Amid global energy pressures, South-east Asia seeks to unlock geothermal power’s promise

[SINGAPORE] With the Iran war unleashing a global energy crisis, geothermal power is gaining renewed attention, including from South-east Asian countries along the Pacific Ring of Fire.

The volcano-rich region has hydrothermal reservoirs: hot water trapped in porous rock or between fractured rocks. Geothermal projects drill into the ground to harness this heat, either for direct heating or to generate electricity.

Such energy is cleaner than fossil fuels, and more reliable than solar or wind power. But this subterranean source is not easy to unlock.

During the global 1970s oil crises, the Philippines invested in geothermal power. By 1984, this supplied a fifth of the country’s electricity. Yet its industry players recognise that geothermal exploration is notoriously expensive and uncertain.

“Once it’s completed, it’s fantastic. But stakeholders don’t appreciate what it took you to get there,” Francis Giles Puno, president of Philippine power developer First Gen, told news outlet Eco-Business in May. “It requires quite a bit of boldness.”

In the region, the development of this energy source has been constrained by financing and regulatory challenges.

But next-generation technologies could make it more widely feasible, prompting interest even from countries such as Singapore.

If these technologies succeed in bringing down costs, geothermal power could meet up to 15 per cent of global electricity demand growth up to 2050, the International Energy Agency (IEA) estimated in 2024.

Losing steam?

The Philippines and Indonesia are already geothermal giants. Yet they have stalled in geothermal expansion, due to high upfront capital needs and exploration risks.

As at end-2025, the Philippines had 2 gigawatts (GW) of geothermal capacity, making it the world’s third-largest player after the US (4 GW) and Indonesia (2.7 GW), according to news platform ThinkGeoEnergy.

A 2020 government report estimated that the country could possess up to 4 GW of geothermal resource potential. 

But although it was an early mover, its geothermal market has slowed since the 2000s. Only 35 megawatts (MW) of capacity was added in the decade up to 2025, a BloombergNEF report highlights.

Geothermal sources accounted for 8.4 per cent of the country’s power generation in 2025, compared to coal at 58.5 per cent. 

A green energy auction held in mid-2025 only yielded 30.9 MW of geothermal capacity from two projects, far below the 100 MW target, notes Grant Hauber, strategic energy finance advisor for Asia at the Institute for Energy Economics and Financial Analysis. 

Meanwhile, Indonesia has tapped under 10 per cent of its geothermal potential, says Fabby Tumiwa, chief executive of Indonesian think tank Institute for Essential Services Reform (IESR). The power source accounted for 5.2 per cent of electricity generation in 2025. 

Indonesia’s geothermal sector picked up in the 1980s but stalled after the 1997 Asian financial crisis, when several projects ran into financial difficulties.

“After that, geothermal became seen as a risky business,” says Fabby.

Resource constraints

Michael Chendorain, global lead for geothermal and groundwater engineering at consultancy Arup, cites financing as a major constraint.

“There’s years of lag time from when a project looks like a good (one) on paper to when there’s enough funding in place to do the initial drilling,” he says. “How long it will take, it’s really hard to say.”

There are also environmental and social concerns, says Dinita Setyawati, senior Asia energy analyst at Ember. “Some geothermal reserves are located in the protected forest areas, or locations considered to be culturally significant for local communities.”

For instance, Indonesia in 2017 earmarked Flores – which already had two operational geothermal plants – for further development as a “geothermal island”. But this plan faced strong backlash from locals over pollution and accident fears. 

The island added another geothermal plant in 2022, but opposition has continued and the government is still engaging residents, according to local media reports.

Elsewhere in the region, geothermal exploration has been limited to areas with volcanos or hot springs.

These include the Vietnamese province of Binh Dinh, which last year proposed a 15 MW plant for inclusion in the country’s power development plan, says Lam Pham, an Asia energy analyst at Ember.

Vietnam has no geothermal plants yet. Whether the Binh Dinh project happens will depend on the project economics, financing availability and regulatory approvals, among other factors, he says.

The country’s national power development plan aims for 45 MW of geothermal capacity by 2030. But the sector “continues to face challenges, including high upfront investment costs and complex technological requirements”, notes Hanh Phan, South-east Asia associate at BloombergNEF.

While there were proposals for geothermal projects – in 2008 for a 19 MW project in Quang Ngai province, and in 2012 for a 25 MW project in Quang Tri province – neither project progressed further, she adds.

Meanwhile, Malaysia and Thailand have limited potential for both geological reasons and their focus on other clean power sources, says Felix Kosasih, South-east Asia associate at BloombergNEF.

Both countries have set modest goals for geothermal inclusion in their energy road maps. Malaysia’s target is for just 30 MW of geothermal power by 2035, while Thailand aims to install 21 MW of capacity by 2037, Kosasih highlights.

“Malaysia focuses more on solar and hydro while Thailand emphasises solar and wind to achieve its clean power goals,” he says.

Thailand has a pilot geothermal facility: the a 300- kilowatt Fang plant in Chiang Mai, which has been operating since 1989. However, further development has not taken place, and geothermal is expected to play only a “minor role” in the country’s energy transition, says Ember’s Lam.

The appeal of geothermal

Yet geothermal power remains appealing for several reasons.

First, it is relatively less costly in the long run. Geothermal plants do not require fuel, and operating costs are relatively low.

And while geothermal plants are typically designed to last 30 years, many operate for over 60 years, with some modern ones expected to last up to 100 years, says Lam. In contrast, coal plants generally operate for 40 years.

With costs spread over a longer period, geothermal can compete with nuclear and coal power when it comes to the average cost of generating electricity over a plant’s lifetime.

Second, unlike solar and wind, geothermal sources are consistent, operating independently of weather conditions.

It “offers what many clean technologies still cannot: reliable, round-the-clock” power, says Sanjeev Gupta, Asean and Singapore energy leader at consultancy EY-Parthenon.

Geothermal power can “provide a useful baseload energy generation that is suitable (for) power-intensive industries, such as nickel smelters and data centres”, notes Dinita of Ember.

It also beats many energy sources in efficiency and consistency: its capacity factor, or the ratio of actual electricity output to the theoretical maximum, is second only to nuclear power.

Technological promise

New technologies may make geothermal energy more widely feasible.

Singapore may not seem like an obvious candidate for geothermal energy, given the lack of volcanic activity on the island.

However, the city-state is conducting a geophysical survey to identify such resources, and in April issued a request for proposals to study the deployment of next-generation technologies.

While it is “unlikely” that Singapore has conventional geothermal energy resources, “recent global advances in geothermal technologies have created new opportunities to harness sub-surface heat for power, heating and cooling needs”, said the Energy Market Authority (EMA) then.

One innovation is enhanced geothermal systems (EGS), which borrows the drilling techniques of the oil industry.

In EGS, fluid is injected into the ground to widen fractures in the rock or create new ones. This creates pathways for the fluid to circulate into hot subterranean rocks, where it absorbs heat and is pumped back up for use in generating electricity.

South-east Asia represents about 15 per cent of the global technical potential for EGS power generation, the IEA estimates.

Quon Energy, a Japanese geothermal startup, believes EGS can enhance existing conventional geothermal projects.

“Many wells have heat but not enough fractures. We can apply EGS to revive production rates and also reuse the abandoned wells,” says founder Ryota Nomura. 

Gupta of EY agrees, noting that EGS and other new geothermal systems could “extend the usable resource base, improve recovery from existing fields and widen the range of commercially viable projects”.

Another technology is advanced geothermal systems (AGS), where fluid is circulated through closed pipes to extract heat from rocks. Canada’s Eavor Technologies, which specialises in this, is backed by Singapore investors Temasek and Vickers Venture Partners.

Chia Poh Hui, a director at Vickers, believes that AGS could unlock a “geothermal anywhere” proposition, where such power is extracted even from areas that lack volcanic activity or natural geothermal resources.

She points to how Eavor’s commercial plant in Germany has been sending power to the grid since December last year.

Next-generation geothermal is stirring interest among mass-market investors too. In May, EGS specialist Fervo Energy became the largest clean energy initial public offering in the US, worth over US$10 billion.

That said, both EGS and AGS technologies are still in a nascent stage, with steep costs and other caveats. 

EGS carries the risk of inducing earthquakes – though the industry has come up with systems to manage this, after a 2017 5.5-magnitude earthquake in Pohang, South Korea, was linked to an EGS project.

While AGS does not carry that risk, there are still many engineering and commercial technicalities to be sorted out.

Chia says Eavor’s German plant faced difficulties in its construction – but added that drilling times and costs were cut significantly over the course of this.

This is “exactly the kind of learning curve a first-of-a-kind project needs to demonstrate”, she adds.

“We now expect the route to ‘geothermal anywhere’ to come through iterative learning across multiple loops and deeper wells rather than a single breakout project.”

Tackling root issues

For geothermal energy’s potential to be realised in South-east Asia, the challenges of funding and local impact must be addressed.

For conventional projects, more financing is critical, “particularly through public funding support and risk-sharing partnerships between the public and private sectors”, says Zhou Yiyi, a clean energy specialist at BloombergNEF.

Some investors are stepping up.

In October, the Asian Development Bank approved a US$180 million loan for Geo Dipa Energy, an Indonesian state-owned company, to develop two geothermal plants with a capacity of 55 MW each on Java Island.

Governments can also play a role with guarantees and land allocation, says Dinita of Ember. Meanwhile, tackling concerns about impact, local community consultations are also vital.

IESR’s Fabby proposes that environmental, social and governance standards for geothermal be incorporated into regulations. Local communities could also be given stakes in projects, for instance via golden shares.

“The local community has to feel that they actually benefit from this project, and the benefit should be financial,” he says.

As for next-generation technologies, policymakers will have to carefully study whether the risks are worth the rewards.

Singapore’s EMA is taking such an approach. Says a spokesperson: “Firstly, such technologies must be demonstrated to be safe and suitable for our highly urbanised environment.”

“Next, EMA will scrutinise their reliability and affordability. Lastly, we also need to map out the required policies and devise the necessary safeguards.”

Whether geothermal takes off in Singapore will also depend on the development of other clean energy options, such as power imports.

“If the power import projects are realised or if the cost of clean hydrogen falls significantly, then there will be less need to adopt geothermal,” says Kosasih of BloombergNEF.

Even if geothermal power may not eventually contribute much to Singapore’s energy mix, the Republic could play “an influential role as a regional financing and innovation hub”, says EY-Parthenon’s Gupta.

Singapore could also tap geothermal technology for niche applications such as district and data centre cooling, he adds. In January, data centre operator Equinix teamed up with Nanyang Technological University to explore how Singapore’s geothermal heat can power cooling solutions.

In theory, it might make sense for South-east Asia to exploit as much geothermal power as it can. But as Chendorain of Arup notes: “We don’t live in a perfect world, so (governments) have to find that reasonable balance.”