The geothermal sector has long been recognised for its potential to provide clean, sustainable energy. However, it is essential to recognise that the benefits of geothermal energy go far beyond electricity generation.
The recent report published by ESMAP highlights the socio-economic contributions of the geothermal sector, focusing on the opportunities and benefits that can be enhanced at national and local levels during the development and operation of geothermal projects.
The findings are based on qualitative data collected from more than 40 geothermal industry stakeholders, including governments, industry associations, universities, public and private sector developers and technical experts.
The report classifies the socio-economic benefits of the geothermal sector into four main categories:
1. Participation of domestic companies in the geothermal value chain
2. Employment in the geothermal sector and skills development
3. Local development and benefit sharing
4. Gender equality and social inclusion
Each of these categories plays a crucial role in maximising the positive effects of geothermal energy on societies and communities.
For instance, Domestic involvement in the geothermal value chain boosts socioeconomic benefits. Understanding this value chain is key to using local goods, services, and labor, thereby stimulating economic growth. Local sourcing is especially beneficial in the construction and operation phases, even with international firms involved.
Governments can promote local sourcing through procurement strategies, while industry groups and associations aid in domestic capability development via training and technology transfer. Tailored financial products also support domestic companies in the geothermal sector.
Here are some examples of good practice for the development of a national geothermal industry, highlighted by ESMAP:
- Conduct a comprehensive value chain analysis.
- Capitalize on domestically available resources to promote localization.
- Design support programs tailored to the needs of local companies.
- Recognize the potential for localization in construction and O&M.
- Implement project procurement strategies that balance localization efforts with cost-effectiveness.
- Promote the formation of industry clusters and associations.
- Develop specialized financial products for domestic companies.
- Foster collaboration between government agencies and industry stakeholders.
- Continuously monitor and adjust localization efforts based on industry dynamics and economic conditions.