Published: March 2016
Report Code: PE10612
Category : Unconventional & Renewable Energy
Geothermal Power Market Overview
The global geothermal power market is expected to grow at a CAGR of 11.6% during the forecast period, to reach $6,518.9 million by 2022. A significant growth in demand for geothermal power is anticipated due to the increased government support for geothermal projects, and need for energy independence and geopolitical energy security.
It refers to the electricity generated from geothermal resources. Geothermal electricity is produced by geothermal power plants, which uses steam produced from hot water reservoirs found below earth’s surface. Steam is used to rotate the turbine, which finally leads to the generation of electricity. Geothermal power plants have capacity higher than 90%, as it is available 24 hours a day throughout a year.
GLOBAL GEOTHERMAL POWER MARKET SIZE BY TECHNOLOGY TYPE $M (2012–2022)
Geothermal energy has several advantages over other renewable energy sources, such as wind, hydropower, wave energy and bioenergy. Some of those advantages are:
Among the various technologies, flash is the largest used technology in the geothermal power market, while dry steam and binary technology are the other major technologies. Asia-Pacific dominated the global geothermal power market in 2015 and is anticipated to retain its dominance during the forecast period. The geothermal power market in Asia-Pacific is expected to grow, due to high energy demands in the region and high growth in the geothermal power industry.
Geothermal Power Market Dynamics
The rapid depletion of fossil fuels and global warming are creating abundant opportunities for the growth of the market. However, the high initial cost of installation of geothermal power plants is hampering the growth of the global market. The installation of geothermal power plant requires huge one-time investment to retrieve heat from deep within the earth. There are several steps involved in the installation of geothermal power plants including exploration, drilling, plant design and construction, and manufacturing of components and equipment. The exploration and drilling of production wells require expensive equipment for mud logging, welding, cement casing, and installation of geothermal rigs. Similarly, design and construction phase require planning and designing of plants, engineering designing and EPC services. Geothermal power developers generally outsource EPC services to EPC service providers.
The major factors driving the demand of geothermal power includes increased government support for geothermal power projects and stringent environment regulations, high capacity factor, and increasing need for energy independence and geopolitical energy security.
Energy independence refers to the development of alternative fuels to be produced in one’s own country, which is providing consumers an opportunity to choose among non-petroleum fuels for transportation. Energy independence is a long-term vision of several countries, such as the U.S., Mexico, and different economies of the European Union (EU) and Asia. The different countries across the world are trying to free themselves from dependence on foreign oil. Several initiatives are being taken to reduce the foreign oil import. The EU has set target in Renewable Energy Directive (RED), to fulfil at least 20% of its total energy needs with renewables by 2020. The RED establishes an overall policy for the production and promotion of energy from renewable sources in the EU.
Similarly, different governments across the globe are looking for alternative source of energy to reduce their dependency on conventional energy sources. Geothermal energy is one of the most efficient alternatives for conventional fossil fuel based energy, as it is produced locally in the country. The governments across the globe are taking initiatives to replace at least part of their conventional energy with renewable energy. This helps these countries to utilize their money for the economic growth and national security. All the aforementioned factors tend to drive the growth of the market worldwide.
The key trends observed in the global market include technological advancements and increasing job opportunities. From the start-up phase of geothermal power generation to distribution of electricity, there are enormous job opportunities throughout the project timeline. The start-up and exploratory phase is creating job-opportunities for geologists, geophysicists, geochemists, wild life biologists, hydrologists, archeologists, management and clerical staff. During the drilling phase, drilling engineers are required to support well drilling, drill men to operate geothermal drilling rig and mud loggers for analyzing fluid and rock cutting, cementing personnel to place cement metal casings within the wellbore, and welders for welding well equipment at project site.
Similarly, EPC services require skilled labor, thus providing work opportunity for workers with specialization in electrical engineering, civil engineering, mechanical engineering, plant designers for preparing engineering designs, inspection personnel, concrete construction operator, welders and others. The manufacturing of equipment for geothermal power plant and their assembly also require persons with specialized skills. The operation and maintenance of geothermal power plant creates ample job opportunities. Moreover, the increasing geothermal power capacity across the globe is expected to have a significant positive impact on the population in different countries.
The massive unexplored geothermal power market and high rate of fossil fuel depletion and increasing demand for reduction of greenhouse gases are the opportunities witnessed in this market. Although geothermal power has witnessed significant growth in demand during the last decade, the massive unexplored geothermal power markets still exist across the globe. The market in Middle East, Africa, and Latin America is at its nascent stage. The heat in earth is considered limitless; however, owing to the cost and technology, its use has been limited. With the advent of several new technologies and cost-effective generation of geothermal power, several countries across the globe are framing regulations to reduce their dependency on petroleum fuels and increase production of geothermal energy. This is creating abundant opportunities for the manufacturers and developers of geothermal power plant for their capacity and geographical expansion. In addition, there also lies an opportunity for new players to establish their presence in the geothermal power market. Different countries around the world, such as Germany, France, Australia, China, Ethiopia and Portugal, have started exploiting geothermal energy. Hence, the massive unexplored market would attract investors and new players to exploit the potential of the geothermal power market.
Geothermal Power Market Competitive Landscape
Some of the key companies operating in the geothermal power market include Ormat Technologies Inc., Mitsubishi Heavy Industries Ltd., U.S. Geothermal Inc., Cyrq Energy, Calpine Corporation, Alterra Power Corp., NV Energy, Raya Group, Energy Development Corporation, Mannvit Engineering, and Contact Energy.