LONDON, October 27 /PRNewswire/ -- Until recently, the geothermal energy market grew tepidly, in spurts, in just a handful of countries. Insufficient government support and high initial investment costs topped by an overall lack of interest pushed this market into the sidelines. However, the increasingly urgent need to curb climate change is proving to be an effective catalyst for this industry. As many governments race to meet renewable energy goals of 2020, they are revisiting this sector which promises to contribute electricity as a base-load power while severing dependence on foreign oil and gas. Frost Sullivan expects the geothermal industry to steadily gather steam in the coming years, despite the current economic situation and restraining factors such as high initial investment costs.

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Frost Sullivan (www.power.frost.com) finds that the European Geothermal Energy Market reached installed capacity of 1,558MW in 2009 and estimates this to reach close to 4,000MW in 2016 once drilling costs are reduced and become more independent of the oil and gas industries. Growth rates are expected to pick up in the next few years, with a CAGR of 13% between 2010-2016, with established countries such as Italy and Iceland continuing to invest in geothermal power and new countries such as Germany and France exploring their opportunities.

The European geothermal energy market emerged relatively unscathed from the financial crisis compared to other renewable energy sources, and today the largest European markets for geothermal energy are: Italy, Iceland, Turkey, Germany and France, followed by Portugal, Austria, Spain, Hungary and the UK. While for some countries like Iceland, geothermal is the main electric power or energy resource, for others including Italy, Turkey and Germany, it will complement other energy sources.

Recession has slowed-down and will slow-down the sector until the end of 2010, but this market has not been as hard hit as other renewable energy sectors such as wind and solar. Continued government support will bolster growth rates, while falling costs due to economies of scale in countries like Italy and Iceland will eventually eliminate high initial investment costs, says Frost Sullivan Industry Analyst Gouri Kumar, who has just published a study on this market. Established countries will continue to invest in geothermal power and new countries such as Germany and France will explore opportunities. This will lower initial capital costs and attract drilling and other companies to invest in the sector.

Improved information regarding resources in emerging markets will allow more companies to enter the industry, especially those with multiple synergies with the geothermal industry such as oil and gas (OG) service companies. Drilling companies in the OG sector have diversification opportunities in the drilling and exploration phase of geothermal energy projects. There are also a number of techniques and expertise that can be transferred from OG to geothermal and therefore better co-operation between the sectors is necessary.

As with other renewable energy sources, individual countries and Europe as a whole need a geothermal electricity target to spur governments to achieve them. The growth in new technologies must be complemented with government support. As suggested by some market participants, clustering of wells leading to bigger power plants will help reduce costs and thus make geothermal power a more competitive source both with conventional and other renewable energy sources, concludes Gouri Kumar. As in most electricity markets, grid is key. Countries need to research, invest and build new grid infrastructure to accommodate higher loads. Large scale investment should be earmarked for infrastructure, drilling and resource exploration. Society and investors should be educated about the benefits of geothermal energy.

For more information on Frost Sullivan's research on the Geothermal Market in Europe, please contact Chiara Carella, Frost Sullivan Corporate Communications, at chiara.carella@frost.com, with your full name, company name, telephone number, e-mail address, company website, city, and country.

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Contact: Chiara Carella Corporate Communications - Europe P: +44-(0)-20-7343-8314 M: +44-(0)-753-3017689 E: chiara.carella@frost.com http://www.frost.com

SOURCE: Frost SOURCE: Sullivan

CONTACT: Chiara Carella, Corporate Communications - Europe of Frost Sullivan, +44(0)20-7343-8314, cell, +44(0)753-3017689,chiara.carella@frost.com