Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Scaling Up Geothermal Power

Generation to Rebalance the

Energy Trilemma

Doi: 10.30573/KS-2024-WB07

Jul 2024

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

About KAPSARC

KAPSARC is an advisory think tank within global energy economics and sustainability

providing advisory services to entities and authorities in the Saudi energy sector

to advance Saudi Arabia's energy sector and inform global policies through

evidence-based advice and applied research.

This publication is also available in Arabic.

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position of KAPSARC.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Key Points

Energy is the vehicle that has enabled humanity to ourish. Since the dawn of time, humans have

sought to nd more efcient ways to power and propel their lives forward. With each generation,

humanity has made progress in unlocking energy density, from burning wood to using fossil

fuels and nuclear energy, and has more recently pivoted to renewable resources, such as hydropower,

geothermal, solar power, and wind.

The need for sustainable energy resources has never been more urgent. The energy trilemma (balancing

energy security, equitable energy access, and environmental sustainability) presents a signicant

challenge, especially in the face of growing demand from developing nations and the impacts of climate

change. The potential of geothermal energy to help meet this challenge is undeniable. As heat is stored

below the earth’s surface, it offers a consistent, renewable source of power that could make signicant

contributions to rebalancing the energy trilemma.

At the 2023 United Nations Climate Change Conference (COP28), world leaders pledged to triple the

global renewable energy capacity to at least 11 terawatts and double the rate of global energy efciency

improvements by 2030. This will require robust policy actions, signicant investment, and international

collaboration to drive the required structural changes in renewable energy generation and consumption.

According to the International Geothermal Association, geothermal capacity for electricity generation

and direct use must grow to reach 568 gigawatts (GW) by 2030 to realize this pledge (roughly 63 GW of

geothermal energy commissioned annually).

Despite being in commercial use since 1913, geothermal energy has been a niche market and is currently

valued at $6 billion globally. This market is expected to grow to $17 billion by 2030, according to Rystad

Energy. To achieve this target, integrated business structures, advanced technology solutions, risk

mitigation measures, nancial prudence, and public-private partnerships will be required.

On January 23 and 24, 2024, King Abdullah Petroleum Studies and Research Center (KAPSARC) and the

International Renewable Energy Agency (IRENA) hosted a webinar titled “Scaling Up Geothermal Power

Generation to Rebalance the Energy Trilemma.” The objectives of this webinar were to:

Highlight the current and potentially greater contributions that geothermal energy can make in

rebalancing the energy trilemma, especially in the Middle East and Africa.

Examine the technological innovation megatrends in the sector and how market dynamics and policy

environment changes affect the geothermal industry.

Propose policy options and recommendations to advance geothermal development at scale.

1 These ﬁgures include estimates for industry-scale projects from medium and deep geothermal and exclude district heating from shallow

reservoirs (less than 500 meters deep).

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Key takeaways and points addressed in the webinar were as follows:

The Status and Prospects for Geothermal Energy

As of now, most electricity generation prospects for geothermal energy are restricted to tectonically

and volcanically active areas. However, recent innovations, such as enhanced geothermal systems

and closed-loop systems, allow for geothermal energy to be accessed nearly anywhere. In the

near term, the adoption of these technologies is expected to grow in low- to medium- temperature

reservoirs. Advancing these technologies for high-temperature systems above 400 degrees Celsius

(˚C) may increase their power potential substantially. Cost reductions and a wide deployment of

geothermal energy may be motivated by drivers such as climate targets and nancial support.

Resource assessment is the initial phase of the geothermal development program that is required

to measure the resource potential, depths, and magnitude, and also to prepare detailed feasibility

studies. The geologic risk incurs substantial capital costs. Financial mechanisms that ease these

capital costs could help to accelerate transformational geothermal deployment.

Middle Eastern countries, with decades of experience in oil and gas exploration and development, are

in a favourable position to exploit geothermal energy. This would require appropriate and coherent

policies and regulations. Countries with oil and gas experience have the existing infrastructure, supply

chains, and workforce required to advance and deploy geothermal technologies at the rapid rate that

is required to meet the world’s increasing energy needs.

Direct-use applications may transform energy-intensive heating, ventilation, and air conditioning

(HVAC) in the Middle East and North Africa.

Policies and Legal and Regulatory Frameworks

Geothermal development requires a multidisciplinary approach with multiple stakeholders, such

as governments, industries, nancial institutions, and academia, to overcome barriers to adoption.

Emerging markets, such as the Middle East, can gain insights from the established geothermal

developments in Kenya and Türkiye.

Geothermal projects require robust legal regulations to ensure a fair playing eld. These

regulations should cover aspects such as resource endowment, land access, permitting, social and

environmental impact assessments, and tax incentives. Establishing clear targets for the integration

of clean, rm power sources within the national energy mix will help to support future policies.

It is also crucial that these regulations create a favorable investment environment to attract capital

and ensure investor condence. They should also guide power generation sequencing, determine

electricity dispatch methods, and manage the electricity market as well as carbon trade ows. Tax

incentives and other nancial mechanisms should be established to attract investments in geothermal

Key Points

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Key Points

energy research, development, and deployment. Such measures should aim to make geothermal

projects more nancially viable and attractive to investors by offsetting upfront costs and risks.

For decades, geothermal energy has been historically absent from international debates concerning

the future of energy. Lobbying and advocacy will be crucial in promoting technology-agnostic policies

and instruments to advance geothermal power.

Geothermal developers must build social licenses with local communities where they operate by

familiarizing them with all aspects of geothermal development and addressing any inquiries that they

may have in order to minimize disruptions during project execution.

Sustainable Financing, Investment Strategies, and Risk Mitigation Schemes

The level of maturity and competitiveness of the geothermal market could inuence the risk mitigation

scheme adopted. In general, private (insurance-based) risk mitigation schemes are more prevalent

in countries with mature geothermal markets, while public or public-private partnership risk mitigation

schemes are more common in nascent markets.

Conciliary risk schemes such as feed-in tariffs, power purchasing agreements, and tax breaks will

ensure stable revenue streams, secure nancing for geothermal projects, and mitigate the geological

and offtaker risks associated with geothermal development.

Establishing loan authorities for geothermal exploration, monitoring, and calibration will help operators

to maximize their returns on investment and advance geothermal development.

Sustainable nance can help mobilize capital toward geothermal projects by leveraging innovative

nancing models, such as green certicates and carbon credit bond issuance. Geothermal

developers can turn to capital markets by selling stocks (e.g., through initial public offerings or IPOs),

issuing bonds, crowdfunding, or obtaining concessional loans, complemented by technical assistance

from government support programs.

Interdependencies Between Geothermal and Oil and Gas Industries

Considering the commonalities between the geothermal and oil and gas (O&G) industries, particularly

during the exploration and development phases, the O&G industry can signicantly contribute to

decreasing the risk in the geothermal value chain. The O&G industry’s knowledge of the subsurface,

based on the vast amount of data it possesses, as well as the technical skills, technology solutions,

operational efciency, and scal meticulousness it has developed, can all play a crucial role. In

addition, active O&G wells can be used to co-produce geothermal energy, while abandoned ones can

be repurposed for geothermal production.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Key Points

In their quest to diversify their energy portfolios, generate new revenue streams, and address climate

change, oil and gas operators and service providers are increasing their footprint in the geothermal

market directly and indirectly via mergers and acquisitions and joint ventures.

Given its high upfront capital costs and long-term gestation periods, geothermal energy is attracting

big oil, medium- to large-size O&G players, and national oil companies. Major oileld service

companies are also eyeing technology development and deployment opportunities in the burgeoning

geothermal market.

The evolution of geothermal development in the United States may follow the historic pattern of its

shale boom. The technology spillover from the O&G industry propels this expansion.

Geothermal Technology Ecosystem

Public policies and investments in research, development, and demonstration (RD&D) as well

as consortia opportunities help determine the potential of geothermal energy and the viability of

expanding heat extraction and utilization technologies.

Three key technologies likely to fuel growth in geothermal energy extraction and usage in the near to

medium term are binary cycles, advanced geothermal systems, and the repurposing of O&G wells for

geothermal power.

Binary cycle technologies are poised to transform geothermal power generation from low- to

medium-temperature reservoirs in the years to come as geothermal power matures and the market

competition intensies.

Geothermal systems that allow for access to geothermal energy nearly anywhere, including both

closed loop systems (also referred to as advanced geothermal systems) and enhanced geothermal

systems, could be game changers in the medium to long term.

Depleted O&G wells can be deepened or upcycled as geothermal wells, thus generating clean

energy, offsetting the abandonment costs, and eliminating methane leaks. This technically feasible

application represents low-hanging fruit for O&G companies and hydrocarbon-producing nations.

In the long run, technological breakthroughs may transform intangible superhot geothermal sources

(in excess of 400˚C) into fusion-like energy engines.

Geothermal power is braced for dynamic change, especially in new and emerging markets, but the

talents and skill competencies in them must match the new energy future they aspire to create.

Geothermal power could offer new ‘green’ employment opportunities for the O&G workforce,

especially for those with expertise in reservoir modeling, well completions, pipelines, and plant

engineering.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Background to the Webinar

On January 23 and 24, 2024, KAPSARC and

IRENA welcomed regulators, policymakers,

industry professionals, and economists

from a wide range of research institutions, the

nancial sector, the oil and gas industry, and energy

consulting rms across the globe to explore the

nancial instruments, legal frameworks, and policies

needed to accelerate the pace of geothermal

development and deployment.

The webinar titled “Scaling up Geothermal

Power Generation to Rebalance the Energy

Trilemma” comprised ve panels. In the rst,

panelists discussed the recent developments

in the geothermal industry and the prospects

for geothermal energy in a post-2023 United

Nations Climate Change Conference (COP28)

era. Presenters shared their insights on emerging

trends in geothermal exploration and heat extraction

technologies, investments, and policies. The

second panel underscored the best practices and

lessons learned from geothermal projects in mature

and emerging markets. They also addressed the

technical and institutional risks encountered and

proposed mitigation policy recommendations. In

the third session, panelists surveyed the emerging

investment modalities and strategies in the

geothermal sector and the role of legislation and

policies in accelerating the pace of its development

globally to diversify energy portfolios and address

climate change. The fourth panel underscored

the role of technologies in the geothermal sector,

including engineered geothermal systems, value-

added minerals, green hydrogen, carbon capture,

and storage in scaling geothermal development.

The nal panel addressed geothermal projects in

the East African Rift and the Middle East and the

progress made in unlocking geothermal’s potential

in these regions.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Workshop Brief Outline

This Workshop Brief was put together based

on the presentations and discussions in the

ve panels. The rst section focuses on the

increasing importance and growth of geothermal

energy as a solution to the energy trilemma, detailing

its merits and benets. It then explains the concept

of geothermal energy, discusses how it is harnessed,

and touches on challenges such as its high upfront

cost, risk prole, regulatory hurdles, and the variance

in geothermal development across countries.

The third section discusses geothermal’s associated

risks and the processes used to narrow its

uncertainty range, thereby making geothermal

energy more competitive. The subsequent section

covers legal and regulatory frameworks, pricing,

risk management, access to capital, and the

social license it needs to operate. The section also

discusses how these drivers and inhibitors inuence

the development of geothermal projects and the

strategies adopted. The fth section examines the

oil and gas (O&G) industry’s interest in geothermal

power and analyzes the new entrants to this market

and the segments they are focusing on. This sets

the stage for the following section, which addresses

the technology spillover from the O&G industry,

the technological breakthroughs in the geothermal

industry, the feasibility of converting idle O&G wells

into geothermal wells, and the role cross-industry

collaboration plays in advancing geothermal

development and creating value-added products.

The seventh section investigates the

underrepresentation of geothermal energy in

the energy and climate debate. It also examines

the role of public policy and advocacy groups in

demystifying some of the misunderstandings about

geothermal energy. This is followed by a discussion

of job prospects for oil and gas professionals, the

challenges of attracting students to specialize in

this eld, the need for more gender equality in

the sector, and how organizations are working to

promote women in the geothermal industry.

The paper concludes by discussing the status and

prospects of geothermal extraction and utilization in

nascent and emerging markets, specically Türkiye,

Kenya, Indonesia, and Saudi Arabia. It examines

the policy levers, public-private partnerships, and

regional geological characteristics impacting the

growth and challenges in these markets.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

In recent years, signicant global events such

as the COVID-19 pandemic and the war in

Ukraine have drastically altered the energy

policy landscape. There has been considerable

re-prioritization toward energy security and

affordability, pushing governments to develop

domestic industrial policies in pursuit of more

decisive climate action, energy security, and

resilience. They are increasingly creating sovereign

industries to attract investment, create employment

opportunities, secure competitiveness, and oversee

energy supply chains. In remaking the entire energy

system, major upheavals seem unavoidable.

Geothermal energy has surfaced as a viable solution

for tackling the energy trilemma, offering a clean,

indigenous, and affordable source of energy. It

provides renewable, high-capacity power, boasting a

capacity factor of over 80%, and holding advantages

over intermittent renewable energy sources like solar

and wind.

The potential of geothermal energy was recognized

by inuential gures such as Al Gore, who

declared that it is potentially the largest and most

misunderstood energy source in the world in

2009 (Gore Jr. 2009). In 2015, Bill Gates featured

geothermal power as a promising but underfunded

area within his investment rm, Breakthrough

Energy. Since these endorsements, the sector has

seen signicant growth, particularly in recent years.

As of year-end 2023, the installed capacities from

geothermal resources were projected to be 16.36

gigawatts of electricity (GWe) and 173 gigawatts of

heat (GWth), according to IRENA.

The Energy Trilemma –

What is the Role of Geothermal

Power?

Despite its signicant potential and long-standing

history, the installed capacity of geothermal power

only accounts for 0.2% of the world’s installed power

capacity, leaving its share of the energy mix minimal

and its growth stalled. Even though there are ongoing

geothermal projects in over 90 countries, only a few

nations have consistently grown their geothermal

capacities. However, recent developments have put

geothermal energy back into focus, with escalating

energy security concerns, an increasing awareness

of climate change, sustainable capital investments,

and technology transfer from the oil and gas industry

all fueling interest.

Electricity capacity additions from geothermal

resources in 2023 were estimated to be 281

megawatts of electricity (MWe). This capacity has

grown at a compound annual growth rate (CAGR)

of 3.5% since 2000. Since 2017, this growth rate

has increased slightly. Since 2010, the increase

in geothermal capacity has been driven mainly by

Türkiye, Indonesia, Kenya, New Zealand, and the

United States (U.S.) (Figure 1). Although much of the

attention has traditionally been geared toward power

generation from geothermal resources, direct heating

and cooling remains a key market, harvested mostly

using ground source heat pumps. The heat capacity

additions from geothermal sources in 2023 were

estimated at 173 GWth, mostly concentrated in China

and countries in the Global North. This capacity

increased at a CAGR of 10.3% between 2000 and

2020, much higher than that of geothermal power

generation. Between 2020 and 2023, geothermal

heating and cooling applications experienced an

annual growth rate of about 17%.

2 The “energy trilemma” is a term coined by the World Energy Council in 2010. It encompasses three overlapping and often conﬂicting domains in

the quest for clean energy transitions: energy security, equitable energy access, and environmental sustainability.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Figure 1. Installed electricity capacity generated from geothermal resources in MWe in 2017 and 2023.

Source: ThinkGeoEnergy (2023).

The Energy Trilemma – What is the Role of Geothermal Power?

China is the world’s leading contender in heating

applications, with an installed capacity of 16.8 GWth,

according to Rystad Energy. Government push,

robust supply chain networks, and efcient project

management practices have driven this incremental

growth. Globally, direct energy use is poised for

accelerated growth in the coming years, driven by

space heating, cooling, and agri-food applications.

0 500 1000 1500 2000 2500 3000 3500 4000 4500

USA

Indonesia

Philippines

Turkiye

New Zealand

Italy

Mexico

Kenya

Iceland

Japan

Other Countries

2017 2023

One gigawatt country club:

United States, Indonesia,

Philippines, Turkiye, and New

Zealand

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal energy is simply heat stored in

rocks and uids below the Earth’s surface.

This heat can be harnessed primarily by

drilling into the ground and then transporting it to

the surface using working uids, mainly water and

steam (step 1, Figure 2). At the Earth’s surface, heat

is extracted from hot water and/or steam and then

converted into electricity and other uses, depending

on the resource temperature and technology

chosen. These uses include heating and cooling in

What is Geothermal Energy?

buildings, agriculture, and industries through district

energy networks and the use of ground-source heat

pumps, and generating zero-carbon electricity through

geothermal power plants (step 2, Figure 2) (Ofce

of Energy Efciency and Renewable Energy 2018).

Excess uids used in geothermal plants and heating

and cooling installations are typically re-injected

back into the reservoir to extract more energy and to

replenish the reservoirs with uids (step 3, Figure 2).

Figure 2. Conventional hydrothermal systems.

Source: KAPSARC schematic, adapted from Department of Energy (2019).

3 The Earth’s outer shell is divided into 15 large slabs of solid rock, called “plates”, that glide over Earth’s mantle, the rocky inner layer above

Earth’s core. Earthquakes are the result of sudden movement along the boundaries (British Geological Survey, 2024)

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Success in geothermal development is down to

geology, technology, policies, and capital. Currently

developed and extensively explored geothermal

systems are in areas that are tectonically and

volcanically active. These include the Pacic

Ring of Fire (in countries such as Japan or New

Zealand), mid-oceanic ridges (in countries such as

Iceland) and rift valleys (such as the East African

Rift in Kenya). High-yield and low-risk prospects,

comprising high temperatures and relatively shallow

depths in areas with thin Earth crusts, have been

chiey explored and exploited.

Wells are drilled into geothermal resources

and hydrothermal uids are transported to the

surface to generate electricity or for other direct-

use applications. The appropriate technology

used to harness this energy is determined by the

complexity and energy content of geothermal

rocks. At the surface, and depending on the

temperatures and ow rates, electricity can be

generated using dry steam, single ash, double or

triple ash, binary cycle, or back pressure .

In recent years, there has been a consistent

increase in the installed capacity of the binary

cycle, as depicted in Figure 3. This is mainly

because developers are increasingly moving from

hot “sweet spots” characterized by high reservoir

temperatures to developing reservoirs with

temperatures below 120˚C in sedimentary basins

and shallow grounds. This shift requires a binary

cycle that converts electricity efciently from these

lower temperature regimes. The one drawback of

binary cycle plants is that they are somewhat more

expensive than ash or dry steam technologies

because of the complexity of their design and the

cost of their equipment and installations.

4 The technology type depends on the power plant design and the state of the subsurface ﬂuid (steam or water), and its temperature (Geothermal

Technologies Oce n.d.)

What is Geothermal Energy?

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

What is Geothermal Energy?

Policy-related hurdles affect electricity generation

and the heating and cooling aspects. The legal

and regulatory frameworks, incentives, and risk

mitigation mechanisms are all vital for the growth

of the geothermal energy market. Geological risk

is the greatest uncertainty in geothermal project

development, as many of the details regarding the

reservoir parameters, depths, and characteristics

of new projects are not well established. Panelists

discussed the different risk mitigation schemes

adopted in many countries and how they have

helped to support and scale up geothermal energy.

Geothermal growth varies from one country to

another. A few, such as Türkiye and Kenya, have

experienced exponential growth driven by balanced

national energy and climate policies. Others, such

as Japan and the U.S., have encountered stagnation

in their geothermal industries due to various factors,

including but not limited to government regulations

and policies not being conducive to growth or up-to-

date, technological constraints, infeasible project

economics, and constrained access to capital.

0 500 1000 1500 2000 2500

Binary Cycle

Single Flash

Double Flash

Dry Steam

Back Pressure

Figure 3. Geothermal power generation capacity gains between 2015 and 2023 in megawatts of electricity (MWe).

Source: Webinar Presentation.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal Project Stages

and Risk Regimes

The development stages of geothermal

projects can be divided into a series of steps

that begin with preliminary surveys, followed

by geoscientic studies, exploration and appraisal

drilling, feasibility studies, steam eld development,

power plant construction, and commissioning,

all of which have varying degrees of uncertainty.

Greeneld projects tend to have the highest risks

initially due to geological uncertainty in their

early phases to identify and test resource regime

magnitude and exploitability. There are also off-taker

risks. To mitigate this compounded risk, geothermal

developers negotiate long-term power purchasing

agreements, typically in the 15- to 25-year range,

with an electric utility or another off-taker to secure

funding. Overall, as the project progresses, the

degree of uncertainty decreases (Figure 4)

Figure 4. Cost and risk proles for geothermal projects.

Source: Modied from Loksha and Gehringer (2012).

5 LCOE is a ﬁgure used to measure the lifetime cost of energy production. It is a simple and well-known metric used by energy and utility ﬁrms.

However, it does not account for attributes in each technology that contribute to the safe and stable functioning of the electric system. Examples

include dispatch ﬂexibility, regulation capabilities, environmental attributes, and reduced transmission congestion and demands (IBM, Gomstyn

and Jonker 2024).

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal energy is a premium energy source

competitively priced against other sources, including

other renewables. The levelized cost of electricity

(LCOE) for geothermal projects varies across

regions and according to other factors, including

the plant size, number and depths of wells, and

downhole temperatures. The weighted average

LCOE is $81.5 per megawatthour (MWh), which

is higher than other renewable sources, such as

solar photovoltaic (PV) power and onshore wind.

However, it is lower than the levelized cost of

conventional energy systems, as shown in Figure 5.

Geothermal projects generate positive cash ows

from the sale of electricity to utility companies,

Geothermal Project Stages and Risk Regimes

which often occurs a couple of years after the

exploration phase once plants are constructed and

operational. Developers incur large costs, most

of which are capital related. These expenditures

include power plant construction, steam eld

infrastructure, exploration and drilling, and grid

connection. Geothermal wells make up over 30% of

the total expenditure, according to Rystad Energy

(2023) (Rystad Energy 2023). This includes the

cost of the land rig, mobility, drill pipes, casing, and

wellheads. Operational expenditures include the

cost of drilling make-up wells to compensate for the

decline in productivity over time, personnel costs,

ofce rents, and insurance.

Figure 5. Levelized cost of electricity for traditional and renewable energy technologies.6

Source: Modied from Loksha and Gehringer (2012).

0 100 200 300 400 500

Solar PV Rooftop Residential

Geothermal

Wind Onshore

Wind + Storage Onshore

Wind Oshore

Gas Peaking

Nuclear

Coal

Gas Combined Cycle

Levelized Cost ($/MWh)

Traditional

Renewable Energy

6 Lazard ﬁgures are primarily based on capital and operational expenditures and subsidy estimates from U.S. projects. They are for indicative

purposes.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

The high upfront capital needed for geothermal

development and its long lead period (~5-7 years) have

deterred many energy rms from entering and competing

in the geothermal sector. The capital is required for

sunk costs, such as those incurred during exploration to

identify and test resources, and capital and operational

spending on well drilling, infrastructure and construction,

power plants, and transmission, among other items.

Scattered and inadequate data and models

encapsulating geoscientic and heat ow distributions

have been an obstacle for many developers. The

geologic risk can be further narrowed by collecting and

synthesizing subsurface data, especially GIS-based

systems, and making them accessible. Many national

agencies have built and shared their subsurface

data, including the Dutch Oil and Gas Portal (NLOG);

the Slovak Renewable Energy Agency; Japan Oil,

Gas, Metals National Cooperation; and the Australia

Renewable Energy Agency.

Some panelists argued that big data and machine

learning could further reduce the risks in geothermal

developments, especially in the early stages. These

powerful tools, used in O&G exploration and production,

can analyze vast amounts of data, identify patterns,

establish dependencies, and support decision-making.

For instance, the Norwegian Petroleum Directorate

increasingly uses articial intelligence to provide

geotechnical assistance for informed decision-making.

Geothermal Project Stages and Risk Regimes

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Drivers and Inhibitors of Geothermal

Extraction and Utilization

Geothermal developments across

many countries and jurisdictions have

experienced boom-and-bust cycles over

the past decades (Ediger and Akar 2023). This

is because of the inherent risks of geothermal

developments and the erce competition from

other energy sources. The barriers to entry into

the geothermal space continue to exist. Still, they

are gradually but slowly being addressed due to

increased participation and collaboration amongst

different policymaking actors in the geothermal

sector.

Legal and Regulatory Frameworks

Over the years, different legal and regulatory

frameworks have been enacted to support

geothermal development. Some are dedicated

to geothermal energy, such as those applied

in Indonesia and Kenya. They have positive

implications for the widespread adoption of

geothermal power in these countries. For other

countries, geothermal has been part of larger

national strategies and regulatory frameworks for

their energy sectors. According to some panelists,

many policymakers fail to consider the unique

characteristics of geothermal energy. Consequently,

they ultimately make social and political decisions

to prioritize other technologies, resulting in

technological lock-in and a reliance on a particular

socially-created path. In the U.S., the geothermal

sector received the lowest tax breaks and implicit

subsidies of all energy sources (Figure 6). According

to one panelist, the Ination Reduction Act of 2022

is a course correction mechanism to ensure a

better allocation of resources to alternative energy,

especially geothermal.

369

104

121

Oil Geothermal Nuclear Solar & Wind Hydro Coal Natural Gas

Figure 6. U.S. federal energy subsidies between 1950 and 2010, in billion USD.

Source: Webinar Presentation.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

One of the key barriers to geothermal development

for both green and browneld projects in emerging

geothermal markets is the lack of coherent legal

and regulatory frameworks. These frameworks

are needed to clearly dene geothermal energy,

differentiate it from other sources, and govern the

utilization of its resources. Some countries have

overcome these regulatory barriers by enacting

designated regulatory frameworks for geothermal

energy as the industry has evolved. These

frameworks have helped to encourage private

sector participation by clearly dening resource

characteristics, land access rights, licensing

procedures for resource exploration, development

and extraction, taxation of geothermal energy, and

distinguishing between geothermal, mineral and

hydrocarbon extraction. Other countries still do not

have laws and regulations for geothermal extraction;

thus, reviews and approvals are required by different

regulatory agencies. Because geothermal power

has been an unfamiliar presence in many places, it

is often unnecessarily complex and time consuming

to deal with regulatory bodies that do not understand

it.

The above factors have affected grant approvals.

According to two panelists, the pace of granting

permits to drill geothermal wells is increasing, but

not fast enough. It is still harder to get a permit for

geothermal projects than for oil and gas. There are

ongoing efforts in the U.S. to streamline geothermal

project permits to reduce frivolous legal challenges

and allow expedited agency reviews. Creating a

one-stop-shop for geothermal permitting could help

to streamline the process.

These regulatory bodies may act in contradictory

ways, and harmonization is required. Harmonization

can be achieved by re-examining regulatory

procedures to make them simpler and make them

accessible and transparent, henceforth creating

a level playing eld for current and prospective

operators. Most importantly, all stakeholders should

be informed of any regulatory changes. The net

impact of these revisions should be largely positive

and transparent, and the processes should be

straightforward. For the geothermal industry to

ourish, private developers should be shielded from

any tax and royalty hikes, as abrupt changes may

yield counterproductive measures.

Pricing and Risk Management

Geothermal projects entail many risks, especially

geological. The geological risk is a signicant barrier

to the development of geothermal projects. This is

particularly the case for deep applications with a

high capital cost and high risk exposure. Shallow

geothermal projects have a relatively low capital

cost and risk. Risk mitigation instruments, such as

risk insurance, capital grants, cost-share programs

for the use of innovative drilling technologies, and

loan guarantees, allow geothermal developers to

transfer geological risks, fully or partially, to public

and private entities. Public, private, and private-

public partnership (PPP) schemes are the three

categories of risk mitigation schemes. A public

scheme usually has a legal foundation, such as an

act, ordinance, or a decree. In PPPs, government

or energy agencies regularly require public banks

or insurance companies to provide low-interest

loans or loan guarantees, often in partnership with

commercial private companies (Karytsas et al.

2022).

The level of maturity and competitiveness of a

geothermal market determines the type of risk

scheme employed. In countries and jurisdictions

with more competitive geothermal markets,

developers usually assume responsibility for private,

insurance-based risk mitigation schemes. However,

in countries that are new to geothermal, developers

Drivers and Inhibitors of Geothermal Extraction and Utilization

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Drivers and Inhibitors of Geothermal Extraction and Utilization

tend to prefer public or PPP risk mitigation schemes

for greeneld geothermal projects. While this is

generally the case, it should be noted that this is a

prevalent market trend rather than a hard and fast

rule.

The most signicant cost in a geothermal project

is the power plant itself. This cost includes

procuring equipment such as ash separators, heat

exchangers, turbines, and uid disposal systems

(Rystad Energy 2023). To mitigate the compound

risk, the geothermal industry relies on long-term

power purchase agreements (PPAs) or feed-in tariffs

to secure nancing for the development stage. The

PPAs allow developers to secure a xed rate for the

energy produced, ensuring a return on investment

over a specied contract duration. Feed-in tariffs,

on the other hand, involve a policy mechanism

designed to accelerate investment in renewable

energy technologies. Producers are paid a set rate

for the electricity they produce over a given period.

Access to Capital

Resource risk, combined with long lead times from

the start of exploration until the commissioning of

the plant, contributes to the difculties in securing

private capital nance. This calls for innovative

approaches from the public sector and nancial

institutions to nance geothermal projects.

Sustainable nance can help mobilize capital

for geothermal projects by leveraging innovative

nancing models, such as green certicates and

carbon credit bond issuance. Companies can turn

to capital markets by selling stocks (initial public

offerings or IPOs), issuing bonds, crowdfunding,

or obtaining concessional loans, complemented

by technical assistance from government support

programs.

Another emerging source of nance is the oil and

gas industry. Medium-to-large O&G companies are

well-capitalized and are familiar with the inherent

subsurface risks. They can absorb the sunk costs of

geothermal projects’ exploration and development

phases. Most importantly, their nancial prudence

and increased interest in low-carbon investments

will likely help overcome any investment shortfalls

and position the geothermal sector for growth.

Social License to Operate

Social licensing is another hurdle experienced by

geothermal developers. Public and political views

on the acceptability of geothermal energy as a safe,

clean, and affordable form of energy vary widely.

Local community opposition to drilling wells and

constructing geothermal power plants due to safety-

related and environmental concerns has been

documented even in well-established geothermal

markets. This challenge can be addressed by

engaging local communities in geothermal project

development and publicizing the environmental and

local economic advantages of geothermal energy to

help garner public support and ease potential local

resistance. One notable example of addressing

social licensing is the GEOENVI project coordinated

by the European Geothermal Energy Council. It

aims to assess the environmental impacts and

risks of geothermal projects operational or in

development on localities and states at large.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Can the Oil and Gas Industry

Crack Geothermal Energy?

The global drive for sustainability has sparked

a paradigm shift within the O&G industry,

prompting an increased focus on minimizing

its carbon footprint and an expansion of its

sustainable environmental practices. Sustainability

stipulates operators change the way they produce,

manage, and use energy. Geothermal power is a

perfect t for O&G players pursuing clean energy

transitions.

The boom-and-bust oil price cycles have

adversely affected investment in O&G projects

and employment in recent years. Thousands of

O&G workers have been laid off during these down

cycles, and many experienced professionals are

considering transitioning into more stable industries

that benet from their skillsets and expertise, such

as geothermal.

The rising number of O&G companies and supply

chain providers entering the geothermal energy

realm since the historic 2020 downturn in oil prices,

most notably in the U.S., is helping to transform the

geothermal landscape. Geothermal investments

provide a different kind of risk exposure for O&G

rms. Many are increasingly seeing added value in

expanding into the geothermal sector to diversify

their investment portfolio and as a means to hedge

against unforeseen O&G supply and demand

shocks, and it also enables them to capitalize on

their project management and technical expertise

and leverage their nancial cushions.

The cost prole and long lead periods of geothermal

projects have deterred small operators from entering

the geothermal space. Thus far, only a handful of

medium-to-large O&G operators have expressed

interest in or recently delved into this arena. The list

of operators includes medium-sized independent

rms such as Devon and Oxy, big oil companies

such as BP and Chevron, and state oil enterprises

such as ADNOC and Saudi Aramco.

Overall, heat extraction technologies used in the

geothermal sector replicate those used in the

O&G industry. Oileld service companies, such as

Baker Hughes and TAQA, primarily developed and

supplied the tools and equipment. These companies

are eyeing opportunities in the geothermal market

because the technologies they developed, such as

directional drilling and stimulation, are well suited

for heat extraction. Furthermore, oileld service

companies are increasingly partnering or buying the

equity of many startups to develop next-generation

technologies that can withstand very hot and

superhot formations and bolster the productivity of

geothermal wells.

The O&G industry has extensive datasets and

knowledge of sub-surface hydrocarbon reserves,

especially in sedimentary basins that host low- to

medium-temperature geothermal resources suitable

for heating and cooling applications and electricity

generation. In these areas, geological data collected

during oil and gas drilling can reduce exploration

costs and mitigate sub-surface risk. The government

of Oman recently initiated a project to assess the

country’s geothermal potential using data obtained

from over 7,000 oil, gas, and water wells.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Heat Extraction Technologies

Geothermal developers are vigorously

exploring novel technologies, such as

enhanced geothermal systems, to de-risk

geothermal development and exploit economies

of scale. These technologies will help to harness

a portion of the heat capacity in the subsurface.

Some push the envelope by exploring drilling

deeper, hotter dry rock systems (>400˚C). A

superhot geothermal well is envisaged to deliver

between 5 to 10 times the capacity of conventional

geothermal wells. According to the Clean Air Task

Force, the superhot rock energy capacity in the

Middle East is estimated to be 5,257 GWe. This

could generate up to 44,000 terawatthours (TWh)

of electricity and potentially export in excess of

34,000 TWh to other countries. It could also be

used to incentivize other hard-to-decarbonize and

energy-intensive industries. The hottest well drilled

so far was in Iceland. The reservoir temperature

was found to be over 450˚C, requiring customized

tools and equipment that could withstand this

temperature. Superhot rock energy pilots currently

taking place include the Japan Supercritical Project;

the Geothermal: Next Generation project in New

Zealand; the Iceland Deep Drilling Project; and the

Newberry Deep Drilling Project in the U.S., among

others.

The public sector can play a role in accelerating the

development of disruptive, innovative technologies

that can be used to develop superhot dry rock

sites by providing structural support, enhancing

data accessibility, providing nancial support

through grants or other incentives, and improving

opportunities for siting and testing superhot

technologies. As of now, the most notable advances

in geothermal exploitation and development are:

Advanced geothermal systems (AGS) or closed

loop systems

A heat extraction system where uid is contained

and circulated to harvest heat from subsurface

rocks. This often looks like a series of horizontal

laterals in hot, dry rocks. Fluids are circulated in

sealed pipelines and boreholes, picking up the heat

by conduction and carrying it to the surface where

it can be used to cogenerate heat and electricity by

articially creating a radiator.

Enhanced or engineered geothermal systems

(EGS)

A heat extraction system that uses multistage

fracturing (‘fracking’) methods to increase rock

permeability and then circulates uid through

the fractures. Fracture enhancement may occur

by hydraulic means and thermal or chemical

stimulation.

Superhot rock

Subsurface rock at or above the supercritical

temperature of water, which is 374˚C in de-ionized

water (or higher in brine). Superhot rock energy can

be extracted using EGS or AGS heat extraction

methods, as dened above.

The pace of innovation in the geothermal industry

is languid. Historically, most geothermal operators

have preferred conventional practices over

innovative solutions because of their tight budgets

and the uncertainty associated with each phase of

geothermal project development. The exploration

and drilling phase contains the highest risk, as

Figure 4 illustrates. Because of the sunk costs in

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

the exploration phase and thin prot margins in

the exploration and development phases prior to

tying the wells to the plants, operators tend to be

risk averse, which has limited innovation in the

geothermal sector. When the uncertainty is reduced

and a geothermal plant is in operation, it becomes

too late to experiment with innovative technologies.

Research and development (R&D) funding in the

geothermal sector had been historically below that

of the O&G sector. Since the mid-1970s, the U.S.

Department of Energy (DOE) and parallel agencies

at the state and federal levels have been funding

projects to map and evaluate unconventional

O&G resources (including shale), understand their

characteristics and geological complexity, and

develop and deploy innovative technologies (such

as directional drilling and massive hydraulic fracking

to extract them economically).

The technical feasibility of mining heat from

high-temperature, water-poor rocks has been

demonstrated. However, the cost of doing so is

not yet economically competitive. The oldest EGS

project currently generating power is in France. Most

EGS development remains in the demonstration

phase. The most notable project is the Frontier

Observatory for Research in Geothermal Energy

(FORGE), which was funded mainly by the U.S.

DOE and comprises three phases. Six pilot wells

have been spudded, stimulated, and monitored to

evaluate their productivity and temperatures.

From the rst hydraulically fractured shale gas well,

it took nearly a quarter of a century for shale gas

to offtake. One panelist argued that the geothermal

sector in the U.S. will exhibit an offtake in less than

a quarter of a century following the successful

completion of FORGE and as a result of the

technology spillover and increased participation of

O&G players in the geothermal space (Table 1).

Heat Extraction Technologies

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Heat Extraction Technologies

Shale gas Geothermal

Geological factors Very favorable Favorable

Takeaway infrastructure Very favorable Available and compatible

Technical ability of energy

companies Adept operators Getting there

Ease of nancing Accessible despite constraints Constrained

Fiscal terms/taxation Very favorable Ination Reduction Act is an

enabler

Government regulations Favorable with some

constraints

Getting there

Service providers (rigs, rack

crews) Strong presence and extensive

networks

Available and expanding

Breakeven cost Enabled through economies of

scale and high oil prices

High upfront capital cost

Economic viability Financially viable in the short

and medium term

Long payback periods

Table 1. Comparison between the U.S. shale gas and geothermal industries.

The technology spillover from the oil and gas

industry is envisioned to play a role in galvanizing

the productivity of existing and future geothermal

wells. The average well capacity for power

generation is 4.5 MWe, according to Rystad Energy.

While geothermal drilling and production has grown

substantially, one panelist argued that the average

well productivity is expected to remain static in

the medium term. This is because geothermal

developers are increasingly moving into new

frontiers characterized by low and medium reservoir

temperatures. The current proven technologies are

helping to unleash the geothermal sector’s potential,

but they are still not as mature as those used in very

hot, conventional developments. For instance, a 5-6

kilometer (km) deep well in Germany can harness

energy from reservoirs at 150˚C, and in Indonesia,

reservoirs with temperatures of 200˚C or above are

found at depths of 2-3 km.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Repurposing Idle O&G Wells for Geothermal

Applications

To overcome the inherent costs of drilling new

geothermal wells, abandoned wells that are no

longer on-stream can be deepened or upcycled as

geothermal wells, thus minimizing drilling risks and

costs. There are almost 30 million abandoned wells

worldwide, most of which have ceased to ow and

have been decommissioned. The future inventory of

abandoned wells will grow with active hydrocarbon

drilling. Plugging and abandoning these stranded

assets does not yield prots for operators, and

they incur nancial costs and legal liabilities for oil

and gas operators. The cost to properly abandon

an onshore oil or gas well in the U.S. ranges from

$50,000 to $150,000.

Many of these idle wells have requisite temperatures

for geothermal exploitation. It is also possible that

many of them have large diameters and can be

recongured as geothermal wells using EGS and

AGS. The benets from retrotting these stranded

assets as geothermal wells include cost savings,

risk mitigation, and environmental protection. For

example, operators can bypass the costs associated

with drilling new geothermal wells.

Upcycling depleted wells will have little impact on

the environment since most wells have existing

road, pipeline, and facilities infrastructures. Another

benet yet to be realized from converting these

wells to geothermal wells is methane mitigation. An

unplugged abandoned well is estimated to leak 0.13

tonnes of methane annually. Methane leaks can be

prevented by repairing and repurposing these wells

for geothermal production.

Squeezing the Lemon: How Can Cross-Industry

Collaborations Boost Geothermal Growth?

Geothermal energy can generate green hydrogen

and value-added minerals and complement negative

emissions technology with direct air capture and

carbon storage.

Carbon Capture and Mineralization

Carbon capture and mineralization are deemed

prospective technologies. They will foster

collaborations between geothermal and carbon-

emitting industries, such as cement, steel, and O&G.

Excess heat from geothermal plants may generate

electricity to power direct air capture applications.

According to one of the panelists, geothermal

reservoirs, especially those comprising basalt, are

ideal to store carbon and prevent CO2 from leaking.

A pilot project is currently operational in Iceland

to assess the technical and economic viability of

carbon capture at a larger scale.

Critical Mineral Extraction

The “energy transition” has created the largest

demand for critical minerals required for

electrication since the Paris Agreement came

into force in late 2015. The demand for lithium

and critical minerals, essential components for

wind turbines, solar panels, and electric vehicles,

has been on a steep ascent as countries are

increasingly greening their power systems and

transportation eets.

Hydrothermal uids can dissolve lithium and

minerals from underground rock formations, but

7 Carbon mineralization is the process by which CO2 becomes a solid mineral, such as carbonate. It is a chemical reaction that happens when certain rocks are

exposed to CO2 (Alturki et al. 2024)

8 Parts per million (ppm) is a unit that describes the concentration of a mineral in water. One ppm is equivalent to 1 milligram of the particular mineral per liter of water.

Heat Extraction Technologies

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Heat Extraction Technologies

the concentrations tend to be very low. Geothermal

brines with grades of 100 to 200 parts per million

(ppm) may contain sufcient lithium deposits

(Azevedo et al. 2022). With high volumes of

hydrothermal uids at the surface, lithium and other

minerals can become economically feasible to

extract using existing technologies. This helps lower

the cost of electricity generation, shortening the time

to plant protability and increasing net prots.

In the Salton Sea geothermal eld, the proven

reserves of lithium, manganese, and zinc that can

be extracted from its brines are 2 million, 5 million,

and 15 million metric kilotonnes, respectively

(McKibben, Elders and Raju 2021). It is even argued

that the revenues generated from mineral extraction

in this project exceed that of geothermal power

generation.

Green Hydrogen

Geothermal energy can help generate green

hydrogen by simultaneously providing the baseload

electricity and raw heat required for electrolysis.

Three ongoing pilots are taking place to evaluate the

techno-economic feasibility of green hydrogen using

geothermal power in Iceland, Indonesia, Japan, and

New Zealand.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

International Collaboration and Public

Policy Advocacy

Geothermal energy has been absent from

energy and climate debates. The energy

community at large was and still is not

fully aware of its merits and benets. Geothermal

lobbying and advocacy have historically been very

weak. Apart from in the U.S., most geothermal

companies are wholly or partially owned by the

state. Some state or hybrid companies have

exercised hegemony over geothermal assets

and derailed the entry of new rms. With limited

players in the geothermal market, these companies

opted for no or steady growth in their businesses.

Lobbying and advocacy were not at the top of the

agenda of geothermal enterprises. As a result, the

contribution of geothermal to the global renewable

energy mix is negligible.

One reason that geothermal power has been

absent from energy and climate debates is that

few countries have developed conventional

hydrothermal systems, which are only possible

in volcanically and tectonically active regions.

Now that technologies like EGS and AGS have

developed, and geothermal is possible outside of

conventional hydrothermal systems, opportunities

for geothermal development are rapidly increasing.

More non-governmental organizations, advocacy

groups, and trade associations, such as

Geothermal Rising, the International Geothermal

Association, and the Clean Air Task Force, are

actively engaged in environmental and social

management outreach programs, sharing best

practices and inuencing the democratic political

processes to enact public policies that can advance

geothermal energy.

There is a growing appetite for international

collaboration in the development of geothermal

technology. A prime example of this is the

GEOTHERMICA project. Such international

partnerships are crucial for bridging signicant gaps

in the development process, ensuring that the rapid

advancements in geothermal technologies are

not hindered by isolated efforts. The creation of a

geothermal center of excellence would be another

model of successful international cooperation. This

center would facilitate the transfer of knowledge and

technology from the O&G sector to the geothermal

industry, acting as a beacon for innovation,

collaboration, and knowledge exchange. It would

play a critical role in the evolution of geothermal

technologies and contribute signicantly to the

sector’s expansion. The synergy between the O&G

industry and geothermal developers is testament

to the potential of international collaboration in

technology development, paving the way for a

more sustainable and efcient future for energy

production. Establishing a test center dedicated

to the improvement, testing, and demonstration

of low-maturity, high-potential technologies,

including applications above 400˚C, could be

pivotal to enhancing these collaborations. While

geothermal technologies such as low-to-mid-

temperature hydrothermal, closed-loop, and

enhanced geothermal systems are ready to

deploy, a geothermal test center focused on

the improvement of high-temperature casings,

cements, well-stimulation techniques, and deep

drilling technologies would be critical in advancing

the potential and longevity of these existing

technologies.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Talent Acquisition, Workforce

Readiness, and Inclusion

Geothermal is a multi-disciplinary eld that

covers a broad spectrum of topics and

specialties, ranging from geoscience and

engineering to social science. Geoscience and

engineering overlap with O&G. The geothermal

sector could offer a route into new “green”

employment for the O&G workforce, especially

those with expertise in reservoir modeling, well

completions, pipelines, and plant engineering.

While these skills are transferrable, geothermal

development requires entrants from the O&G

workforce to develop new technical skills in reservoir

characterization and power generation.

Panelists pointed out the challenges in attracting

prospective students to study and specialize

in geothermal energy. The eld itself is still not

understood, and career prospects are limited given

the market size. Currently, postgraduate degrees

in geothermal engineering and geoscience and

comprehensive geothermal courses are taught in

nations with a long history of geothermal utilization

(e.g., Iceland, Indonesia, New Zealand, Japan,

etc). There has been a shift in the past decade,

with more graduate schools integrating geothermal

energy into their curriculum.

Women are still underrepresented in the geothermal

industry. To ensure gender equality in the sector,

companies are implored to take steps to eliminate

gender inequalities in the recruitment process, foster

inclusive business cultures, develop internal policies

on gender equality, and assign women to senior and

executive roles. Not-for-prot organizations such

as Women in Geothermal (WING) actively promote

the education, professional development, and

advancement of women in the geothermal sector

worldwide.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal Exploration and

Development in New and

Emerging Markets

During the webinar, the panelists presented

case studies of geothermal exploration and

exploitation in nascent and key markets,

including Türkiye, Kenya, Indonesia, and Saudi

Arabia.

Türkiye

In Türkiye, geothermal capacities have

increased dramatically since 2010 following the

implementation of t-for-purpose market policies,

exploration risk mitigation schemes, and regulations

to entice investment from the private sector. The

country is ranked fourth in electricity generation

from geothermal sources and is the Middle East’s

pioneer in geothermal electricity generation.

Heat ow maps in Türkiye indicate 1,000 sweet hot

spots, half of which have been exploited. Geothermal

power currently contributes approximately 5%

of primary energy consumption in Türkiye. The

development of geothermal power in the country

has gained momentum since the early 2010s as

the government enacted regulations to govern the

resources, awarded concessions, and applied xed

feed-in tariffs and local content programs to attract

investment to this sector (Figure 7).

Figure 7. Installed capacity of electricity from geothermal resources in Türkiye between 2006 and 2022 in Mwe.

Source: IRENA (2024).

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal development is expected to grow at

a CAGR of 5.2%. This growth could be propelled

by public sector engagement in preliminary and

feasibility studies and nancing the exploration and

development stages of geothermal projects across

the country, especially those pertaining to deep

geothermal basins.

Kenya

The East African Rift System (EARS) and the

Comoros Islands are characterized by temperatures

as high as 400˚C, indicating robust power

generation potential. Kenya and Ethiopia are the

only EARS countries to have installed geothermal

power plants. Power generation from geothermal

sources in Kenya has grown immensely since the

early 2000s, reaching 950 MWe and contributing

roughly 30% of the country’s total installed capacity

(Figure 8). The government is also set to add 70

MWe in 2023 and join the One-Gigawatt Country

Club (Figure 1).

Kenya’s success in advancing the pace of its

geothermal sector has been enabled by both

private and public sectors partnering to exploit

opportunities and overcome hurdles in nancing,

technical competencies, legislation and policy, and

operational excellence.

Figure 8. Kenya’s installed electricity capacity and the share of hydropower and geothermal energies in Kenya’s

energy mix.

0.00

0.05

0.10

0.15

0.20

0.25

0.30

500

1000

1500

2000

2500

3000

3500

4000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Share of Hydropower and Geothermal Energies, %

Kenya’s Installed Electricity Capacity, MW

Solar Wind Hydro Bioenergy

Geothermal Fossil Fuels %Geothermal

Source: Analysis based on IRENA (2024).

Geothermal Exploration and Development in New and Emerging Markets

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Kenya’s successful development and exploitation of

geothermal energy for electricity generation has had

a spillover effect in nearby countries, with ongoing

exploration activities taking place in Djibouti,

Tanzania, and Uganda.

The Kenya Electricity Generating Company

(KenGen), which produces the bulk of Kenya’s

electricity, has been keeping up with rapid change

and seizing growth opportunities domestically and

overseas. The company went public in 2006 to

raise funds through the capital markets to expedite

growth. Its IPO helped raise $295 million to nance

geothermal projects. In 2009, the company issued

bonds worth $194 million. The listing, its market

valuation, and its healthy balance sheet helped the

company secure loans from banks at low interest

rates.

Kenya’s Ministry of Energy played an instrumental

role in de-risking geothermal development in the

country by providing grants for initial exploration

and preliminary feasibility studies, and KenGen

beneted from these government grants.

Coupled with direct air capture or carbon storage,

geothermal power can become a negative

emissions technology, and geothermal operators

who qualify can claim carbon credits. KenGen has

successfully claimed carbon credits through carbon

markets for its geothermal projects and increments.

These proceeds have helped the company to

generate positive cash ows and reduce its

development costs.

KenGen would not have excelled were it not for

an agile legal system that continuously adapts to

market dynamics. Since the 1980s, Kenya has

enacted many laws and regulations to promote

geothermal power and liberalize its energy market.

This has included encouraging private participation,

restructuring the bodies overseeing utilities and

renewables in the country, and introducing feed-in

tariffs to accelerate the pace of development.

Indonesia

Indonesia has the world’s most signicant potential

for geothermal power, estimated at 29 GWe from

over 300 sites, of which less than 5% has been

exploited. The country is the second largest

producer of geothermal energy, with an installed

capacity of 2,418 MWe, trailing only the U.S.

In the past, geothermal development in Indonesia

had low participation from the private sector. Over

the past decade, the Indonesian government

has developed and executed programs to entice

investment and increase the participation of

private geothermal developers. Policy levers and

risk mitigation tools employed by the Indonesian

government include 30-year-long power purchase

agreements, granting concessions, and loan

guarantees. The Sarulla geothermal power plant

(GPP), the world’s largest GPP with a nameplate

capacity of 330 MWe, has beneted from these

programs.

Nevertheless, the unattractive rates of return

exacerbated by high development costs, uncertainty

about electricity offtake pricing, and public

resistance to new developments, especially in

conserved forests, have deterred new players from

entering the market and derailed future expansions.

As a result, one panelist argued that the country is

likely to fall behind its 7.2 GWe by 2025 target.

Saudi Arabia

The surface of the Kingdom’s Western Region

exhibits prominent geological characteristics that

suggest the presence of geothermal resources

(Figure 9). This includes the Red Sea Basin and the

Arabian Shield, which are associated with tectonic

Geothermal Exploration and Development in New and Emerging Markets

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal Exploration and Development in New and Emerging Markets

and volcanic activities. The last volcanic eruption

was recorded in 1256 AD near the holy city of

Medina.

The country’s geothermal resources are

predominantly characterized by low-to-medium

temperature gradients, except for the Jizan area

to the south, where temperature gradients appear

appreciably higher. This area is deemed a promising

geothermal prospect, based on an analysis of

available satellite images, geo-indicators, and two-

dimensional electric geophysical surveys conducted

on hot springs. Furthermore, eleven volcanic terrains

are scattered across the Western Region. Known as

“harrats,” these areas contain over 2,500 dormant

volcanoes, craters, and a few hot springs. Recorded

temperatures from some of the hot springs were

found to be in the range of 80˚C, with seasonally

varying owrates. However, their hydrothermal

systems and related heat sources do not appear

deeply rooted, with water circulating within shallower

layers.

Geothermal systems in the Arabian Peninsula differ

from those found on the Anatolian Plate (e.g., in

Türkiye) or EARS (e.g., in Kenya), which constitute

medium to high enthalpy systems. Although one

panelist noted that higher temperature regimes

can be found in very deep formations on the

Arabian Peninsula, they are either dry or possibly

impermeable, requiring advanced technological

interventions such as AGS and EGS to harvest

them.

Unfortunately, only a few publications – generally

from academia and small-scale projects – provide

circumstantial evidence about the peninsula’s

geothermal potential. Thus, a robust assessment of

its geothermal resources and developing rigorous

heat ow maps and associated drilling prognoses

are not possible with the available public data.

More reliable and accurate geothermal resource

estimates with different condence intervals in Saudi

Arabia are only possible through exploration drilling

by Saudi Aramco, the Saudi Geological Survey

(SGS), and other players. The rst exploration well

was drilled in 2022 by the SGS, and preliminary

assessment suggests that the area east of Medina

near Harrat Rahat is conducive to geothermal sweet

spots. This will be followed by a series of exploration

wells drilled to assess the resource potential,

distribution, and depths. The second observatory

well was spudded on the King Abdullah University

for Sciences and Technology’ (KAUST) campus

in February 2024 as part of a pilot development to

harvest geothermal heat and demonstrate its direct

use, such as district cooling and water desalination,

as well as other uses. Furthermore, this project aims

to assess the potential of lithium extraction and CO2

or ue gas sequestration. Following the success of

this exploration project and other assessments, a

series of production and injection wells will be drilled

targeting temperatures of between 150˚C and 175˚C

in order to evaluate and demonstrate advanced

geothermal energy utilization.

These recent examples show that Saudi Arabia is

taking a multidimensional approach to diversifying

its energy mix and reducing greenhouse gas

emissions, as outlined in Saudi Vision 2030 and,

most recently, the Saudi Green Initiative. It has

committed to source 50% of its power capacity

from renewable sources by 2030, or roughly 60

GWe. These targets will be realized from over 20

solar, wind, and green hydrogen megaprojects

throughout the Kingdom. Nevertheless, the

intermittency and diluteness of solar and wind

energy pose challenges to grid stability that can be

overcome using a third technology pillar, namely,

geothermal energy. It is a key enabler as it allows

for sustainable baseload electricity, reduces

dependency on hydrocarbons (availing more barrels

for other uses, including rened products and

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Geothermal Exploration and Development in New and Emerging Markets

chemicals), and decarbonizes the power system.

Geothermal power for district cooling is likely to

yield energy efciencies in Saudi Arabia. The United

Arab Emirates (UAE) has successfully launched a

geothermal-based district cooling pilot. Two wells in

Masdar City (Abu Dhabi) were drilled 12 years ago

to a depth of ~2.6 km to harness ~90ºC hot water.

These wells were recently connected to surface

facilities that pass the water produced through

an absorption cooling system, generating chilled

water. This pilot is part of a $15 billion endowment

for low-carbon technologies. The project, led by

the UAE’s ADNOC and Tabreed, a utility company,

aims to leverage geothermal heat for district cooling

operations to reduce electricity demand for cooling

from the grid and decarbonize one of the most

energy-intensive sectors.

With decades of experience in oil and gas

exploration and development, Saudi Arabia is

uniquely positioned to exploit geothermal energy

for electricity generation and direct use. Preliminary

studies suggest that Saudi Arabia has the potential

to add 1 GW of geothermal capacity by 2035.

However, a plethora of government policies still

need to be implemented to be able to exploit and

use geothermal energy in Saudi Arabia. They

include regulations on resource ownership, access

rights, involved administrative bodies, drill permits,

royalties, and incentives. All of these are required

for geothermal energy to start and then eventually

ourish as a renewable and green energy source in

the country.

Figure 9. Key geothermal elements in Saudi Arabia, including volcanic areas (lled red shapes), hot springs (lled red

triangles), and temperatures.

Source: Lashin et al. (2020).

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

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Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

About the Workshop

This workshop, jointly organized by KAPSARC

and IRENA, was held virtually on January

23 and 24, 2024. The workshop gathered

30 distinguished keynote speakers, presenters,

moderators, and participants from various elds,

including regulatory, policy, research, academia,

and the geothermal industry. The webinar served

as a platform to learn from these experts, explore

synergies, and envision a collective roadmap

toward just and sustainable transitions enabled by

geothermal energy.

Acknowledgments

The team would like to thank Amro Elshurafa, Frank

Felder, Jack Kiruja, Jenna Hill, Jesse Nyokabi,

Mohammed Aldubyan, Mohammad Hejazi, Paulo

Alexandre Lopes Pedro, Thomas Finkbeiner,

and Umut Destegül Solaroğlu for their insightful

comments, criticisms, and suggestions.

List of Participants

Abdulrahman Alwosheel – Research Associate at

KAPSARC

Albaraa Alrayess – Public Relations Associate at

KAPSARC

Amjad Abdullah – Head of Partnerships at IRENA

Arash Dahi Taleghani – Professor of Petroleum

and Natural Gas Engineering at Pennsylvania State

University

Axel Pierru – Vice President of Knowledge and

Analysis at KAPSARC

Bez Hoxha – Associate Consultant at Darcy

Partners

Bryant Jones – Executive Director of Geothermal

Rising

Dani Merino-Garcia – Director of Research and

Development at Project InnerSpace

Fahad Alsaree – Renewable Energy Engineer at

KACARE

Francesco La Camera – Director General of IRENA

Gladis Sondakh – Research Manager at

ThinkGeoEnergy

Jitendra Roychoudhury – Fellow at KAPSARC

Hani Taibah – President of Steps Energy

Henning Bjorvik – Senior Vice President and Head

of Low Carbon Supply Chain Research at Rystad

Energy

Jack Kiruja – Manager, Energy Advisory at WSP

and Geothermal Expert

Jenna Hill – Geoscientist and Geothermal Liaison

at Clean Air Task Force

Jesse Nyokabi – Green Energy Pacesetter

Juliet Newson – Director of Iceland School of

Energy

Khalid AlDossary – VP of Energy Transition and

Sustainability at TAQA

Khalid Bankher – Technical Advisor at the Saudi

Geological Survey

Majed Alsuwailem – Fellow at KAPSARC

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Marit Brommer – Chief Executive, International

Geothermal Asociation

Meshary AlAyed – CEO of TAQA Geothermal

Muneef AlMuneef – General Director at the Saudi

Ministry of Energy

Osamah Al-Momen – Senior Marketing Manager at

Baker Hughes

Paulo Alexandre Lopes Pedro – Independent

Renewable Energy Consultant

Xavier Musonye – Principal Ofcer, Geothermal

Projects Planning at Kenya Electricity Generating

Company

Rakan Al-Murshed – Director of Climate

Technology Solutions at Baker Hughes

Roberto Aguilera – Director of the Oil and Gas

Program at KAPSARC

Tevk Kaya – Geothermal Manager at SLB

Thomas Finkbeiner – Research Professor of

Energy Resources and Petroleum Engineering at

King Abdullah University of Science and Technology

Umut Destegül Solaroğlu – Senior Geothermal

Consultant at Spero Consultancy

Wenxin Li – Assistant Professor at Southeast

University

About the Workshop

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

About the Team

Roberto Aguilera

Roberto is the Director of the Oil and Gas Program at KAPSARC. Previously, he

worked at the OPEC Secretariat, Curtin University (Australia), IIASA (Austria), and

Servipetrol (Canada). He holds Ph.D. and M.Sc. degrees from the Colorado School

of Mines and a B.Com. from the University of Calgary.

His publication record includes dozens of papers in top peer-reviewed journals

and an acclaimed book, The Price of Oil (Cambridge University Press). He has

participated in numerous energy initiatives, including with the World Petroleum

Council, the U.S. National Petroleum Council, and the UN Expert Group on

Resource Management. In 2018-19, he was a Society of Petroleum Engineers (SPE)

Distinguished Lecturer, a program that took him to around 30 cities worldwide.

Majed Al-Suwailem

Majed is a Research Fellow at KAPSARC with a focus on energy security, oil trade,

and sustainable energy. He has more than 15 years of experience in the Oil and

Gas industry in the elds of simulation and modeling, asset management, oil eld

development, disruptive technologies, and business planning, gained at Chevron

and Saudi Aramco.

Majed holds a B.S. degree in Petroleum Engineering from the University of Tulsa

in the United States, along with two M.S. degrees in Petroleum Engineering and

Reservoir Geosciences and Engineering from Texas A&M University and the Institut

Francais du Petrole (IFP School), respectively. In 2022, he earned his Master of

Science in Public Economics and Policy from Purdue University.

Tarig Ahmed

Tarig has more than 15 years of experience in the energy sector and renewable

energy industry in different parts of the world. He is currently IRENA’s Regional

Programme Ofcer, leading the organization’s engagement in the Middle East and

North Africa. During his two and half years with IRENA, Tarig has led the Climate

Investment Platform and the project facilitation activities within the Investment

Forums. Tarig holds an M.Sc. degree in Sustainable Energy and Entrepreneurship

from the University of Nottingham, funded by the U.K. government’s prestigious

Chevening Scholarship. He was also awarded the Fulbright/Hubert H. Humphrey

Fellowship from the U.S. Department of State to study Natural Resources,

Environmental Policy, and Climate Change at Cornell University.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Abdullah Abou Ali

Abdullah has over six years of experience (specically at IRENA) in the renewable

energy industry. He is currently supporting IRENA’s engagement within the

Middle East and North Africa as an Associate Programme Ofcer. During his

time with IRENA, Abdullah has contributed to over 30 high-impact publications

on renewables, energy transition, and climate change. Abdullah holds an MBA

degree with a specialization in Project Management from the Swiss Business

School. Additionally, he holds a B.Sc. degree in Sustainable and Renewable Energy

Engineering from the University of Sharjah.

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma

Notes

Scaling Up Geothermal Power Generation to Rebalance the Energy Trilemma