Heating up: Geothermal investment set for 20% annual rise through 2030

Global geothermal investment is entering a period of accelerated growth, with capital expenditure (capex) expected to climb about 20% annually through 2030, according to Rystad Energy’s latest geothermal economics model. This momentum comes as geothermal energy, produced by tapping heat from deep within the earth, is no longer defined only by mature hubs in Southeast Asia and the US. Interest in regions such as Africa and Europe has been building at a measured pace, contributing to a steady broadening of activity worldwide. Meanwhile, the distribution of spending remains relatively stable across development categories due to consistent cost structures in drilling, surface facilities and steamfield infrastructure.

Currently, just over half of total spending goes toward surface facilities, while an estimated 47% is directed to subsurface work and about 2% is allocated to pre-final investment decision (FID) activities. This distribution is broadly consistent across most markets, making this cost structure a defining aspect of geothermal development. Even the relatively small share devoted to pre-FID work can represent a significant risk, as early exploration determines whether a project advances or is halted altogether. The distribution of costs helps explain why project timelines and financing needs remain relatively uniform  across regions, even as overall activity grows.

Global investment in geothermal energy is gaining momentum as more projects move toward FID. Our research shows that geothermal energy is increasingly being tailored to regional needs, reflecting its dual role as a source of clean, reliable power and a provider of heat. In the US, growth is being driven by the expansion of enhanced geothermal systems (EGS) and rising demand for baseload power from data centers. Europe, on the other hand, is focusing on decarbonizing heat, while Southeast Asia is turning to geothermal to meet growing electricity demand. The sector’s longer-term potential in cooling applications is growing as well, a market set to expand alongside global data center activity that’s less considered,

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When comparing geothermal deployment across continents, Europe stands out as a market dominated by district heating, driven by ambitious decarbonization targets and extensive municipal heating networks. In contrast, Asia, particularly Indonesia, and North America focus primarily on electricity-generating geothermal projects, reflecting strong baseload power needs and abundant geological resources. This divergence shapes both installed capacity and investment patterns. Europe relies more on subsurface development for heating despite lower surface infrastructure costs, while Asia and North America exhibit a more balanced demand between drilling and surface power facilities.

Beyond regional deployment differences, geothermal energy’s role as a clean, reliable source of baseload power is gaining importance. EGS reduces site dependence by requiring only hot rock rather than aquifers, unlocking additional clean power potential and providing stable baseload heat. The technology also shows long-term promise in cooling applications. Pilot projects in the Middle East are exploring its use for data centers, including the UAE’s first geothermal cooling plant, the G2COOL project.

Further research from Rystad Energy, using a bottom-up approach, examines each geothermal asset and its individual cost components, including drilling operations, equipment and surface infrastructure, rather than focusing solely on total project costs or subsurface development. Geothermal projects are primarily used for district heating systems or power generation, and the resource stands out as one of the few energy sources capable of providing clean baseload power, meaning it can deliver a steady and reliable energy supply.

Costs are often expressed in “dollars per watt,” which indicates the investment required to produce one watt of energy. On this basis, district heating projects generally require about half the investment of geothermal power plants. This difference arises because heating systems do not require expensive turbine sets or complex surface infrastructure, which are essential for electricity generation. In contrast, geothermal power projects involve more extensive facilities and intricate designs, resulting in roughly $6 per watt for power versus around $3 per watt for district heating.

These cost differences are important for policymakers, investors and developers when assessing project feasibility, choosing technologies, and planning long-term geothermal development. Understanding these relative costs helps guide decisions on which projects to prioritize and how to maximize the value of geothermal resources.

Contacts

Alexandra Gerken
Vice President, New Energies (Geothermal)
Phone: +47 24 00 42 00
alexandra.gerken@rystadenergy.com

Kartik Selvaraju
Media Relations Manager 
Phone: +65 8779 4619
kartik.selvaraju@rystadenergy.com 

About Rystad Energy

Rystad Energy is a leading global independent research and energy intelligence company dedicated to helping clients navigate the future of energy. By providing high-quality data and thought leadership, our international team empowers businesses, governments and organizations to make well-informed decisions.

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