Learning in Geothermal Power and Heat Generation – A German Case Study

Abstract

Geothermal energy, while generally recognized for its potential in climate change mitigation, has featured a much slower global deployment over the last two decades than other renewables like wind and solar PV. The latter has experienced massive cost reductions due to incremental innovation ("learning") and economies of scale. In contrast, geothermal cost data remains inconsistent, with a large cost variation between technologically similar projects and some studies showing strong cost increases over time. This inconsistency in cost data highlights the need for a detailed investigation into the factors influencing geothermal energy cost dynamics, including the differentiation between sub-technologies and regional variations. Here, we focus on the German geothermal sector to detect successful learning and barriers across several channels described in the innovation literature. We reveal how technological progress, characterized by the exploration of higher-temperature resources and enhanced well yields, coexists with significant barriers, particularly in project complexity and market structure. These findings are a first step towards a detailed understanding of geothermal innovation and cost dynamics and offer first insights for policymakers and industry stakeholders to foster innovation, cost reductions, and capacity growth.