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Geothermal energy

  • Article
  • We estimate the use of next-generation geothermal energy in developing Asia could reduce fossil fuel emissions by c17%...
  • ...and see growing opportunities in this power source due to its stability, low emissions, and declining construction costs
  • We see geothermal playing a key role in China’s energy mix; Indonesia has greatest potential for next-gen geothermal

A key plank of Asia’s net zero path

Digging deep: We expect emissions control to be integrated into economic and industrial policies with the enhanced economic fundamentals of clean energy. In light of this, we see growing opportunities for geothermal energy to move up the agenda of Asia’s net zero energy path. Solar and wind have been growing rapidly, but intermittency problems have constrained their ability to fully replace coal.

By contrast, geothermal energy is a stable source of power, coupled with falling production costs and new technology that’s a game changer. Currently, geothermal energy contributes less than 1% to electricity generation in developing Asia but we think that’s set to rise fast, especially as the region has to speed up and strengthen its decarbonisation efforts. There’s also a window now to build up capacity before coal plants are demised from 2040.

A new catalyst: Up to now, only a few countries in Asia – like Indonesia and the Philippines – have had favourable conditions for geothermal energy. But new technology now allows heat to be harnessed at far greater depths. The IEA estimates that the energy potential of next-generation geothermal energy is 2,000 times more than conventional. We estimate adoption of next-generation geothermal energy could reduce fossil fuel CO2 emissions by up to 17% by 2050, versus the current trajectory.

Adoption of next-generation geothermal energy in developing Asia could reduce up to 17% fossil fuel CO2 emissions by 2050

Higher investments, lower costs: Investments in geothermal almost tripled last year from 2023, bucking the wider trend in climate technology, which heading downwards. That boom in investment is helping to drive down the cost of next-gen geothermal energy, which could fall by up to 80% by 2035, per IEA estimates.

Who are the key players? There is huge demand for dispatchable clean energy in China to meet climate goals and energy security, so geothermal looks set to play a role there, alongside nuclear energy. Indonesia is the second-largest geothermal electricity generator globally due to rich geothermal resources and has the greatest potential for next-gen geothermal energy, with the government supporting expansion plans.

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