Wood Mackenzie: North America geothermal investment soars 85%

Wood Mackenzie's latest Geothermal Market Update reveals that next-generation technologies including enhanced geothermal systems (EGS), advanced geothermal systems (AGS), and super-hot rock technology are fundamentally transforming the sector. These innovations make geothermal energy accessible almost anywhere, not just traditional high-temperature sites.

Commercial activity accelerated dramatically, with 47 new wells announced in 1Q25 – an 80% increase y/y. This rise was largely driven by the expansion of low-carbon heating initiatives in Europe. The US and Turkey led the way, together accounting for nearly half of all planned wells. Fervo Energy's 500 MW Cape Station project in Utah demonstrates commercial viability at US$79/MWh without subsidy, signalling the technology's competitive potential against traditional power sources.

“Next-generation geothermal technologies are fundamentally changing the energy landscape by making this reliable, 24/7 clean power source available almost anywhere,” said Annick Adjei, Senior Research Analyst, Upstream and Carbon Management/Subsurface at Wood Mackenzie. “With US$1.7 billion in 1Q25 funding alone and projects like Fervo's 500 MW Cape Station demonstrating commercial viability at US$79/MWh, we're witnessing the emergence of a technology that could provide 15% of global power by 2050 whilst addressing the critical need for baseload renewable energy.”

Currently supplying less than 1% of global energy needs, geothermal could provide 15% of worldwide power by 2050. The US leads global geothermal power production, yet its 4 GW of installed capacity leaves vast resources untapped. Total potential US geothermal capacity exceeds 500 GW, with the best sites in western states featuring temperatures above 150°C and heat flow rates exceeding 80 mW/m².

Canada shows significant potential for geothermal power generation, mainly in British Columbia, Alberta, Saskatchewan, and Yukon, plus Nova Scotia.

Investment confidence has strengthened significantly, with 41% of the sector's nearly US$2 billion total investment raised in 2024 alone. Major partnerships have emerged, including Canadian Deep Earth Energy's collaboration with SLB on Canada's first next-generation project in Saskatchewan.

Under a net-zero scenario, Wood Mackenzie estimates these next generation technologies could account for 46% of total geothermal output by 2050.

Three breakthrough technologies are driving this revolution. Enhanced geothermal systems access energy from hot dry rock using hydraulic fracturing techniques. Advanced geothermal systems employ closed-loop circulation without extracting formation fluids. Super-hot rock technology targets temperatures above 374°C at depths exceeding 5 km.

These innovations address traditional barriers including high costs, location constraints, and technological limitations that previously restricted geothermal development to specific geological conditions.

The U.S. Department of Energy's US$1.36 billion conditional commitment to Project ATLiS for lithium extraction from geothermal brines demonstrates the technology's expanding applications beyond power generation. Exploration activities expanded with new lease awards in Chile, Alaska, and Utah covering over 100 000 acres.

Policy momentum builds across North America, with Energy Secretary, Chris Wright, advocating for next-generation technologies whilst federal initiatives streamline permitting and accelerate development. States including Colorado, Nevada, Utah, and North Dakota emerge as development leaders, whilst Canada allocated over CA$50 million in 2024.

“The geothermal sector's 80% increase in new well announcements and nearly US$2 billion in total investment reflects unprecedented confidence in technologies that unlock America's vast untapped resources,” Adjei concluded. “With over 500 GW of potential in the US alone and only 4 GW currently installed, we're looking at a market opportunity that could rival the scale of traditional oil and gas development whilst delivering the clean, reliable energy essential for grid stability.”

The sector's transformation from niche applications to mainstream energy solution reflects technological maturation and growing recognition of geothermal's unique advantages: reliable 24/7 generation, minimal land footprint, and compatibility with existing grid infrastructure.

As costs decline and deployment scales increase, geothermal energy positions itself as a cornerstone technology for North America's clean energy transition, offering the baseload renewable generation essential for grid stability as intermittent sources expand.

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