Geothermal energy is one of the most underrated renewable energy sources today. It harnesses the natural heat of the Earth to produce electricity and provide heating with virtually zero greenhouse gas emissions. Unlike solar and wind, which are intermittent, geothermal can deliver round-the-clock power through all seasons. Yet it currently meets less than 1% of the world’s energy needs. So why isn’t geothermal everywhere, and why are energy investors and policymakers starting to take a closer look at this heat beneath our feet? Let’s dive in.

What Exactly Is Geothermal Energy?

At its core, geothermal energy means tapping into the Earth’s internal heat. Beneath the crust, the planet is incredibly hot, and in certain areas that heat comes close to the surface (think volcanic regions, hot springs, geysers). Geothermal power plants take advantage of this by drilling wells to bring hot water and steam to the surface.

Key Benefits of Geothermal Energy

24/7 Baseload Power:

Geothermal plants run day and night, delivering reliable electricity even when the sun isn’t shining or the wind isn’t blowing. In fact, geothermal plants achieved an average capacity factor over 75% in 2023, meaning they ran near full power most of the time. This far exceeds wind (~30%) or solar PV (<15%). In practical terms, a geothermal facility can produce 2–5 times more energy per unit of capacity than a solar or wind farm, thanks to this constant operation. Grid operators value geothermal as a dispatchable, steady source that can firm up the variability of other renewables.

Low Carbon Footprint:

Geothermal energy is remarkably clean. There are no fossil fuels burned – the Earth’s heat does the work. Lifecycle emissions are minimal; an average coal power plant emits ~35 times more CO₂ per kWh than a geothermal plant. By displacing coal or gas generation, each megawatt of geothermal power helps avoid significant greenhouse emissions and air pollution. Geothermal also uses much less water than conventional thermal power plants for cooling. It’s a sustainable resource with a tiny environmental footprint.

Heating and Beyond:

Electricity is one use of geothermal, but the resource is versatile. Direct-use heating is a huge opportunity: geothermal heat can warm buildings, drive industrial processes, or even be stored. For example, many communities in Iceland pipe geothermal hot water for district heating. Globally, sedimentary aquifers just a few kilometers down could provide low- to medium-temperature heat (≥90 °C) potentially yielding hundreds of terawatts of thermal energy. This could decarbonize heating for cities currently reliant on gas or coal, an often overlooked piece of the clean energy puzzle.

Long-Term and Cost-Effective:

Once a geothermal plant is up and running, it benefits from low operating costs and no fuel requirements (the “fuel” is simply Earth’s heat, constantly regenerated). Geothermal facilities can operate for decades – typically 25+ years of service is achievable – providing stable output over their lifetime. With capacity factors often exceeding 90% in practice, the economics can be favorable: early capital costs are paid back over many years of continuous generation. In essence, geothermal can offer stable, long-term energy output akin to nuclear or hydro, but fully renewable.

The Current Status and Massive Potential

Despite these advantages, geothermal energy today plays only a minor role in the global energy mix. As noted, installed geothermal power capacity worldwide is on the order of 16–17 GW (gigawatts) – roughly **0.3% of global electricity generation.** For comparison, solar and wind capacities are in the hundreds of GW. The use of geothermal is also concentrated in just a few regions with exceptional resources: the United States (leader at ~4 GW), Indonesia, Turkey, the Philippines, New Zealand, as well as Iceland, Kenya, Italy, and Japan to name a few. Most other countries have barely tapped it – yet.

The untapped potential is immense. As new drilling and reservoir engineering technologies unlock deeper and hotter resources, geothermal could become a major global energy pillar. A recent International Energy Agency analysis suggests geothermal could feasibly grow to around 800 GW by 2050 (in a high-growth scenario), supplying some 6,000 TWh of electricity per year. That output would equal the current power usage of the U.S. and India combined! In terms of future electricity needs, geothermal alone could meet up to 15% of global power demand growth to 2050 if costs fall and investment accelerates.

Even these figures scratch the surface. The technical potential of geothermal energy, especially with next-generation techniques, is second only to solar among renewables. By drilling deeper (5–10+ km) virtually any location on Earth could access some geothermal heat. Estimates indicate the total heat resource at depth could theoretically provide hundreds of terawatts of capacity – enough to supply global energy demand many times over. In short, the Earth’s heat is practically limitless on human timescales. The challenge is accessing it economically and safely.

Why Isn’t Geothermal Everywhere (Yet)?

If geothermal is so great, one might wonder why every country isn’t building geothermal plants. The reality is that several challenges have held back geothermal development. Key hurdles include:

1. High Upfront Costs & Drilling Risks: Geothermal projects require significant initial investments, with 60–80% of costs arising from drilling and exploration before generating any power. Drilling is costly and risky—failed "dry wells" and small inaccuracies at great depths can lead to expensive setbacks. This makes geothermal investments riskier compared to faster and simpler renewable projects like solar.

2. Technological Challenges: Expanding geothermal requires drilling deeper and into hotter conditions (300–400°C), challenging current drilling technology. New methods, like Enhanced Geothermal Systems (EGS), are promising but still experimental. Geothermal needs a technological breakthrough similar to the shale revolution in oil/gas drilling to become broadly viable.

3. Limited Awareness and Policy Support: Unlike wind and solar, geothermal receives less attention from policymakers, resulting in fewer subsidies, incentives, and research programs. Misconceptions about earthquake risks and lack of public awareness further hinder support. Stronger advocacy, successful examples, and policy incentives are needed to raise geothermal’s profile.

4. Talent Shortage and Industry Scale: The geothermal sector is currently tiny, roughly 1,000 times smaller than oil & gas, leading to a shortage of experienced talent and developed supply chains, which keeps costs high. However, oil & gas skills and equipment are highly transferable; redirecting just 1% of oil & gas workers into geothermalcould expand the industry by 1000%. Oil hubs like Houston are already leveraging this potential to drive geothermal innovation.

The Road Ahead: Innovation and Financing

The good news is that momentum is building to overcome these challenges. Innovation is accelerating; collaboration with the oil & gas sector is growing - leveraging decades of drilling experience to expand geothermal’s reach and cut costs.

On the financing front, geothermal is starting to catch investors’ attention as a potentially lucrative piece of the clean energy puzzle. Once built, a geothermal plant provides stable cash flow from energy sales (thanks to its high capacity factor). This makes it akin to infrastructure or utility investments – typically lower risk over the long term. The International Energy Agency projects that if next-generation geothermal technologies succeed, total investment in geothermal could reach $1 trillion cumulatively by 2035, and $2.5 trillion by 2050. Annual investment could peak at ~$140 billion per year, which notably would be more than what the world currently invests in onshore wind. These eye-opening figures underscore that geothermal could grow from niche to mainstream in the coming decades, given the right conditions.

Source: IEA (2024), Cumulative investment for next-generation geothermal, 2025-2050, IEA, Paris https://www.iea.org/data-and-statistics/charts/cumulative-investment-for-next-generation-geothermal-2025-2050, Licence: CC BY 4.0

For energy companies and utilities, geothermal offers a way to diversify renewable portfolios with a firm, baseload resource. Notably, some tech giants and data center operators are also exploring geothermal projects to secure 24/7 clean power (since data centers need constant energy). And for countries seeking energy independence, tapping local geothermal heat can reduce reliance on imported fuels. All these drivers point to a resurgence in geothermal interest.

Source: IEA (2024), Share of total supply for next-generation geothermal, 2030-2050, IEA, Paris https://www.iea.org/data-and-statistics/charts/share-of-total-supply-for-next-generation-geothermal-2030-2050, Licence: CC BY 4.0

So, what needs to happen next? In short: continued innovation, supportive policy, and creative financing.

Governments can spur geothermal by funding R&D and de-risking early-stage projects (for instance, subsidizing the drilling of exploratory wells or providing insurance against drilling failure). Streamlined permitting and integrating geothermal into renewable targets would help. Meanwhile, new financing mechanisms are making it easier to fund geothermal projects:

• Green bonds for CapEx

• Private equity for growth stage financing

• Novel approaches like asset tokenization for working capital are being leveraged to address financing needs at each project stage in the capital stack. For example, platforms are emerging that let investors purchase stakes in renewable energy projects (from solar farms to geothermal plants) via digital tokens – broadening the investor base and unlocking fresh capital for projects that might otherwise struggle with traditional funding models.

As technology improves and awareness grows, geothermal could move from the sidelines to center stage in the global energy transition.

About Penomo

Penomo is a digital asset infrastructure platform specializing in tokenized energy and AI infrastructure financing. By transforming physical infrastructure into compliant digital securities, we connect private capital markets with institutional-grade renewable energy and AI investments. Through tokenization, Penomo is streamlining capital access, enhancing liquidity, and enabling efficient financing for the global energy transition and AI expansion.

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