Next-Generation Geothermal Poised to Become Europe’s Mainstream Clean Power Option
Next-Generation Geothermal Poised to Become Europe’s Mainstream Clean Power Option
Technological progress is rapidly expanding the areas where geothermal electricity can be produced, strengthening its position as a cost-competitive and secure alternative to fossil fuels—including for fast-growing loads such as data centres. With today’s emerging methods, geothermal could already replace 42% of electricity generation from coal and gas plants in the EU, Ember found. Enhanced geothermal systems (EGS) could also provide a form of indirect storage for surplus solar and wind power.
In its report Hot Stuff: Geothermal Energy in Europe, Ember said advances in drilling and reservoir engineering are unlocking geothermal electricity across far wider parts of Europe. Once confined to a handful of favourable locations, geothermal is now positioned to scale from a niche “volcanic” resource to a more mainstream technology.
New geothermal technologies could replace 42% of EU’s fossil electricity, at costs comparable to coal and gas
Ember’s latest figures indicate geothermal could replace 42% of the EU’s coal- and gas-fired generation for less than €100/MWh.
“Once restricted to a few geological hotspots like Iceland or Tuscany, modern geothermal is now cost-competitive with gas across much of the continent. As Europe seeks to slash emissions while meeting the energy demands of heavy industry and AI data centers, this untapped resource offers a clean, firm power supply that remains insulated from the price volatility of imported fossil fuels,” said Ember Policy Advisor Tatiana Mindekova, the report’s author.
Conventional geothermal historically depended on underground rock formations that were both hot and naturally permeable, enabling water at depth to circulate and transport heat. Despite this, geothermal’s global electricity output remains limited: 99 TWh in 2024, representing below 0.5% of worldwide generation.
Deeper, hotter—and less dependent on natural conditions
Over the past decade, progress in “next-generation” geothermal has reduced reliance on naturally occurring permeability—the open pores in rock that allow fluids to flow. New approaches can now create or enhance these flow pathways artificially.
While geothermal plants rarely operated deeper than three kilometers in the past, enhanced geothermal systems (EGS) are increasingly able to access heat from much deeper, hotter rock layers—often with little or no natural water or permeability.
These techniques, adapted from the oil and gas sector, allow a working fluid—typically water—to circulate through engineered pathways and extract heat.
Costs fall as flexibility rises
Ember noted that improvements in power conversion systems now allow electricity generation at lower temperatures. At the same time, well costs have fallen by 40% over the past decade.
The report also highlighted geothermal’s ability to operate flexibly. Reservoirs can be managed to indirectly absorb surplus wind and solar generation—primarily through increased pumping and injection—and later release stored thermal and pressure energy to produce additional electricity.
Beyond power, geothermal brines may offer a minerals opportunity. Ember pointed to the potential to extract valuable materials such as lithium directly from underground brines, with recovery rates of up to 95%, compared with around 60% from hard-rock mining, alongside far lower water use.
Cost competitiveness and growing global pipeline
Geothermal is already described as cost-competitive with fossil fuels in Europe. Ember put geothermal’s levelised cost of electricity (LCOE) at around $60/MWh, versus roughly $100/MWh for most fossil-fuel generation. LCOE reflects lifetime construction and operating costs.
Globally, by 2030, nearly 1.5 GW of new geothermal capacity is expected to come online each year—around three times more than in 2024. Ember said geothermal could meet up to 15% of growth in electricity demand by 2050.
Europe had 147 geothermal power plants operating in 2024, generating about 20 TWh from just over 3.5 GW—roughly one-fifth of global capacity. Turkey, Italy, and Iceland accounted for nearly all of Europe’s output.
Hungary leads EU potential below €100/MWh
Ember identified 43 GW of enhanced geothermal capacity in the EU that could be developed at costs currently below €100/MWh, translating to 301 TWh per year—equal to 42% of production in 2025.
43 GW of geothermal in the EU would cost less than gas-fired power
Hungary stands out within the EU with 28.3 GW of potential below €100/MWh. When including projects with LCOE between €100/MWh and €200/MWh, Hungary’s total rises to 39.6 GW. Only France is higher overall, at 52.7 GW. Iceland was highlighted for exceptionally large potential—191.9 GW at up to €100/MWh.
Across the wider region tracked by Balkan Green Energy News, Turkey is also in the top tier, with 5.7 GW at up to €100/MWh and another 12.9 GW above that threshold.
In Southeast Europe, Ember estimated potential below €100/MWh at 838 MW in Romania, compared with 631 MW in Serbia and 148 MW in Croatia. Croatia also has 607 MW in the higher-cost segment, while Slovenia is at 168 MW, all in the more expensive range.
Data centers, policy gaps, and a race to scale
Drawing on recent US trends, Ember said geothermal could cost-effectively meet up to 64% of the expected increase in data center electricity demand by the early 2030s.
The report warned that Europe—despite being an early tester of next-generation methods—risks falling behind due to lengthy permitting and the lack of a unified EU strategy. In contrast, the US and Canada are scaling projects more aggressively through targeted policy incentives.
Ember also referenced a Stanford University study suggesting EGS can complement wind and solar and significantly reduce the volume of renewables and battery infrastructure required for a clean transition. The US Department of Energy expects costs to decline substantially by 2035, and the first major EGS project in the US—a 2 GW facility in Utah—was approved in October 2024.
BAKU, March 9
