Asia is set to spearhead the next decade’s expansion of the global geothermal power market driven by gigawatt-scale growth in Indonesia, according to latest calculations from Fitch Solutions, but the sector is expected to only play a supporting role in the evolving energy transition as wind and solar costs continue to drop.
The research group forecasts Asia will be the largest regional geothermal market by installed capacity by 2029, accounting for a total of 7.8GW of the worldwide 18.6GW expected online by this date, with Indonesia foreseen installing 1.25GW of plant.
Fitch Solutions figures point to an average growth rate of 2.8% over the decade, leading to build out of just over 4GW, “still small in the overall renewables market”.
“During this period, geothermal will be responsible for annual average of 2.3% of global non-hydropower renewables output and less than 1% of non-hydro renewables capacity,” said the analyst in a flash note.
“This is due to both the lower costs of wind and solar power as well as the fact that geothermal developments are restricted to markets with natural geothermal resources.”
After Asia, North America will be the second-largest geothermal market with 2.8GW, while Turkey is forecast to come second behind Indonesia for growth, with 948MW in the pipeline for construction.
Given the slow-rolling expansion of the sector, Fitch Solutions believes international financial institutions and development banks will be “key”, noting this support would be “especially pertinent in developing markets aiming to reduce their reliance on fossil fuel, as geothermal is both a non-intermittent source – unlike solar or wind power – and has zero emissions – unlike biomass”.
Analyst Rystad reported recently that between 2015-2019 some 30 to 80 geothermal projects were commissioned per year, resulting in the drilling of 150-200 wells, each with an average capacity of 5.3MW.
Wind and solar together accounted for 67% of new power production capacity added globally in 2019, while fossil fuels slide to 25%, according to Bloomberg NEF’s Power Transition Trends 2020 report.