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Nearly 1GW worth of new additions was commissioned last year to
reach a total global installed base of 15.4GW by the end of 2019,
around 5% of the over 300GW of geothermal energy potential
globally. While the installed capacity is spread across more than
30 countries, the top three markets including the United States,
Indonesia and Philippines lead the global rankings with 24%, 14%
and 13% of the global installed fleet respectively.
Figure 1: Geothermal power installed capacity versus global
potential
Although the technology accounts for only 1% of the world's
installed renewable energy fleet, it contributes more than 3% to
the total generation of renewable energy owing to load factors
exceeding 80%. As a result, in suitable geographies geothermal is
competitive to other renewable energy systems on a levelized cost
of electricity basis.
While geothermal generates clean, reliable and baseload power,
its development requires very good to excellent high-temperature
resources located relatively close to the earth's surface.
Therefore, the exploration stage is accompanied by relatively large
upfront investments and very high uncertainty associated with the
availability of a quality resource. This often impacts the
bankability of projects, causing unnecessary delays and requiring
the government's backing and/or financing by multilateral agencies
and international funding institutions including the World Bank and
Climate Investment Funds.
With upcoming technological improvements, such as enhanced
resource mapping, the very high uncertainty in the early phases can
be reduced, and the costs of new developments are expected to
decline further. As a result, IHS Markit estimates that geothermal
capacity will more than double over the next decades offering
promising investment opportunities in Indonesia, the United States,
Turkey, Kenya and Philippines.
