Geothermal Energy Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Binary Cycle, Flash, Dry Steam), By Application (Industrial, Commercial, Residential, Others), By Region, and By Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 70.00 Billion
CAGR (2026-2031)	6.89%
Fastest Growing Segment	Residential
Largest Market	Asia Pacific
Market Size (2031)	USD 104.40 Billion

Market Overview

The Global Geothermal Energy Market will grow from USD 70.00 Billion in 2025 to USD 104.40 Billion by 2031 at a 6.89% CAGR. Geothermal energy is defined as the thermal energy generated and stored in the Earth, utilized for continuous electricity production and direct heating applications. The primary driver supporting this market is the global imperative for reliable baseload power, which distinguishes geothermal from intermittent renewable sources like wind and solar. Furthermore, the sector is bolstered by long-term government decarbonization mandates and the strategic necessity for energy security, which ensures sustained demand independent of fluctuating market trends.

However, widespread market expansion is significantly impeded by high upfront capital expenditure and the financial risks associated with exploration and drilling. The uncertainty of resource availability prior to costly excavation often limits private investment and slows project development. According to the International Renewable Energy Agency, in 2024, the global geothermal energy sector added approximately 0.4 GW of new capacity. This moderate growth figure underscores the persistent challenge of overcoming initial development barriers despite the resource's substantial potential for stable energy generation.

Key Market Drivers

Technological advancements in Enhanced Geothermal Systems (EGS) are fundamentally altering the market landscape by enabling energy extraction in areas previously deemed unsuitable due to limited natural permeability. By creating man-made fractures in hot rock to circulate fluid, EGS mitigates the geographical constraints and exploration risks inherent in traditional hydrothermal models. This technical evolution is critical for expanding the addressable market beyond naturally occurring reservoirs. According to Fervo Energy, February 2024, in the 'Cape Station Drilling Results', the company reported a 70% reduction in drilling times for its horizontal wells, demonstrating how adapting oil and gas techniques can substantially improve operational efficiency and project economics.

Simultaneously, the implementation of supportive government policies and financial incentives serves as a primary engine for market growth by offsetting the high upfront capital expenditures required for exploration. Governments are increasingly utilizing grants and funding programs to de-risk initial development phases, thereby encouraging private sector participation in baseload renewable energy projects. According to the U.S. Department of Energy, February 2024, in the 'Pilot Projects to Advance Enhanced Geothermal Systems' announcement, the administration awarded up to $60 million to three demonstration projects to accelerate the commercialization of next-generation geothermal technologies. Such support is essential for industry expansion; according to ThinkGeoEnergy, in January 2024, the global installed geothermal power generation capacity reached 16,335 MW, underscoring the tangible impact of these strategic investments.

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Key Market Challenges

High upfront capital expenditure and the significant financial risks associated with exploration and drilling are the primary factors hampering the growth of the Global Geothermal Energy Market. Unlike other renewable energy sources, geothermal development requires substantial initial investment to verify resource viability through exploratory drilling, which can account for a large percentage of total project costs. This "dry hole" risk creates a formidable barrier to entry, as developers face the potential of losing their entire capital outlay if the drilled wells fail to yield commercially viable temperatures or flow rates. Consequently, this uncertainty deters private investment and complicates securing debt financing, restricting market participation to only the most capitalized entities and stalling the project pipeline.

The impact of these financial hurdles is evident in the slow pace of new capacity deployment in major markets. According to the European Geothermal Energy Council, in 2025, the European market commissioned only three new geothermal power plants throughout the preceding year. This limited number of completed projects underscores how the high cost of exploration and drilling continues to suppress the conversion of potential resources into operational facilities, thereby slowing the overall expansion of the global market.

Key Market Trends

The integration of Direct Lithium Extraction (DLE) from brines is emerging as a transformative trend, enabling geothermal facilities to operate as dual-purpose assets that co-produce renewable energy and critical battery metals. This approach significantly enhances project economics by creating a high-value revenue stream from the lithium contained in geothermal fluids, effectively subsidizing the cost of electricity generation and mitigating exploration risks. By leveraging this synergy, developers can support the rapidly growing electric vehicle supply chain while delivering zero-carbon baseload power. According to ThinkGeoEnergy, August 2025, in the 'Controlled Thermal Resources provides updates on Hell's Kitchen geothermal project' article, the developer is targeting an annual production of 25,000 metric tons of lithium hydroxide from the first stage of its integrated facility, highlighting the scale of this emerging market segment.

Concurrently, the expansion of Geothermal District Heating and Cooling (GDHC) networks is driving growth by shifting the sector’s focus toward the direct decarbonization of urban thermal energy. Unlike deep-power generation, these systems utilize lower-temperature resources to replace fossil-fuel-based heating in residential and commercial buildings, offering a highly efficient solution for energy security and emission reduction. This application broadens the market's geographical reach, as suitable low-enthalpy resources are more widely available than the high-temperature reservoirs required for electricity. According to the European Geothermal Energy Council, July 2025, in the 'Geothermal Market Report 2024', the European sector commissioned ten new geothermal district heating and cooling systems throughout the preceding year, demonstrating the sustained momentum in this specialized sub-market.

Segmental Insights

The residential sector is currently recognized as the fastest-growing segment within the global geothermal energy market, primarily due to the increasing adoption of geothermal heat pumps for space heating and cooling. This trend is accelerated by rising energy costs and a global shift toward decarbonization, which encourages homeowners to replace conventional fossil fuel systems with renewable alternatives. Furthermore, policy frameworks aligned with recommendations from the International Energy Agency support this transition through incentives for energy-efficient building upgrades. Consequently, the demand for sustainable domestic thermal solutions continues to drive substantial expansion in this category.

Regional Insights

Asia Pacific leads the global geothermal energy market due to the extensive natural reserves located along the tectonic Pacific Ring of Fire. Countries such as Indonesia and the Philippines possess high installed capacity and continue to expand infrastructure to meet rising electricity demand. This dominance is reinforced by supportive regulatory frameworks and renewable energy mandates from agencies like the Indonesian Ministry of Energy and Mineral Resources. Consequently, the combination of abundant geological resources and strong government initiatives encourages continuous investment, establishing the region as the primary hub for geothermal power generation.

Recent Developments

• In November 2024, Ormat Technologies announced that it had reached an understanding with Contact Energy to execute an Engineering, Procurement, and Construction contract for a new facility in New Zealand. The agreement, valued at approximately $200 million, outlined the development of the Te Mihi Stage 2 geothermal power plant, which is projected to have a capacity of 101 megawatts. The Chief Executive Officer of Ormat Technologies noted that this project would replace an older station and utilize the company's binary technology to enable zero-emissions operation. The plant is expected to be completed by mid-2027, strengthening the region’s renewable energy capacity.
• In September 2024, a joint venture involving Chevron New Energies and PT Pertamina Geothermal Energy officially received a geothermal permit for the Way Ratai working area in Indonesia. The permit, issued by the Ministry of Energy and Mineral Resources, authorized the consortium to commence exploration activities in Lampung province. This regulatory milestone was supported by an exploration investment commitment of USD 28.85 million. The President Director of the partner company highlighted that this project was part of a broader strategy to expand their geothermal portfolio and leverage strategic collaborations to develop sustainable baseload energy resources in the region.
• In June 2024, Google and NV Energy entered into a partnership to power the tech giant's data centers in Nevada with advanced geothermal energy. Under this agreement, NV Energy agreed to supply 115 megawatts of power generated by Fervo Energy to the local grid, specifically to support Google's operations. The deal introduced a novel "Clean Transition Tariff," a rate structure designed to accelerate the development of new clean energy projects by allowing large customers to contract for firm renewable power. This collaboration marked a major step in Google's commitment to operating on 24/7 carbon-free energy by 2030.
• In February 2024, Fervo Energy announced that it had raised $244 million in a new funding round led by the oil and gas company Devon Energy. This strategic investment was intended to accelerate the deployment of Fervo’s next-generation geothermal technology, which adapts horizontal drilling and distributed fiber optic sensing from the oil industry to unlock clean energy resources. The capital injection represented a significant endorsement of enhanced geothermal systems by traditional energy players. The company stated that these funds would support its operations at the Cape Station project in Utah, designed to deliver 400 megawatts of 24/7 carbon-free electricity.

Key Market Players

• Ormat Technologies Inc.
• Enel Green Power S.p.A.
• Chevron Corporation
• Fuji Electric Co., Ltd.
• Toshiba Energy Systems & Solutions Corporation
• Mitsubishi Heavy Industries, Ltd.
• KenGen
• Alterra Power Corp.
• Calpine Corporation
• First Gen Corporation

By Type	By Application	By Region
Binary Cycle Flash Dry Steam	Industrial Commercial Residential Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Geothermal Energy Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Geothermal Energy Market, By Type:

• Binary Cycle
• Flash
• Dry Steam

• Geothermal Energy Market, By Application:

• Industrial
• Commercial
• Residential
• Others

• Geothermal Energy Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE