The shale oil drilling techniques which led to a boom in oil and gas production could be used to develop geothermal energy, and meet up to 15% of global electricity demand growth by 2050, the International Energy Agency said.
“With continued technology improvements and reductions in project costs, geothermal could meet up to 15% of global electricity demand growth to 2050,” the IEA said in its “Future of Geothermal Energy” report.
The agency said the development of geothermal energy through shale oil drilling techniques would mean the deployment of 800 gigawatts (GW) of power capacity worldwide.
This deployment would be able to produce 6,000 terawatt-hours per year, equivalent to the current electricity demand of the US and India combined.
“Advances in technology are opening new horizons for geothermal, promising to make it an attractive option for countries and companies all around the world,” the agency said.
These technologies would involve horizontal and hydraulic fracturing processes used in oil and gas developments in North America, according to the report.
At present, geothermal meets less than 1% of global energy demand and is only easily available in the US, Iceland, Indonesia, Turkiye, Kenya, and Italy.
Versatile and clean source of energy
According to the report, geothermal can provide around-the-clock electricity generation, heat production, and storage.
On average, global geothermal capacity had a utilization rate of over 75% in 2023, compared with less than 30% for wind power and less than 15% for solar PV.
“In addition, geothermal power plants can operate flexibly in ways that contribute to the stability of electricity grids, ensuring demand can be met at all times and supporting the integration of variable renewables such as solar PV and wind,” IEA said.
It is also a clean source of energy.
The Paris-based energy watchdog said the full technical potential of next-generation geothermal systems to generate electricity is second only to solar PV among renewable technologies.
This is enough to meet global electricity demand 140 times over, the agency said.
Investments in geothermal energy
Governments and oil and gas companies are among those looking for investment opportunities in geothermal.
IEA said:
If deep cost reductions for next-generation geothermal can be delivered, total investment in geothermal could reach USD 1 trillion cumulatively by 2035 and USD 2.5 trillion by 2050.
According to the report, at its peak, geothermal investments could reach up to $140 billion per year, higher than current investments in wind power.
“As a dispatchable source of clean power, geothermal is also attracting interest from stakeholders beyond the energy industry, including technology companies looking to meet the fast-growing demand for electricity in data centers.”
The awareness around the potential of geothermal energy comes at a time amid accelerating demand growth from cooling, electric vehicles, and data centers.
The agency said that the deployment of geothermal energy could bolster countries such as China, India, and Southeast Asia in their efforts to move away from fossil fuels.
“China, the United States, and India have the largest market potential for next-generation geothermal electricity, together accounting for three-quarters of the global total,” IEA said.
Key role of the oil and gas industry
IEA said that up to 80% of the investment required in a geothermal project involves capacity and skills that are commonly used in the oil and gas industry.
“The industry has transferable skills, data, technologies, and supply chains that make it central to the prospects for next-generation geothermal.”
It also presents diversification opportunities to the oil and gas industry amid large-scale efforts worldwide to limit the use of fossil fuels.
However, along with the support from the oil and gas industry, policy intervention is required for geothermal energy, IEA said.
“Along with support for innovation and technology development, governments could design policies that de-risk project development,” IEA said.
These could include policies focusing on risk mitigation measures at the early project development phase and on contracts ensuring long-term revenue certainty.
According to the report, more than 100 countries have policies in place for solar and wind energy. But, only 30 have implemented policies for geothermal.
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