Geothermal Investment Surges 85% in Q1: Wood Mackenzie

Geothermal Investment Surges 85% in Q1: Wood Mackenzie

Investment in North America’s geothermal sector surged to a record US$1.7 billion in the first quarter of 2025, marking an 85% increase over the full-year total for 2024, driven by breakthrough technologies that expand geothermal potential beyond traditional locations, Wood Mackenzie said in a report on Monday.

The energy consultancy’s latest Geothermal Market Update highlights the rise of enhanced geothermal systems (EGS), advanced geothermal systems (AGS), and super-hot rock technology, which enable energy extraction from hot dry rock and low-permeability formations. These innovations are transforming geothermal into a viable, 24/7 clean energy option nearly anywhere, not just in volcanic or tectonically active zones.

Commercial Breakthroughs and Global Expansion

A total of 47 new wells were announced in Q1 2025, representing an 80% year-on-year increase. The United States and Turkey led activity, with Europe also seeing accelerated growth in low-carbon heating deployments.

U.S.-based Fervo Energy’s 500 MW Cape Station project in Utah was flagged as a commercial milestone, delivering power at US$79/MWh without subsidies – a level competitive with conventional energy sources.

“Next-generation geothermal technologies are fundamentally changing the energy landscape,” said Annick Adjei, senior research analyst at Wood Mackenzie. “With $1.7 billion in funding and projects like Cape Station demonstrating viability, geothermal could supply up to 15% of global electricity by 2050.”

Massive Untapped Potential

The U.S., with just 4 GW of current geothermal capacity, holds an estimated 500 GW of technical potential, primarily in western states with high subsurface temperatures and heat flow rates. Canada is also emerging as a hotspot, with key activity in Alberta, Saskatchewan, British Columbia, and Yukon.

New partnerships have formed, including Deep Earth Energy’s collaboration with SLB on Canada’s first next-gen project in Saskatchewan. Nearly US$2 billion in total investment was raised in 2024, with 41% of that coming in the final quarter, indicating accelerating market confidence.

Technological Shifts and Policy Tailwinds

Three advanced technologies are driving the sector’s growth:

• EGS, which uses hydraulic stimulation to extract heat from hot dry rock.

• AGS, involving closed-loop circulation systems.

• Super-hot rock technology, targeting depths beyond five kilometres with temperatures above 374°C.

These technologies address traditional barriers like high costs and location constraints. Under a net-zero scenario, Wood Mackenzie projects they could contribute 46% of global geothermal output by 2050.

Government support is also rising. The U.S. Department of Energy committed US$1.36 billion to Project ATLiS for lithium extraction from geothermal brines. Meanwhile, permitting reforms and over 100,000 acres in new lease awards in Chile, Alaska, and Utah signal growing momentum.

States including Colorado, Nevada, Utah, and North Dakota are leading U.S. development, while Canada allocated over CA$50 million in funding last year.

“With only 4 GW installed and 500 GW in potential, geothermal presents a market opportunity rivaling oil and gas,” Adjei said. “Its reliability and small land footprint make it a critical piece of the clean energy transition.”

Baseload Solution for Energy Transition

As deployment scales and costs decline, geothermal is increasingly seen as a key baseload complement to intermittent renewables like solar and wind. Its steady output, compatibility with existing grid infrastructure, and expanded geographical reach position it as a cornerstone of North America’s future energy mix