As the world accelerates its transition toward sustainable energy systems under SDG 7 (Affordable and Clean Energy), much of the focus has been on solar, wind, and hydropower. Yet, beneath the Earth’s surface lies one of the most stable, renewable, and underutilized resources: geothermal energy. Despite its enormous potential, geothermal contributes just 0.5% of global electricity generation (IRENA, 2022). Installed capacity stands at around 16 GW worldwide, far below its estimated global potential of 200 GW by 2050.

Why is this resource so untapped? What regions can lead in its development? And what do businesses in the energy domain need to know about the opportunities and requirements for entering this market? This article addresses these questions from a market research perspective, analyzing geothermal energy as a growth opportunity for businesses, investors, and policymakers.

Why Geothermal Energy is Underutilized?

Several barriers explain why geothermal energy lags behind solar and wind:

1. High upfront exploration costs: Locating viable geothermal reservoirs requires drilling, which can cost $2–10 million per well with high financial risk if no viable resource is found.
2. Site-specific availability: Unlike solar or wind, geothermal resources are concentrated in geologically active regions such as volcanic belts and tectonic plate boundaries.
3. Policy neglect: Governments and investors have favored solar and wind due to faster deployment, falling costs, and high visibility.
4. Technical expertise requirement: Developing geothermal requires advanced geoscience, drilling, and reservoir management skills, limiting entry to specialized players.

Despite these challenges, geothermal offers unique advantages: it provides baseload power (24/7 availability), unlike intermittent solar and wind, and has one of the lowest lifecycle carbon footprints of any energy source (just 27 g CO₂/kWh, IEA).

Regional Opportunities in Geothermal Energy

1. The “Ring of Fire” (Asia-Pacific & Americas)

The Pacific Rim, known as the “Ring of Fire,” holds the richest geothermal potential.

• Indonesia: With an estimated 29 GW potential, it is second only to the U.S. in installed capacity (2.3 GW). Projects like the Sarulla Geothermal Power Station (330 MW) highlight the investment scale.
• Philippines: Already generates about 12% of its electricity from geothermal.
• United States: Leads globally with 3.7 GW installed, primarily in California and Nevada.

2. East Africa Rift System

• Countries like Kenya and Ethiopia sit on active rift valleys ideal for geothermal. Kenya generates over 40% of its electricity from geothermal (950 MW installed at Olkaria). This makes Kenya a global success story in leveraging geothermal for energy security.

3. Europe

• Iceland: A textbook case with 100% of electricity from renewables, 25% of which comes from geothermal. Its direct-use geothermal systems also heat nearly all buildings.
• Turkey: Rapidly scaling, with 1.7 GW installed, making it the 4th largest globally.
• Other countries like Italy, Germany, and France are exploring enhanced geothermal systems (EGS).

4. Latin America

• Mexico (1 GW installed) has one of the world’s largest geothermal plants—Cerro Prieto.
• Chile and Costa Rica are also emerging players due to volcanic terrain.

Case Studies in Geothermal Development

1. Olkaria Geothermal Project – Kenya

The Olkaria complex is one of the world’s largest geothermal fields, providing 950 MW capacity. Developed through a mix of public investment (Kenya Electricity Generating Company – KenGen) and international finance, it has transformed Kenya’s power mix, reducing reliance on fossil imports and lowering electricity costs. For businesses, it illustrates how government-private cooperation can de-risk exploration and attract investors.

2. Sarulla Geothermal Power Station – Indonesia

At 330 MW, Sarulla is one of the largest geothermal plants globally. It cost $1.6 billion and was financed through a consortium including Itochu (Japan), Medco Power (Indonesia), and the World Bank. It showcases how multi-stakeholder financing is key in capital-intensive geothermal ventures.

3. Iceland’s Geothermal Model

Iceland has become a global hub for geothermal innovation. Beyond electricity, it uses geothermal to heat 90% of its homes and power industries. For business leaders, Iceland demonstrates how geothermal can extend value chains into industrial applications, not just electricity.

Requirements for Scaling Geothermal Energy

To unlock geothermal’s potential, businesses and governments must address specific requirements:

1. Exploration and Drilling Investment: Governments can de-risk exploration through public-private partnerships or guarantee funds. The World Bank’s Geothermal Risk Mitigation Facility (GRMF) in Africa is a model.
2. Regulatory Frameworks: Clear licensing, tariffs, and feed-in policies are needed to attract investors. Kenya’s Geothermal Development Company (GDC) demonstrates effective state-led exploration followed by private investment.
3. Technology Development: Enhanced geothermal systems (EGS) could unlock resources in non-volcanic areas, expanding the market beyond hotspots.
4. Skilled Workforce: Geothermal requires geologists, engineers, and drilling specialists. Training programs must accompany investment.
5. Financing Models: Blended finance (mixing concessional funds with private capital) can lower upfront risks.

How Businesses Benefit from Geothermal Energy

Geothermal presents both direct and indirect opportunities for businesses in the energy sector:

• Stable revenue streams: Unlike wind and solar, geothermal provides continuous generation, making power purchase agreements (PPAs) more reliable.
• Diversification: Utilities can balance intermittent renewables with geothermal baseload.
• Industrial heating and cooling: Beyond electricity, geothermal can supply direct heat for industries (food processing, textiles, greenhouses). In Iceland, geothermal supports both aluminum smelting and agribusiness.
• Carbon credits and ESG alignment: Low-carbon geothermal assets enhance ESG ratings and qualify for green financing instruments.

According to IEA forecasts, investment in geothermal could reach $40 billion by 2030, creating opportunities across drilling, construction, equipment manufacturing, and O&M services.

Here’s a forecast table and accompanying analysis on geothermal energy capacity growth by region 2025-2035, based on recent market data and studies. This gives business readers a sense of where the opportunity lies and how fast it may develop.

Analysis & Insights

• Asia-Pacific is projected to lead in both investment and added capacity. Indonesia and the Philippines are among the most active geothermal markets. Indonesia has targets to significantly increase its geothermal installed capacity in the coming years.
• North America, already having a relatively mature geothermal sector (e.g., U.S. ~3.7 GW installed), will see increased investment particularly around infrastructure, modernization, and deployment of enhanced geothermal systems (EGS) or improved drilling/heat extraction technologies.
• Europe is expected to accelerate growth, not just in power generation but also in heating and direct use applications. Policies, especially to reduce reliance on fossil fuels for heating, are key drivers. The EU and some individual countries are making regulatory changes to simplify permitting for geothermal, which may accelerate deployment.
• Middle East & Africa are emerging markets. Places like Kenya & Ethiopia already have geothermal projects and strong potential. If regulatory, financial, and exploration risks are managed, these regions could see considerable growth.

Implications for Business and Strategy

For businesses, these forecasts imply:

1. Target Regions for Investment– Firms seeking new geothermal ventures should especially consider Asia-Pacific (Indonesia, Philippines), East Africa (Kenya, Ethiopia), and parts of Europe (Turkey, Southern & Central Europe). These regions combine geological potential, policy support, and growing demand.
2. Demand for Supporting Services– As capacity increases, there’ll be demand for drilling, reservoir mapping, technology providers (for binary cycle plants, EGS), financing models, consultancy, and maintenance. Companies with those capabilities stand to benefit.
3. Importance of Policy & Regulatory Advocacy– Growth will be heavily dependent on favourable policy regimes: exploration subsidies, streamlined licensing, feed-in tariffs or PPAs, and risk mitigation instruments (e.g. exploration guarantees). Companies need strategy teams focused on navigating and influencing regulatory landscapes.
4. ESG and Green Finance Alignment– Geothermal projects tend to score well under ESG metrics (low emissions, baseload stability, potential for direct heat uses). Firms that can present credible sustainability metrics may access green bonds, concessional finance, and improve investor appeal.
5. Technology & Innovation Premium– Firms that invest early in improved drilling technology, reservoir augmentation (EGS), high-enthalpy geothermal, and hybrid systems (geothermal + solar or geothermal + district heating) will have a competitive edge as resource availability in prime sites declines or becomes more competitive.

Improving Geothermal’s Market Position

To accelerate Geothermal’s role in the clean energy transition, the following steps are critical:

1. Policy Innovation: Governments should adopt risk-sharing mechanisms (e.g., drilling insurance funds).
2. Technology Scaling: Enhanced Geothermal Systems (EGS) and binary cycle plants can expand resource availability.
3. Cross-sector Integration: Promote industrial direct-use applications and district heating.
4. International Collaboration: Sharing expertise from leaders (Iceland, Kenya, U.S.) to emerging players.
5. Awareness Campaigns: Position geothermal as an essential complement to solar and wind in the global energy mix.

Conclusion

Geothermal energy remains one of the most underutilized yet promising clean energy sources. With just 16 GW installed globally against a potential of 200 GW or more, the untapped market opportunity is massive. Concentrated in volcanic and tectonic regions like the Ring of Fire, East Africa, and parts of Europe and Latin America, geothermal offers unique business advantages: 24/7 reliable power, industrial heating applications, and ESG-friendly investment profiles.

Case studies from Kenya, Indonesia, and Iceland demonstrate that with the right policies, financing, and technology, geothermal can scale rapidly. For businesses, this represents a chance to diversify portfolios, secure stable revenues, and align with SDG 7 goals.

As the world moves toward net-zero by mid-century, geothermal energy will play a critical role in balancing intermittent renewables, securing energy independence, and unlocking industrial applications. Its time as a niche resource is ending—geothermal is emerging as a mainstream clean energy frontier for the decades ahead.