The global geothermal energy market was surpassed at USD 7.48 billion in 2023 and is expected to hit around USD 10.19 billion by 2033, growing at a CAGR of 3.14% from 2024 to 2033.
The growth of the geothermal energy market is driven by the heightened environmental consciousness and the imperative to mitigate climate change for renewable energy sources. Geothermal energy, being clean and sustainable, offers a compelling solution, attracting both public and private investments. Additionally, advancements in geothermal technology, particularly in drilling techniques and reservoir engineering, have expanded the accessibility of geothermal resources, making projects more feasible and cost-effective. Furthermore, supportive government policies, such as incentives, subsidies, and renewable energy targets, have incentivized the development of geothermal projects worldwide. These factors collectively contribute to the robust growth trajectory of the geothermal energy market, positioning it as a vital component of the global energy transition towards a greener and more sustainable future.
Segmented by technology, the market comprises flash steam, dry steam, and binary cycle power plants. Leading the market in 2023 was the binary cycle power plants segment, holding the largest revenue share at 31%. These plants capitalize on lower temperature geothermal resources, which are more widespread globally compared to high temperature ones. Hence, they serve as the most feasible option for regions with moderate to low geothermal heat potential, expanding the geographical scope for geothermal energy development.
The flash steam segment is projected to exhibit the fastest compound annual growth rate (CAGR) during the forecast period. This can be attributed to the efficient utilization of natural steam produced in underground reservoirs, directly converting it into electrical power. Flash steam geothermal energy plants offer reliable and sustainable energy solutions with minimal environmental impact, rendering them appealing options for countries aiming to diversify their energy mix. Furthermore, advancements in flash steam technology, such as enhanced drilling techniques and reservoir management, have bolstered efficiency and cost-effectiveness, thereby driving demand for these power plants. As countries worldwide increasingly adopt sustainable energy sources for power generation, the demand for geothermal energy is poised to witness significant growth in the forthcoming years.
The market is divided based on power into two segments: up to 5MW and above 5 MW. Leading the market in 2023 was the above 5 MW segment, capturing the largest revenue share at 57%. This dominance can be attributed to the rising demand for large-scale power plants capable of generating significant amounts of electricity for commercial and industrial applications. Additionally, the increasing recognition of geothermal energy as a dependable and sustainable source of baseload power further drives the demand for above 5 MW geothermal power plants.
Nevertheless, geothermal power plants with a capacity of up to 5 MW also command notable demand. These mid-sized plants strike a balance between scalability, efficiency, and cost-effectiveness, rendering them an attractive option for both developed and developing countries. As countries worldwide prioritize the transition to clean energy sources in residential applications, the demand for up to 5MW geothermal power plants is anticipated to rise steadily over the forecast period.
The market is categorized by application into residential, commercial, and industrial segments. Leading the market in 2023 was the residential segment, capturing the largest revenue share at 41%. This dominance is driven by the substantial demand for residential cooling and heating applications, offering homeowners a renewable alternative to traditional HVAC systems. Geothermal heat pumps, apart from space conditioning, can also provide domestic hot water. Equipped with a desuperheater, these systems utilize surplus heat from the compressor to heat water, particularly during summer months. However, during fall, spring, and winter, traditional water heating methods are relied upon as the desuperheater produces minimal excess heat.
The industrial segment is poised to exhibit the fastest compound annual growth rate (CAGR) over the forecast period. This growth is attributed to the increasing ground temperature, which adversely affects system efficiency and capacity. Despite the potential benefits, the adoption of geothermal heat pumps in industrial applications lags behind residential and commercial sectors. Industrial environments consume significant energy, resulting in continuous heat production that needs to be dissipated. Installing geothermal heat pumps in industrial facilities leads to continuous heat rejection into the ground, consequently elevating ground temperature and diminishing system efficiency and capacity. These factors are anticipated to hinder the adoption of geothermal heat pumps in industrial applications further.
In 2023, Asia Pacific emerged as the dominant force in the geothermal energy market, holding a significant revenue share of 35%. This region is poised to exhibit the fastest Compound Annual Growth Rate (CAGR) over the forecast period. The remarkable growth in Asia Pacific can be attributed to the high demand for geothermal heat pumps in the residential sector, particularly for space heating and cooling purposes. Additionally, factors such as a burgeoning population, improving economic conditions, and the presence of one of the largest manufacturing sectors are expected to further bolster market growth in the region.
Meanwhile, Europe is anticipated to witness the fastest CAGR in the geothermal energy market during the forecast period. The region's strong emphasis on energy efficiency is driving the demand for energy-efficient products, including heat pumps. Various government policies aimed at reducing energy consumption are expected to spur demand for heat pumps in Europe. Furthermore, the recovering construction sector is poised to contribute significantly to market growth in the region.
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