Heating up: 2024 showcased the promise of geothermal energy

Geothermal energy is a clean, reliable source of 24/7 baseload power. Unlike solar and wind, it is consistently available and unaffected by seasonal variations. With advancements in next-generation geothermal technologies, it has the potential to meet 15% of the world's energy needs by 2050.  

Geothermal is an excellent option in the drive to meet burgeoning power demand from data centres whilst enabling companies to expand their renewable energy portfolios and meet energy transition targets. What’s more, it is not a new concept; it has been around for more than 100 years, employing the same tools and techniques developed in the oil and gas industry.  

Wood Mackenzie analysts recently undertook a review of the geothermal industry in 2024. This analysis contributes to our upcoming geothermal research and data offering, which is being developed for the Lens Subsurface portfolio. Our geothermal research, like all Wood Mackenzie products and solutions, is designed to integrate data and analytics with subject-matter expertise, to inform decisions on geothermal energy. The solution will support geothermal exploration by providing access to comprehensive datasets of wells, fields projects, and licenses and will offer insightful content as this emerging industry continues to grow. 

Fill in the form to receive a complimentary extract from our recent geothermal report and read on for a brief introduction. Contact your salesperson to find out more about Lens Subsurface. 

A very good year 

The geothermal industry flourished in 2024. From projects, financing and regulation to drilling and mergers and acquisitions (M&A) activity, there were plentiful signs of growing confidence among legislators, project developers and investors in the sector. This confidence is underpinned by the emergence of next-generation technologies, growing demand for power from data centres, and the need to diversify the energy mix in response to the energy transition. 

Next-generation geothermal expanded into new regions in 2024, including the Middle East (Saudi Arabia) and Asia Pacific (the Philippines), with 14 new projects announced (3 commercial-scale projects and 11 pilots). Three enhanced geothermal system (EGS) projects had previously failed to get off the ground in Australia, but Earth’s Energy is now revisiting a site in South Australia, as well as assessing the potential for geothermal-powered data centres in Queensland. Four new projects were introduced in the US, meanwhile, to power military bases. 

Financial and legislative support 

Crucially, financial support continued to flow into the geothermal sector. Governments allocated more than US$2 billion to geothermal energy initiatives in 2024, with 21% of that directed towards next-generation technologies ‒ specifically, EGS, advanced geothermal systems (AGS) and superhot rock geothermal (SHR). Most government funding came in Europe (primarily the Netherlands, Poland and Germany), while the US allocated US$185 million to EGS deployment. Overall, next-generation geothermal startups raised nearly US$790 million from venture capital, debt financing and government grants last year. 

There were also signs of a more favourable policy and regulatory environment for geothermal. Indonesia and New Zealand announced a five-year plan to develop geothermal energy and meet renewable energy targets, including technical support and training. Four countries passed new legislation, notably the US and Germany.  

The US introduced 12 bills, more than half of them focused on expediting permitting to accelerate industry growth and attract more investment. Among those, the Heat Act, which removes the need for federal drilling permits for wells on state or private land and the Clean Act, which establishes a deadline for processing geothermal leasing applications, both passed the House in November 2024. 

Germany passed a major legislative package in September to facilitate the approval of geothermal projects and the expansion of heat systems. This included legislation to simplify and digitalise permitting procedures, setting maximum deadlines for mining law approvals, ambitious water law approvals, the classification of geothermal projects as essential to public good and exempting near-surface projects from mining law. 

Drill (geothermal), baby, drill 

Drilling activity continued apace. Operators announced plans to drill 146 new geothermal wells, of which 53 were due to be drilled in 2024. Thirty-four were spudded on schedule. The expansion of geothermal heating in Europe dominated drilling activity, driven by demand for low-carbon heating. 

Deep geothermal projects require significant upfront capital expenditure, and with drill time the largest contributor to well cost, drilling efficiencies are crucial. Fervo Energy significantly reduced drilling times (by upwards of 60%) across the first eight horizontal development wells completed between its Project Red pilot site and its commercial-scale Cape Station.  

The prospect of faster access to unlimited power holds great appeal for the world of artificial intelligence, in particular. In 2024, therefore, big tech, in its persistent search for power to drive energy-hungry data centres, expanded its renewable portfolio to include geothermal, signing power purchase agreements (PPAs) for 360 MW of power supply.  

Two key partnerships were formed: Sage Geosystems signed a 150MW PPA with Meta to supply power to US data centres, while Microsoft partnered with KenGen and G42 for a US$1 billion digital investment in Kenya, including a geothermal-powered data centre. Fervo Energy confirmed plans to boost output to 115 MW from 3.5 MW at its Nevada Project Red EGS site to power Google’s data centres. 

To receive a complimentary extract from our report, fill in the form. To find out about how to access our full report or to learn more about Lens Subsurface, contact your salesperson.