Today, geothermal energy meets roughly 1% of global electricity demand but it has the potential to meet up to 15% of projected global electricity growth by 2050. The sector represents a significant opportunity with investments estimated to reach $1 trillion by 2035.
Prioritizing geothermal on national energy agendas and sustained support for innovation can attract new investment. Funding also incentivizes researchers to drive ideas from concept to commercialization.
This article, part of our Geothermal Energy series, examines how capital is being deployed to accelerate the development of this clean source of energy. Building on prior coverage of challenges and innovations, we explore where funds are flowing, who is investing, and how these trends are shaping the future of geothermal resource discovery, scalability, and adoption.
Debt funding gains ground in geothermal investment
Climate Tech investment in geothermal energy is primarily driven by equity. Deal activity peaked in 2024 with 25 transactions totaling $ 622.83 million. This includes US-based Sage Geosystems’ $41.1 million in Series A funding and Germany’s Dandelion Energy $40 million in Series C funding.
In contrast, debt financing was negligible from 2020 to 2022, averaging under $5 million annually. However, 2024 marked a turning point with $120 million raised, followed by $105 million in 2025. Both the years were driven by Fervo Energy, a U.S.-based next-generation geothermal developer.
This surge in debt activity means only a handful of geothermal companies are mature enough to attract scalability-oriented capital. Also, the sector’s asset-intensive nature and uncertain market adoption will require further innovation to reduce costs and improve adaptability.
Grant funding gained strong momentum between 2022 and 2024. The growth was largely driven by programs in Europe and the U.S. Strong policy support in the U.S. is expected to boost funding for geothermal technologies over the near to medium term.
Early investment dominates while late-stage deals remain concentrated
Early-stage investment dominates geothermal funding with 52 deals recorded from 2020 to date amounting to $641.47 million. However, pre-seed and seed rounds had 42 deals with a combined value of $169.85 million.
Late-stage investment has been less frequent with only 15 deals but worth $736.97 million. Much of this volume comes from a handful of mature players. In 2024, U.S.-based Fervo Energy alone drove late-stage activity securing more than $240 million in a Series D round.
The year 2024 stands out as the strongest on record for geothermal energy investment. Key funding rounds include:
- Sage Geosystems raising $41.16 million in a Series A round
- Zanskar securing $30 million in Series B
- Dandelion Energy drawing $40 million in Series C funding
These rounds, alongside other sizeable financings, signal an active push toward innovation and scale across the ecosystem.
Despite momentum since 2022, 2025 is likely to see a contraction in funding compared to the peak in 2024. Deal count is expected to remain consistent with recent years but average ticket sizes have begun to decline. This reflects investor caution in a sector that remains asset-intensive and commercially unproven at scale, with volatility amplified by the small number of companies operating globally.
Policy incentives and continued technological innovation will remain essential catalysts for sustaining investment and driving long-term growth.
North America leads global geothermal investment
North America leads geothermal energy funding largely driven by the U.S.-based companies. Between 2020 and 2025, North America attracted $1.6 billion, compared with $299 million for Europe.
In the U.S., Texas-based companies Fervo Energy, Sage Geosystems, and Seismos are widely considered breakthrough innovators in this space. Their location exhibits a good prospect for the state to position itself as a technology hub for geothermal energy.
Europe ranks second in funding through all the years. Key European countries drawing investment include France, Germany, and the UK. Others like Finland and Slovakia also attracted more than $20 million each over the period.
In Asia, Israel and Singapore led funding activity receiving between $15 million and $20 million across the six-year span.
Despite these contributions, technological maturity and the broader innovation landscape remain heavily U.S.-centric driven by strong government support and intensive R&D in academic institutions.
Funding priorities shift toward geothermal technology development
The development of geothermal technologies continues to focus on project feasibility and resource potential at specific sites. Funding patterns reflect this emphasis:
- Geothermal Energy Technologies attracted the largest share, securing $1.61 billion for innovations in energy extraction.
- Drilling and Well Development followed closely with $1.35 billion, underscoring investor recognition of capital-intensive infrastructure needs.
- Geothermal Resource Exploration ranks third, drawing $1.14 billion to support feasibility assessments and site validation.
While geothermal energy remains an emerging segment, innovation is underway to reduce the cost of exploration and drilling. Collaborative initiatives across public and private sectors are expected to accelerate advances that improve cost efficiency and sustainability, with particular relevance for industrial applications.
Policy incentives drive geothermal investments
Geothermal energy’s long development cycle has made government support key to this sector. The sustained backing from the public sector implies the technology’s importance for energy decarbonization. It also reflects that geothermal innovations remain in research or proof-of-concept stages, making them too risky for broad private investment.
Government grants have maintained sector stability since 2020, though funding dipped slightly in 2023 with signs of recovery expected as 2025 concludes.
Venture capital has demonstrated steady support signalling confidence in innovative technologies and their potential to transition from lab to commercial applications.
On the contrary, corporates and corporate venture capital (CVCs) are absent from this sector. This lack of participation indicates that geothermal remains an early-stage field with uncertain timelines for application. The gap also reflects investor caution around scalability and market readiness.
Policy initiatives are increasingly shaping sector investment. For instance, the current administration’s America’s AI Action Plan promotes geothermal energy as a solution to power the grid amid a growing proliferation of data centers. In the first half of 2025, the geothermal sector received $78 million in equity funding, driven by the need for clean, firm, and dispatchable power to support AI infrastructure, industrialization, and electrification.
For additional information, the U.S. Clean Energy & Industrial Innovation report offers a detailed view of how federal policy, capital deployment, and state initiatives are influencing geothermal energy’s growth trajectory.
Investor commitment will shape geothermal’s future
Geothermal energy offers a scalable pathway to provide decarbonized power across residential, industrial, and mobility sectors. At the same time, its potential to supply reliable energy to the growing number of large data centers highlights its strategic role in supporting the expanding digital economy and AI infrastructure.
For geothermal to achieve the maturity and adoption levels of technologies such as solar PV, wind, and electric vehicles, continued technological advancements and targeted investments are essential. Sustained research and development is critical to ensure geothermal is integrated into the future energy mix.
For investors, this is a critical moment to influence a market set to become central to the energy sector’s decarbonization.
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