Geothermal energy emerges as a game-changer for Europe’s energy transition

As Europe intensifies efforts to phase out fossil fuels, reduce energy import dependence, and ensure reliable power amid rising demand from data centers and industry, geothermal energy is gaining attention as a scalable, low-carbon solution.

A new report from independent energy think tank Ember, titled “Hot Stuff: Geothermal Energy in Europe“, published on Monday, argues that technological breakthroughs in deep drilling and Enhanced Geothermal Systems (EGS) could unlock significant capacity across the continent, potentially replacing up to 42% of the EU’s coal- and gas-fired electricity generation.

The analysis estimates that around 43 GW of enhanced geothermal capacity in the EU could be developed today at costs below €100/MWh—directly comparable to recent coal and gas electricity prices, which have fluctuated between €90 and €150/MWh. This capacity could generate approximately 301 TWh of electricity annually, assuming an 80% load factor typical for geothermal plants. For context, this output matches about 42% of the EU’s coal- and gas-fired generation in 2025, according to Ember’s data.

Drilling deeper

Geothermal energy harnesses heat from the Earth’s interior, traditionally limited to volcanic or tectonically active “hotspots” like Iceland, Italy, and parts of Turkey. Conventional systems tap into naturally permeable reservoirs at depths of around 3 km or less. However, advances in drilling technologies – borrowed from the oil and gas sector – now enable Enhanced Geothermal Systems (EGS). These involve drilling deeper (up to 5–7 km or more), fracturing hot, low-permeability rock to create artificial reservoirs, and circulating fluids to extract heat for electricity generation via turbines.

These innovations dramatically expand geothermal’s geographic reach. The report draws on data from Project InnerSpace’s Geomap tool and academic modeling (e.g., Franzmann et al.), focusing on techno-economic potential where levelized costs of electricity (LCOE) fall below €100/MWh. Drilling costs have dropped by about 40% over the past decade, making deeper, hotter resources viable. Geothermal offers “firm” baseload power – always available, unlike weather-dependent solar and wind – plus flexible operation: reservoirs can store heat or pressure like a battery, discharging during peak demand.

The potential is unevenly distributed but substantial. Hungary leads with an estimated 28 GW of competitive capacity, thanks to favorable geology in the Pannonian Basin. Poland, Germany, and France each hold around 4 GW, with additional opportunities in other countries.

Tatiana Mindekova, Ember Policy Advisor and lead author, emphasized the shift: “Once restricted to a few geological hotspots, modern geothermal is now cost-competitive with gas across much of the continent. Geothermal can deliver clean, firm power at scale, reduce reliance on fossil fuel imports, and strengthen energy security. The key question for Europe is no longer whether the resource exists, but whether policies will enable deployment at speed and scale.”

Data centres need more electricity

The report also highlights geothermal’s role in meeting surging electricity needs from AI data centers and heavy industry. Global data centres demand could double by the early 2030s, and U.S. trends suggest geothermal could cover up to 64% of that growth cost-effectively. In Europe, stable, on-site geothermal could support tech hubs while aligning with climate goals and grid reliability.

Despite Europe’s pioneering role in EGS testing (with more early projects than the U.S.), deployment lags. Lengthy permitting, inconsistent national support, and the lack of a unified EU strategy hinder progress. The U.S. and Canada are scaling faster with targeted incentives, risking a shift in innovation, supply chains, and industrial leadership away from Europe.

Experts echo the urgency. Sanjeev Kumar of the European Geothermal Energy Council called for the EU’s forthcoming Geothermal Action Plan to include firm commitments to replace fossil dependency. Jenna Hill from Clean Air Task Force noted that next-generation geothermal could become a major pillar of the EU’s clean, firm power system with continued investment and policy support.

The report recommends streamlining permitting, improving subsurface data access, mitigating early-stage risks through EU financing, and recognizing geothermal’s system value in electricity markets. National roadmaps in countries like Austria, France, Hungary, and Poland provide a foundation, but a coherent EU-level approach – potentially via an European Geothermal Alliance – is essential.

Caption: Geothermal power was originally limited to places with favorable conditions, but technological advances have unlocked vast potential [Ember]