Geothermal energy has long been used worldwide for supplying heat, and since the beginning of the last century for electricity generation. Geothermally generated electricity was previously limited to sites with specific geological conditions, but further intensive research and development work widened potential sites. In particular the creation of large underground heat exchange surfaces - Enhanced Geothermal Systems (EGS) - and the improvement of low temperature power conversion, for example with the Organic Rankine Cycle, could make it possible to produce geothermal electricity anywhere. Advanced heat and power cogeneration plants will also improve the economics of geothermal electricity.
A large part of the costs for a geothermal power plant come from deep underground drilling, so further development of innovative drilling technology is expected. Assuming a global average market growth for geothermal power capacity of 15% per year up to 2020, adjusting to 12% up to 2030 and still 7% per year beyond 2030, the result would be a cost reduction potential of more than 60% by 2050:
- for conventional geothermal power (without heat credits), from $ 15 cents/kWh to about $ 9 cents/kWh;
- for EGS, despite the presently high figures (about $ 20-30 cents/kWh), electricity production costs - depending on the credits for heat supply - are expected to come down to around $ 8 cents/kWh in the long term.
Because of its non-fluctuating supply and a grid load operating almost 100% of the time, geothermal energy is considered to be a key element in a future supply structure based on renewable sources. Up to now we have only used a marginal part of the potential. Shallow geothermal drilling, for example, can deliver energy for heating and cooling at any time anywhere, and can be used for thermal energy storage.