Geothermal energy, a versatile and clean energy source, has been part of global energy systems for over a century. However, its contribution to global energy demand remains minimal, accounting for less than 1% of total energy consumption. Despite this, geothermal energy holds immense potential, especially with advancements in technology and the involvement of the oil and gas industry. This article delves into the current state of geothermal energy, its future potential, and the role of policy and innovation in scaling up its deployment.
Current State of Geothermal Energy
Geothermal energy is primarily used for electricity generation and heating/cooling applications. In 2023, geothermal energy accounted for 0.8% of global energy demand, with the majority of its use concentrated in countries like the United States, Iceland, Indonesia, Türkiye, Kenya, and Italy. These countries benefit from easily accessible, high-quality geothermal resources. Globally, geothermal power capacity reached nearly 15 gigawatts (GW) in 2023, with the United States leading in installed capacity.
Geothermal power plants are highly efficient, with an average utilization rate of over 75%, compared to less than 30% for wind and 15% for solar PV. This high capacity factor makes geothermal energy a reliable, dispatchable source of electricity, capable of providing baseload power and supporting grid stability.
Heating and Cooling Applications
Geothermal energy is also widely used for heating and cooling, particularly through ground-source heat pumps and district heating networks. In 2023, over 60% of geothermal heat was consumed in residential and commercial buildings, with China being the largest user of geothermal district heating. However, the industrial use of geothermal heat remains limited, representing just 1% of direct use globally.
Policy and Investment Landscape
Despite its potential, geothermal energy faces several challenges, including high upfront costs, lengthy permitting processes, and environmental concerns. Over 100 countries have policies in place for solar PV and onshore wind, but less than 30 have implemented policies for geothermal energy. This lack of policy support has hindered the growth of the geothermal sector.
Investment in geothermal energy has been growing, with total investments exceeding USD 47 billion in 2023. However, the majority of these investments are concentrated in China, which accounts for over 70% of global geothermal investments. Outside of China, investments have been increasing, particularly in the United States and Europe, driven by policy support and the need for energy security.
Next-Generation Geothermal Technologies
The future of geothermal energy lies in next-generation technologies, such as Enhanced Geothermal Systems (EGS) and Closed-Loop Geothermal Systems (CLGS). These technologies aim to overcome the limitations of conventional geothermal systems by enabling access to geothermal resources in areas without naturally occurring hydrothermal reservoirs.
EGS involves creating artificial reservoirs by fracturing hot rock formations and circulating fluids to extract heat. This technology has the potential to unlock vast amounts of geothermal energy, particularly in regions with high subsurface temperatures but insufficient natural permeability. CLGS, on the other hand, involves drilling deep, closed-loop circuits to circulate fluids and extract heat without the need for reservoir stimulation.
Technical and Market Potential
The technical potential of next-generation geothermal systems is enormous. According to a first-of-its-kind analysis conducted for this report, the global technical potential for geothermal electricity generation using EGS is nearly 600 terawatts (TW), sufficient to meet global electricity demand 140 times over. This potential increases with depth, with resources below 8 km offering the highest capacity.
Geothermal energy also has significant potential for heating applications. The global technical potential for geothermal heat from sedimentary aquifers at depths up to 3 km is estimated at 320 TW, consistent with the requirements of existing fossil fuel-fired district heating networks. For lower temperature requirements, the potential increases tenfold.
Role of the Oil and Gas Industry
The oil and gas industry can play a crucial role in advancing geothermal energy. Up to 80% of the investment required for geothermal projects involves skills and technologies that are common in the oil and gas sector. The industry’s expertise in drilling, reservoir management, and project execution can significantly reduce the costs of geothermal development.
Oil and gas companies are increasingly diversifying into geothermal energy, leveraging their existing infrastructure and expertise. For example, companies like Chevron and OMV are investing in geothermal projects, while service providers like SLB and Halliburton are developing specialized equipment for geothermal operations.
Cost Reductions and Competitiveness
The cost of next-generation geothermal technologies is currently high, but significant reductions are possible with the right support. The report estimates that costs for next-generation geothermal could fall by 80% by 2035, making it one of the cheapest dispatchable sources of low-emissions electricity. At this cost level, geothermal energy would be highly competitive with solar PV and wind, especially when paired with battery storage.
Policy Recommendations
To realize the full potential of geothermal energy, governments need to take several steps:
1. Move Geothermal Up the Energy Policy Agenda: Governments should include geothermal energy in national energy plans and set specific goals and roadmaps for its development.
2. Design Risk Mitigation Schemes: Early-stage project development risks can be mitigated through grants, public insurance schemes, and subsidized loans.
3. Simplify Permitting Processes: Streamlining permitting and licensing processes can accelerate project development while maintaining high environmental standards.
4. Support Research and Innovation: Increased funding for research and development can drive technological advancements and reduce costs.
5. Expand Geothermal Skillsets: Training programs and academic courses in geothermal energy can help build a skilled workforce to meet growing demand.
Conclusion
Geothermal energy has the potential to play a significant role in the global energy transition, providing a reliable, dispatchable source of clean electricity and heat. With continued technological innovation, cost reductions, and supportive policies, geothermal energy could meet up to 15% of global electricity demand growth by 2050. The involvement of the oil and gas industry, with its extensive expertise and resources, will be crucial in scaling up geothermal energy and making it a cornerstone of tomorrow’s energy systems.
References
– International Energy Agency (IEA). (2024). The Future of Geothermal Energy.
– Project InnerSpace. (2024). Geothermal Exploration Opportunities Map (GeoMap™).
– REN21. (2024). Renewables 2024 Global Status Report.
– US Department of Energy. (2019). GeoVision Report.
– IRENA. (2023). Renewable Power Generation Costs in 2022.
– IEA. (2024). World Energy Outlook 2024.
