The global geothermal energy market is expected to grow at a CAGR of more than 3% during the forecast period of 2021-2026. The outbreak of COVID-19 is expected to significantly impact the global geothermal energy market due to disruption in the international supply chain and a reduction in investment for the upcoming projects. Although annual additions correspond to the driven market, some projects are expected to be delayed due to COVID-19 related lockdown measures. Increasing electricity security concern owing to the clean and eco-friendly resources are driving the growth of the geothermal energy market. In addition, increasing demand for heating and cooling systems including ground source heat pump and district heating are estimated to fuel the growth of the geothermal energy market. However, lucrative market for alternative clean energy sources like solar and wind is likely to hinder the market growth during the forecast period.
- Binary cycle power plant segment is likely to witness significant demand as they can be operated at low-temperature reservoirs (200°F to 330°F).
- Government-undertaken initiatives such as financial benefits and tax refunds to promote sustainable energy production are estimated to generate numerous growth opportunities for the geothermal energy market over the upcoming years.
- North America is expected to be the largest market during the forecast period, with majority of the demand coming from countries like United States, Mexico, etc.
Key Market Trends
Binary Cycle Power Plants Segment to Witness Significant Growth
- In binary cycle power plants, the water or steam below the earth never comes in direct contact with the turbines. Instead, water from geothermal reservoirs is pumped through a heat exchanger where it heats a second liquid like isobutene (which boils at lower temperature than water).
- This second liquid is heated into steam, which powers the turbines that drives a generator. The hot water from the earth is recycled into the earth through the injection well, and the second liquid is recycled through the turbine and back into the heat exchanger where it can be used again.
- Moreover, out of 2,558 MW of geothermal power plant capacity operating in the United States,1,826 MW capacity is from steam-powered plants and 731 MW of capacity is from binary cycle powered plants. But, according to the United States Energy Information Administration (EIA), in August 2020, the geothermal power technology is being shifted from steam to binary cycle. The reason for the shift from steam to binary-cycle power may be a matter of flexibility.
- The United States currently has 93 binary-cycle generators averaging 8 MW of capacity each, and 79 steam generators averaging 23 MW each. Dry-steam and flash plants, which require rarer, high-temperature, shallow reservoirs, produce higher power output and are, therefore, more economically efficient than binary plants. However, because binary plants can operate at reservoirs with lower temperatures, they offer more options for suitable locations.
- Therefore, based on the above-mentioned factors, binary cycle power plants segment is expected to witness significant growth during the forecast period.
North America to Dominate the Market
- North America is one of the leading markets for geothermal energy across the globe, with United States leading the regional as well as global market in terms of installed capacity.
- Most of the geothermal power plants in the United States are in western states and the island state of Hawaii, where geothermal energy resources are close to the earth's surface. California generates the most electricity from geothermal energy, where the Geysers dry steam reservoir in Northern California is the largest known dry steam field in the world.
- According to EIA, as of 2019, California (30) has the highest number of geothermal power plants, followed by Nevada (23), Utah (3), Idaho, Hawai, New Mexico, and Oregon has one plant each.
- Geothermal power is generated primarily in California (2,683 MWe) and Nevada (795 MWe) with the remaining energy coming from power plants in Alaska, Hawaii, Idaho, New Mexico, Oregon, and Utah. Exploration has been conducted in seven other western and southern states, but no new power plants have been built or begun.
- Further, it is expected that there are 1,748 geothermal wells in the United States, most of which are in California. There are 414 active producing steam wells in California, which holds over 95% of the steam wells in the United States.
- Therefore, based on the above-mentioned factors, North America is expected to dominate the global geothermal energy market during the forecast period.
The geothermal energy market is fragmented. Some of the major players includes Mitsubishi Power, Ltd., Ormat Technologies, Inc., Engie SA, Tetra Tech, Inc., and First Gen Corporation.
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