Geothermal Energy Market Set for Strong Growth as Technology Improves

A geothermic power station.

Some two-thirds of the electricity generated in the US today comes from fossil fuels, including about 39% from coal. Most other countries are in the same boat. But what if you could get every bit of energy the world needs straight out of the ground, forever, with zero carbon emissions?

That’s the promise of geothermal. This energy source relies on accessing underground reservoirs of liquid water and steam – or, in some cases, very hot rocks – all of which are heated by the slow decay of radioactive particles in the earth’s core. 

Tapping these geothermal resources allows the generation of clean energy without fossil fuels. Until fairly recently, however, widespread use of geothermal energy was only practical in the relatively few places on earth where underground water and steam reservoirs are fairly close to the surface. But new technologies are making this vast energy source practical in more and more locations, and the market is set to boom.

Market Expected to Reach $6.8 Billion in 2026

According to Allied Market Research, the global geothermal power market was worth $4.6 billion in 2018 and is projected to reach $6.8 billion in 2026. It employs about 35,000 people in the US alone. 

Like other renewable energy markets, the geothermal market is driven primarily by the need to develop new sources of clean energy to combat climate change and meet increasingly stringent environmental regulations. According to Allied Market Research, other factors are at play as well. These include:

  • Volatile fossil fuel prices
  • Limited presence of fossil fuels
  • The relatively high capacity of geothermal power
  • The relative cost-effectiveness of geothermal energy
  • Reduction in pollution by geothermal power plants
  • Increase in demand for energy worldwide

The market outlook is clouded somewhat by the fact that geothermal power plants require a huge upfront investment that not all utilities are willing to make. Geothermal energy also can have some negative environmental impacts that undercut its eco-friendly image. Finally, the exponential growth of wind and solar power is providing stiff competition for geothermal. Still, an “increase in government financing and continuous developing technologies in the renewable energy sector are expected to offer lucrative opportunities for market expansion over the next five years,” Allied Market Research says.

The Asia-Pacific region is expected to see the strongest expansion of geothermal energy by 2026, in part because many of its low-income and rural communities will have access to electricity by then. New environmental laws and regulations in the region will drive the market as well. For example, India has reiterated its commitment to reduce carbon emissions and has passed a national budget that boosts renewable energy.

Key players in the geothermal energy market include:

Geothermal Energy Companies to Watch

Geothermal energy used to be a relatively niche field that was practical on a large scale in only a few places on the planet. That is starting to change with technological advances, and now companies from around the world are entering this growing market. Here are a few of them.

AltaRock Energy ($36.5 Million Total Funding)

Seattle-based company AltaRock Energy is a leader in the development of enhanced (aka engineered) geothermal systems (EGS). The company’s goal is nothing short of “making clean, affordable, renewable geothermal energy available anywhere and everywhere.” 

Unlike conventional geothermal wells, which are limited to areas with shallow pockets of steam and hot water, AltaRock’s Superhot Rock (SHR) geothermal technology uses advanced drilling and other techniques to inject fluid into high-temperature rocks (at least 750°F) underground. This process can yield up to 10 times more energy than a conventional geothermal well and allow geothermal to scale globally while at the same time replacing and repurposing fossil fuel power plants. 

Fervo Energy ($39 Million Total Funding)

Fervo Energy, based in Houston, is another company that wants to leverage new and existing technologies to accelerate the development of geothermal energy. The company uses its 10+ years of experience in the shale sector to improve the performance of geothermal energy systems and wells, combining advanced drilling techniques, fiber optic sensors, and cloud-based analytics. 

Enerdrape ($174,400 Total Funding)

Paris-based Enerdrape produces modular, scalable, easy-to-install, prefabricated geothermal panels that can turn new or existing underground infrastructure into a renewable energy source to heat and cool buildings. 

The panels integrate into a closed circuit of pipes in which a fluid circulates to exchange heat with an underground radiator. The panels both absorb shallow geothermal energy for heat and eliminate waste heat from the air for cooling. The panels can be used on their own or in conjunction with other renewable and/or fossil-fuel-based energy sources. 

Yeager Energy (Funding Not Available)

Yeager Energy, a company based in the Netherlands, develops and operates a portfolio of geothermal energy and district heating networks using an innovative combination of subsurface and surface facilities. These facilities consist of wells, heat and cold distribution, heat and cold storage, and an intelligent, demand-driven control system that permits heating and cooling all year long. 

The company combines geothermal heat sources with other heat sources like waste heat from data centers, freezers, industrial processes, etc. Its overall goal is to provide reliable, cost-competitive, sustainable heat for residential users and the horticulture sector.

Eavor ($64.9 Million Total Funding)

Canada-based Eavor is a geothermal energy company that says it has developed the world’s first truly scalable form of clean, baseload, and dispatchable power. Eavor’s system circulates a benign working fluid that’s completely isolated from the environment in a closed loop, much like a massive subsurface radiator. This “radiator” simply collects heat from the natural geothermal gradient in the ground via conduction. 

Unlike traditional geothermal solutions, Eavor’s system doesn’t require highly permeable aquifers at volcanic-like temperatures, which means it can be used in many more areas around the world. This solution bests other geothermal systems by eliminating fracking, greenhouse gas emissions, and earthquake risks. In addition, the system uses no water, produces no brine or solids, and doesn’t contaminate aquifers.

Recent Geothermal Energy Developments

Many exciting geothermal energy projects and initiatives are being spun up around the globe. These include:

AltaRock Energy

Newberry Volcano, located near Bend, Oregon, sits atop one of the largest geothermal heat reservoirs in the western US. AltaRock Energy and its partners have concluded that Newberry could support a commercially viable EGS power plant. Using SHR extraction technology developed by AltaRock Energy, the Newberry Project could one day generate up to 10 gigawatts of electricity – enough to power three million homes.

Fervo Energy

Fergo Energy recently joined the United Nations, Google, and others to launch the 24/7 Carbon-free Energy Compact, a new global effort to accelerate the transition to a carbon-free electricity sector to mitigate the worst impacts of climate change. The Compact lays out ways to adopt, enable, and advance 24/7 carbon-free energy, focusing on hourly decarbonization of local and regional electricity grids. 

“24/7 carbon-free energy is the next step in advancing progress to address climate change,” Fervo Energy Chief Executive Officer Tim Latimer said in a press release. “Fervo Energy is excited to sign on to this important effort and to continue driving forward geothermal innovations to create a truly carbon free grid.”


Enerdrape announced that some of its panels are currently being pilot-tested in an underground parking structure in Lausanne, Switzerland, where the company says they will be able to supply up to a third of the energy needed to heat about 60 apartments in a building directly above the parking structure year-around. The ten panels measuring 1.3 meters x 0.7 meters are made of a metal no thicker than a painter’s canvas. Each panel functions as a heat exchanger that captures both geothermal and ambient energy. 

Yeager Energy

Yeager Energy announced in a press release that it has partnered with another company from the Netherlands called EnerTrans. The partnership will combine Enertrans’ leading district heating network development and operating expertise with Yeager Energy’s extensive sub-surface energy and project management expertise. The goal is to realize greater efficiencies and lower costs leading to an innovative, sustainable, reliable, and affordable heat for industries, businesses, greenhouses, and consumers. The companies will jointly develop the complete heat supply chain from the source (geothermal and other sustainable sources of heat) to transportation and distribution to the sale of heat.

Eavor Technologies

Eavor Technologies and Deep Energy Capital, an energy investment firm, announced in a press release that they have partnered to begin deploying Eavor’s closed-loop geothermal systems. Initially focusing on European markets, Deep Energy aims to catalyze $5.6 billion in investment to generate clean energy for more than one million homes and avoid more than 1.5 million tonnes of CO2 emissions annually. Using Eavor Technologies’ system, “Electrical power and heating can be delivered with reliability and confidence” on a large scale, president and CEO John Redfern said in the press release. “No fracking, no emissions, no intermittency. This collaboration with Deep Energy is an important step in financing and unlocking our low-carbon future.”

How Geothermal Energy Works

The US Energy Information Administration explains that geothermal energy is heat below the surface of the earth. This heat is constantly being generated by the decay of radioactive particles and by friction as denser material sinks towards the earth’s molten core, which is about 10,800°F. Underground radioactive decay alone generates about 30 terawatts of energy every year, almost double the amount that humans consume.

Geothermal heat can be used as clean, renewable energy for three primary purposes: generating electricity through geothermal power plants, heating through deep direct-use applications, and heating and cooling with geothermal heat pumps. 

Geothermal Power Plants

Most power plants work by converting heat into electricity. This is true of power plants that run on coal, natural gas, and nuclear fission. It’s also true of traditional geothermal power plants, which drill for subsurface hot water or steam much the same way as an oil rig drills for oil. 

The US Environmental Protection Agency explains that a conventional geothermal power plant drills one to two miles into the earth’s crust to pump naturally occurring steam to the surface under high pressure. Alternatively, the plant can pump hot water to the surface, which turns to steam as pressure decreases, or can boil other liquids with a lower boiling point. The steam spins a turbine that’s connected to a generator, which produces electricity. It’s then condensed into water and pumped back into the ground for reuse. 

Geothermal power plants have much in common with other types of power-generating stations, including turbines, generators, transformers, and other equipment. But until recently, geothermal energy has been difficult to extract and geographically limited because of the need to drill deep wells to reach existing pockets of steam and hot water. Technological advances are starting to address this limitation, however. 

One of the most promising developments is EGS, which enables companies to extract energy from hot, dry subterranean rocks by injecting fluid into the ground to expand existing fractures and make the rocks more permeable. This allows the fluid to circulate throughout the rocks and transport heat to the surface, where electricity can be generated. 

While advanced EGS technologies are still under development, they have been used successfully on a pilot scale in Europe and at two demonstration projects in the US funded by the Department of Energy (DOE). 

Direct Deep-Use

Direct Deep-Use (DDU) geothermal applications rely on new technologies that enable energy production from geothermal fluid in the ground at temperatures of 300°F or less. 

For example, oil and gas wells in the US produce about 25 billion barrels of wastewater at these temperatures every year. Such co-produced geothermal resources can generate significant amounts of baseload electricity at low costs with near-zero emissions. DDU applications thus have a wide variety of potential uses, including district, commercial, and residential heating and cooling; industrial processes; and agriculture. 

Geothermal Heat Pumps

Geothermal heat pumps are a cheaper alternative to geothermal power plants and can heat and cool everything from buildings to swimming pools. They transfer heat by pumping water or a refrigerant through pipes just below ground, where the temperature stays between about 50°F and 60°F all year long. During the winter, the water or refrigerant absorbs heat from the ground, and the heated liquid is pumped into a building or other structure directly above. During the summer, the same heat pumps can be run in reverse and dispose of excess heat.

Benefits of Geothermal Energy

According to the EPA, modern closed-loop geothermal power plants emit no greenhouse gasses during operation. They also produce four times fewer emissions over their life cycles than solar PV power plants and six to 20 times fewer emissions than natural gas power plants. Geothermal thus is considered by many to be a key part of the world’s efforts to mitigate climate change. 

The DOE recently announced it is spending $12 million on seven research projects to advance the commercialization of EGS. “Tapping into geothermal energy — a clean and reliable energy source underneath our feet that is available in all corners of this country — is a key part of our plan to expand and diversify America’s clean energy market,” Secretary of Energy Jennifer M. Granholm said. “The ground-breaking solutions we’re anticipating from the selected national laboratory and university research teams will help America achieve a clean energy economy while creating good-paying jobs and bolstering America’s energy workforce.”

Besides generating clean energy, geothermal has a variety of other advantages. 

  • It’s renewable. As long as the earth exists, it will produce more than enough heat to satisfy the world’s energy needs. Although the heat in a given pocket of steam or hot water can be depleted, this can be avoided by balancing the rate of energy extraction from a given hydrothermal reservoir with its natural replenishment rate. 
  • It’s more accessible than ever. Using EGS, energy companies can extract heat from the earth’s crust by injecting water into hot subterranean rocks without having to drill miles into the ground in relatively limited areas with naturally occurring pockets of steam and hot water.
  • It’s constant. Unlike intermittent renewable energy sources such as solar and wind, geothermal produces electricity day and night regardless of the weather.
  • It’s compact. Geothermal plants use less land than coal, wind, or solar plants. National Geographic estimates that a geothermal power plant that can produce one gigawatt-hour (GWh) of electricity needs about 404 square miles of land surface. A comparable wind farm needs about 1,335 square miles, and a solar farm would need about 2,340 square miles.

Challenges of Geothermal Energy

Although geothermal has plenty of potential, there are a few downsides.

  • It’s often geographically limited. Conventional geothermal plants can only be built above geothermal reservoirs at temperatures hotter than 212°F (e.g., over active fault zones). Lower-temperature geothermal resources can be used for heating and cooling, but generally not for power plants. EGS will enable much more flexible siting of geothermal plants, but these systems are still in development.
  • It’s expensive up front. According to one analysis, a geothermal energy plant costs between $4,000 and $6,000 per kilowatt-hour (kWh), compared to no more than $1,250/kWh for utility-scale solar energy and $1,550/kWh for wind. 
  • It’s prone to causing earthquakes. These can result from the deep holes that must be drilled to release hot steam and/or water contained in underground rock formations.
  • It’s not necessarily carbon-neutral. The Union of Concerned Scientists points out that open-loop geothermal systems emit hydrogen sulfide, carbon dioxide, and other pollutants. Although closed-loop geothermal systems (which inject gases removed from the well back into the ground after heat is extracted) don’t usually release greenhouse gases, the drilling required to access geothermal reservoirs can.

Adriaan Brits

As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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