutions across the globe.

Birol says that this is not as big a number as it first appears and is the same that has already been invested into wind power in the last seven year and solar power in only the last three years.

“This scale-up of geothermal can easily be done and it can then play a significant role in meeting the rising electricity demand we are expecting from things like the mushrooming AI data centres and improving lives of emerging middle classes around the world,” says Birol.

However, Birol admitted that it is not clear whether geothermal will take off. “Government needs to act with funding and with slashing the bureaucracy of permitting to make it easier to start projects and bring down costs,” says Birol.

Drilling deep

The IEA’s research shows that if geothermal wells drilled to 2,000 metres there are few sites in the world that produce much heat, but the situation changes dramatically if wells are drilled to 5,000 metres, when most of the countries in the world would produce enough heat to be a viable source of energy. And at 7,000 metres virtually the whole world becomes a viable source of geothermal power and heat.

“And 5,000m deep wells are routine for oil companies,” says Birol. “There is a direct cross-over from the oil and gas business to geothermal.”

Industry professionals are more sceptical, as more technological development needs to be done.

“5,000m deep is the cutting edge of the geothermal business,” one industry participant said who wished to remain anonymous, as they are in ongoing government negotiations. “I don’t know of anyone who has dug a well that deep in Europe. Most wells are between 2,000m and 4,000m.”

The expert also pointed out that 7,000m is an extreme, as the temperatures at that depth rise to between 250C and 400C, which would melt steel pipes.

“There are alternatives like making pipes out of carbon fibre, but this is all still in the future,” the expert said.

Currently, most geothermal projects simply drill deep into the earth, pipe down water to extract the heat and bring it to the surface to use either as raw heat or run an electric generation turbine.

However, advances in oil extraction, such as horizontal drilling, offer new opportunities of more sophisticated methods. One option is a “closed loop” geothermal well, where a pipe is sunk and a series of horizonal pipes are drilled to second pipe that can lift superheated water back to the surface – similar to an upside-down radiator.

“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,” the report says.

However, experts say this idea remains on the drawing board and no one has yet attempted to build a closed loop system, although a lot of money is being invested into the research.

The IEA report proposes 7,000m deep wells, but industry professionals bne IntelliNews talked to said much shallower wells are as attractive, which lift heated water at between 100C and 130C. Half of the gas burnt in the Netherlands goes to heating houses and heat brought to the surface can be used for simple tasks like heating greenhouses in the winter, cutting the demand for other fuels like gas.

Lower temperatures can be used to power turbines if the water is replaced by alcohol with lower boiling temperatures that can also drive turbines. But of course superheated water from the deeper wells will produce far more energy if the goal is to provide the baseload power for the national grid.

Falling costs

“The EU is the home of geothermal technology and the first commercial geothermal project in the world,” Brent Wanner, head of the IEA’s power sector unit, said during the press conference. “Now we can drill deeper it is possible to increase the output and meet rising demand many times over. There is a huge and open opportunity in Europe.”

The world’s first commercial geothermal power plant was developed in Larderello, Tuscany, Italy, in 1904, by scientist Prince Piero Ginori Conti. Natural steam from a hot spring was used to power a small generator that eventually powered local industries. Today the Larderello geothermal field is a major contributor to Italy’s energy mix, producing 800 MW of power a year, enough to light 1mn homes.

The EU also been a global leader in promoting decarbonisation with its Green Deal that is supposed to see carbon-zero by 2050, and it is technologically advanced.

Currently, thanks to the drilling costs, producing geothermal power is expensive: just under $250 per kilowatt hour. But Birol says that geothermal power should follow the same path as solar power, where the costs have fallen dramatically in the last years as countries around the world have scaled up their solar power generation; solar power has become the cheapest source of power at $50 per kWh, leading to an acceleration in the roll out of new capacity, led by China, the global green energy champion. The IEA forecasts that geothermal costs will also fall to $50 per kWh by 2035 if governments and investors around the world throw themselves into the business – a fall of 80%.

“We are expecting to see costs of producing geothermal to fall by three quarters in the coming years thanks to the spillover effects from the oil technology,” says Birol.

But there are still many hurdles to overcome. Birol began his presentation by calling on governments to expediate issuing permits, which currently can take over a decade to obtain. One industry professional told bne IntelliNews that the Netherlands has recently tried to simplify the permitting process, but all that happened was each part of a project now requires a separate permit so they have to submit applications for two, whereas before both parts of the project were covered by a single permit, and this change has introduced delays of eight months to the process.

“It means you have to take a portfolio approach; the uncertainties this sort of thing introduces means that a project can be derailed or delayed and that causes problems with funding. So you need multiple projects in case one goes wrong,” the expert said.