The Global Geothermal Power market is expected to grow at a compound annual growth rate of 2.81% over the analyzed period to reach a market size of US$1.740 billion in 2027 from the US$1.434 billion in 2020. The primary factor driving market growth is technological advancements to improve the efficiency of geothermal power plants, which are expected to provide a more lucrative opportunity for market expansion over the next five years. Furthermore, according to the International Energy Agency, geothermal electricity generation increased roughly by 2% in 2020, falling short of the previous five years' average growth, with a capacity increase of 200 MW. This technology is not on track to meet the Net Zero Emissions by 2050 Scenario, which calls for 13% annual increases in generation from 2021 to 2030, corresponding to average annual capacity expansions of 3.6 GW. As a result, policies to help reduce costs and mitigate predevelopment risks are required to increase geothermal-based power generation. However, factors such as the high investment required for geothermal power plants and the negative environmental impact of geothermal energy are impeding the market's growth.
Continuous Technological Advancement Around the World Will Boost the Market Growth
One of the prime reasons driving the market for geothermal energy is increase in technological advancements in the geothermal energy industry is expected to drive the growth of the geothermal power market. Geothermal energy is rapidly becoming one of the most dependable sources of renewable energy. It is getting popular over traditional and non-renewable energy sources due to its eco-friendliness and consistent access. Geothermal funding in the United States has risen 31% from $84 million in the fiscal year 2019 to $110 million in the fiscal year 2020. The Frontier Observatory for Research in Geothermal Energy (FORGE) project, which aims to test and evaluate enhanced geothermal systems, has received $20 million of the total funding. UKRI announced an early-stage investment in seventeen new projects relating to offshore and geothermal clean energy innovation. In February 2020, Turkish geothermal player MASPO Energy established a national geothermal research and development centre with the goal of increasing turkey's emphasis on equipment manufacturing and reducing its reliance on international support and supply. Eavor Technologies Inc. and Deep Energy Capital announced the collaboration to deploy the Eavor-Loop closed-loop geothermal technology in December 2021.
The Industrial User Segment Will Have a Significant Share
During the forecast period, the industrial end-user segment is expected to have the largest market share. This market is expected to expand during the forecast period due to the increased use of geothermal power in gold mining, milk pasteurisation, and dehydration of food. Geothermal energy is used in many other industries, including lumber, paper, cement, etc. Geothermal energy is also a great source for meeting future energy demands. In the cement and lumber industries, geothermal power is used to dry the components that are produced.
The Availability of Other Renewable Energy Alternatives May Constrain the Market Growth
The growing market for wind and solar energy limits the market's growth. The energy generated by geothermal will not replace the electricity used, but it will lower heating and cooling bills in the long run. Solar energy, on the other hand, can supplement or even replace one's electricity usage while saving a significant amount of money on one's power bill.
The North American Geothermal Power Market Will Grow Significantly During the Forecasted Period
The global geothermal power market has been divided into five major regional markets: North America, South America, Europe, the Middle East and Africa (MEA), and Asia Pacific (APAC). North America held a significant share of the global geothermal power market in 2020, owing to a growing emphasis on geothermal energy sources in countries such as the United States and Mexico. According to DOE, improved technologies could help nearly 26-fold increase in domestic geothermal power generation by 2050, reaching 60 gigatonnes of available baseload energy capacity. Increasing the use of geothermal energy for heating and cooling in the United States can help the Biden-Harris Administration meet its decarbonization goals of cutting U.S. emissions in half by 2030 and achieving a carbon-free electric sector by 2035. The country is home to the world's largest geothermal complex, Geysers, which includes more than 23 geothermal plants at its base in California. Mexico also has a significant geothermal power capacity, led primarily by the Cerro Prieto Geothermal Power Station complex, which has a capacity of approximately 820 MW.
The Asia Pacific (APAC) regional market for geothermal power is expected to grow at a significant compound annual growth rate during the forecast period due to large-scale geothermal energy production in Indonesia, the Philippines, and Japan. The Middle East and Africa (MEA) geothermal power regional market is also expected to grow at a healthy CAGR between 2020 and 2027, owing to favourable government policies and rising investment in geothermal projects in countries such as Turkey, Ethiopia, and South Africa.
To some extent, the COVID-19 pandemic outbreak had a negative impact on the geothermal energy sector. It did have a significant impact on the global geothermal energy sector due to disruptions in the global supply chain and a reduction in investment for prospective projects. For example, Indonesia experienced some delays in geothermal energy deployment, with construction temporarily halted due to mandatory social distancing measures and nationwide lockdowns to prevent the virus's spread.
As a result of the response measures, which include widespread lockdowns, production and supply chains have been disrupted, demand for goods and services has decreased, commodity prices have fallen, and there was a significant economic recession around the world. As a result of the health crisis, hundreds of millions of people have lost their jobs or had their livelihoods jeopardised. Despite suffering alongside the rest of the world's economy, renewable energy has proven to be more resilient than other sectors of the sector.