Sustainability
Transition Tearsheet - Geothermal Energy
Could investment in next-gen geothermal energy reach more than USD 2 trillion by 2050?
Geothermal 101 and the Transition Opportunity
Geothermal 101 and the Transition Opportunity
Geothermal energy offers 24/7, low-emissions, dispatchable electricity and heating/cooling, with minimal land and material footprint compared to other renewables. It isweather-independent and can support grid stability.
What's changing? Significantly higher resource potential & falling costs
What's changing? Significantly higher resource potential & falling costs
With the adoption of next-generation geothermal systems, the total resource potentialof geothermal is vastly expanded (50+ times higher in the US). If drilling to 7km becomesa commercial reality, the technical electricity generation potential of geothermal wouldbe second only to solar among renewables. Conventional geothermal uses heatcarried to the surface by fluids naturally occurring in the subsurface such as aquifers,where water trapped in porous or fractured rock is heated by the surrounding rock.
Next-generation geothermal refers to new engineered systems that harvest heat atgreater depths. They include enhanced geothermal systems (EGSs) and closed-loopgeothermal systems (CLGSs, also known as advanced geothermal systems (AGSs)).
What's the opportunity? Conventional could grow by 50% by 2030, next-gencould deliver 15% of global electricity demand growth for 2023-2050
What's the opportunity? Conventional could grow by 50% by 2030, next-gencould deliver 15% of global electricity demand growth for 2023-2050
Currently, geothermal supplies about 0.8% (15.5GW) of global electricity. Conventionalgeothermal is expected to grow by nearly 50% to 22-26GW by 2030 and up to 83GWby 2050, according to the IEA. The real step-change comes from next-gen geothermal:
with cost reductions and technology advances, cumulative investment could reach USD 1trillion by 2035 and USD 2.5 trillion by 2050.
Tailwinds - We see policy momentum from geopolitics & power demand
Tailwinds - We see policy momentum from geopolitics & power demand
Policy support is critical for both conventional and next-gen geothermal. The US recentlyextended geothermal tax credits to 2034, confirming bipartisan support for thetechnology; Japan offers FITs and is reviewing further support for next-gen systems.
Indonesia, China, and the EU are also providing targeted incentives. We think policymomentum is increasing due to heightened geopolitical risks, tight power markets,decarbonization commitments, and competition to attract AI/data centers.
As wediscuss here, data center electricity consumption growth is expected to be highest in theUS, China, Europe, and Japan. A recent CBRE report forecasts APAC data center capacityto double by 2028, leading to a 15-25GW power supply shortage (a 25-42% gap).
