Geothermal energy could play a much larger role in the global energy transition – but untargeted policies and investment barriers are preventing the sector from reaching its potential, according to new analysis from the Energy Transitions Commission (ETC).
The report found geothermal currently supplies just 0.5% of global final heat consumption and 0.3% of electricity generation. With the right support, this could rise to as much as 8% of both by 2050.
The ETC identifies three distinct geothermal technologies: shallow geothermal for heating and cooling buildings, conventional hydrothermal systems that use naturally hot underground water and next-generation geothermal, which uses advanced drilling techniques to access heat in a wider range of locations.
The report says each technology faces different financial and policy barriers and warns the next three to five years will be critical in proving the commercial viability of next-generation geothermal.
Shallow geothermal, including ground source heat pumps, is highlighted as one of the biggest opportunities. The ETC estimates deployment could grow four to six times by 2050 in colder regions, reducing pressure on electricity grids by around 10-20% and saving US consumers almost $80 billion a year.
Conventional hydrothermal technology remains limited by geography, although it can provide reliable heat, cooling and round-the-clock electricity where suitable resources exist.
Adair Turner, Co-Chair of the Energy Transitions Commission, said: “It’s several different technologies, which are modest in some countries and potentially transformative in others. Yet even where the economics already work and the technology is ready, geothermal remains largely untapped.”
The report calls for tailored policies including grants, low-cost finance, drilling support and regulatory reforms to accelerate deployment across different geothermal technologies.
Meanwhile, next-generation geothermal is attracting growing investor interest, driven by demand for constant low-carbon electricity from AI and data centres. Fervo Energy’s 2026 IPO, valuing the company at around $10 billion, is cited as evidence of growing confidence in the sector.
Copyright © 2026 Energy Live News LtdELN