Global Geothermal Investment Enters New High Growth Era

Global geothermal capital expenditure is projected to increase by approximately 20 per cent annually through 2030, according to recent analysis from Rystad Energy’s geothermal economics model. This expansion marks a significant shift in the sector, which has historically been concentrated in established markets such as Southeast Asia and the United States.

The broadening of geothermal activity now encompasses emerging regions including Africa and Europe, where interest has been developing at a measured pace. Investment distribution across development categories remains relatively consistent due to stable cost structures in drilling, surface facilities and steamfield infrastructure.

Current spending allocation sees just over half of total capital directed towards surface facilities, whilst an estimated 47 per cent funds subsurface operations. Pre-final investment decision activities account for approximately 2 per cent of expenditure. This cost structure demonstrates consistency across most markets, establishing a defining characteristic of geothermal development globally.

The relatively modest allocation to pre-FID work carries significant risk implications, as early exploration determines whether projects proceed or are terminated. The uniformity of cost distribution contributes to relatively consistent project timelines and financing requirements across regions, despite overall growth in activity levels.

Regional deployment patterns reveal distinct priorities shaped by local energy requirements and resource availability. Europe’s geothermal sector is predominantly focused on district heating applications, driven by ambitious decarbonisation targets and extensive municipal heating networks. This contrasts sharply with Asia, particularly Indonesia, and North America, where electricity generation dominates geothermal development.

These divergent approaches influence both installed capacity and investment patterns. Europe demonstrates greater reliance on subsurface development for heating purposes despite lower surface infrastructure costs. Meanwhile, Asian and North American markets exhibit more balanced demand between drilling operations and surface power facilities.

Enhanced geothermal systems represent a notable technological advancement, reducing site dependence by requiring only hot rock rather than aquifers. This capability unlocks additional clean power potential and provides stable baseload heat, expanding the geographical scope of viable geothermal development.

Alexandra Gerken, Vice President of New Energies Analysis at Rystad Energy, noted that geothermal energy is increasingly being tailored to regional needs, reflecting its dual role as both a source of clean, reliable power and a provider of heat. In the United States, growth is being propelled by EGS expansion and rising demand for baseload power from data centres. Europe continues to prioritise heat decarbonisation, whilst Southeast Asia is deploying geothermal resources to meet expanding electricity requirements.

Cost structures differ significantly between heating and power generation projects. Geothermal heating projects typically cost roughly half those of power generation facilities due to simpler surface infrastructure requirements. This cost differential is influencing investment decisions and policy frameworks across markets.

The sector’s longer-term potential in cooling applications is also gaining attention, a market segment expected to expand alongside global data centre activity. This application remains less widely considered but presents additional growth opportunities as demand for sustainable cooling solutions increases.

The accelerated investment trajectory reflects growing recognition of geothermal energy’s attributes as a baseload power source capable of providing continuous output independent of weather conditions. This reliability positions geothermal as a complementary technology to intermittent renewable sources such as wind and solar power.

As more projects advance towards final investment decisions, the sector is demonstrating maturation beyond its traditional geographical concentrations. The consistent cost structures across regions, combined with technological advancements such as enhanced geothermal systems, are supporting this expansion into new markets.

The projected 20 per cent annual growth rate through 2030 indicates substantial confidence in geothermal’s role within the broader energy transition. Investment patterns suggest that both established and emerging markets are positioning geothermal energy as a key component of decarbonisation strategies, whether through power generation, district heating or future cooling applications.