Page 11 - Policy Economic Report - August 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Figure 5: Market potential for next-generation power capacity & industrial heat by region, 2025-2050

Source- IEA

The cost-effective deployment with newer drilling technologies could effectively generate 8,000 terawatt-
hours (TWh) per year. Currently, geothermal accounts for less than 1% of global energy demand, with
primary activity concentrated in the U.S., Iceland, Indonesia, Türkiye, Kenya, and Italy. On average, global
geothermal capacity has a utilization rate of over 75% in 2023, compared to 30% in wind and less than
15% in solar projects.

Policy changes

According to IEA, policy support is lagging for large-scale adoption of geothermal energy. More than 100
countries have policies in place for solar and/or onshore wind, but less than 30 have implemented policies
for geothermal. The IEA has urged governments to elevate geothermal energy on the energy policy
agenda by incorporating it as a prominent part of national energy planning, with dedicated goals and
technology roadmaps. The report recommends creating risk mitigation programs for early-stage project
development in collaboration with national, regional, and international finance institutions. To attract
investments on a scale, IEA stressed the importance of long-term revenue certainty and fair remuneration,
supported by contracts and programs that value geothermal ’s contribution to grid adequacy and
flexibility.

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