Geothermal electricity - power from the earth's heat
Credit: Sam Bark on unsplash

Geothermal electricity - power from the earth's heat

Geothermal electricity generation is currently (very) niche, only working in a few locations, and even then its expensive. But that is changing. New technologies offer the opportunity for it to be a financially viable balance to the variability of wind and solar.

Summary: Geothermal electricity generation is currently (very) niche, only working in a few locations, and even then its expensive. But that is changing. New technologies could make its use much more widespread, and they offer the opportunity for it to be a financially viable balance to the variability of wind and solar.

Why this is important: Renewables, especially solar, are likely to be the backbone of our future electricity generation system. But we need to be honest about their limitations. They are variable, meaning we will need other offsetting generation sources. Geothermal could be part of this, especially if the new Advanced Geothermal Systems can be economically scaled up.

The big theme: Electrify everything, together with a decarbonised electricity generation system, lie at the heart of most countries net zero plans. To make this a reality, we will need more wind and solar, plus a portfolio of alternative electricity generation sources, combined with more interconnectors, battery storage and demand management. The electricity grid of the future will look very different, we need to start preparing.


Generating electricity using the heat from the ground is appealing. Drill down into your heat source, add a steam turbine, and generate electricity. What could be more sustainable? So, given this, why does geothermal only account for 0.5% of global renewable energy capacity, a level than has barely changed in decades?

Geothermal currently works if you live somewhere like Iceland or Indonesia, but not elsewhere. And if that was not going to change, it would be hard to make the argument that this is a topic that sustainability finance people really need to understand. Especially when there are other, more scalable solutions, to investigate.

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But, what if the future of geothermal will look very different from the past? Could it become an important part of our electricity/energy generation mix?

There are currently two material barriers to scaling up geothermal electricity generation. The first is location; there are only a few places in the world where geothermal electricity generation currently makes technological sense. And the second is cost, with Lazard estimating the capital cost as being higher than most other renewables, and considerably higher than using gas.

But this seems to be changing. Pilots are underway that could allow geothermal electricity to be switched on and off on demand, allowing it's use as a alternative generational source when solar and wind are not available. This can be a much higher value market segment than simple always on 'baseload'.

Beyond this, other new technologies are emerging that take advantage of fracking solutions, to enable geothermal to work in more locations. Research is also underway to investigate the re-use of abandoned oil & gas wells, which could reduce the upfront capital cost. Plus, outside of electricity generation, we are seeing an increase in demand for geothermal as a source for district heating and for agriculture.



The Detail


Summary of a report published by Rystad Energy

  • Geothermal power generation initiatives are usually established in locations with very specific geological characteristics. On average, these projects hit reservoir temperatures of 210 degrees Celsius (°C), with many projects also having crossed the 300 degrees Celsius (°C) line. In such regions, operators typically drill deeper wells (on average 2 kilometer deep) to access the higher reservoir temperatures.

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