China and India could lead Asia’s geothermal market, IEA says

TOKYO — China and India could become market leaders in geothermal energy, as emerging technology offers an exit from their dependence on coal power, the International Energy Agency (IEA) said in a new report published Friday.

Renewable geothermal power, which taps underground hot-water reservoirs, met just 0.3% of global electricity demand last year as its use was limited to countries with easily accessible and high-quality natural resources, including the U.S., Indonesia and the Philippines.

But geothermal could play a bigger role in global electricity generation, meeting 15% of demand growth to 2050, according to the agency’s “The Future of Geothermal Energy” report.

The cost of geothermal energy using new technologies could be lowered by as much as 80% over the next decade with sufficient investment, it said.

“Drilling technologies which enabled the shale oil and gas revolution in the U.S. are now being deployed for geothermal, and the result is, we can go deeper under the ground … This can be a game changer,” IEA Executive Director Fatih Birol told Nikkei Asia, adding that next-generation technologies “can be competitive, like with hydropower, solar and wind, in about 10 years of time.”

Fatih Birol, the executive director of the International Energy Agency speaks at Equinor’s Autumn Conference 2024 at Det Norske Teater in Oslo, Norway, on Nov. 26.

The energy source is a “good candidate to replace coal in Asia,” Birol said, and could be critical to helping meet the needs of technology companies, such as Google and Microsoft, as they develop power-hungry data centers around the world.

Geothermal energy can steadily generate power regardless of weather conditions and complement rising output from other renewable energy sources, he added.

Conventional geothermal plants produce electricity using steam from underground hot-water reservoirs to spin a turbine, which drives a power generator.

But new technology, known as enhanced geothermal systems (EGS), is opening up opportunities for countries that lack conventional geothermal resources by drilling deeper underground to tap into existing hot-water resources or even create new ones, the report said.

China has the second-largest EGS potential at 8% of the global total, after the U.S. which accounted for about 13%, the IEA report said. Southeast Asian nations together represented about 15% of the global technical potential, led by Indonesia and the Philippines.

The cost of technology such as EGS could fall as much as 80% by 2035, putting it on par with or making it even cheaper than other sources of energy, including gas or coal with carbon capture, the report said.

A drop of that magnitude could see geothermal power account for about 20% of electricity generation growth in China, India, Southeast Asia and the U.S. by 2050, the report said.

“China, the United States and India have the greatest market potential for next-generation geothermal electricity … together accounting for three-quarters of global potential in the low-cost case,” the report said.

The cost of EGS is high, but it could be lowered using expertise from the oil and gas sector, the report said.  Up to 80% of the investment required in geothermal involves capacity and skills that are transferrable from existing oil and gas operations, it said.

“Diversifying into geothermal energy could be of great benefit to the oil and gas industry, providing opportunities to develop new business lines in the fast-growing clean-energy economy, as well as a hedge against commercial risks arising from projected future declines in oil and gas demand,” it added.

Governments must also boost support for the energy source to encourage the growth of next-generation technology.

“One important challenge is to make sure the permitting and licensing doesn’t take too long, without compromising the environmental standards,” Birol said.

source : asia.nikkei