If You Had $1 Billion for Geothermal in 2026, Where Wouldn’t You Invest?
Geothermal is becoming one of the most interesting corners of clean energy, but that does not mean every market deserves your capital. In 2026, the smartest geothermal investors are not asking where the hottest rocks are, they are asking where geology, contracts, policy, and execution line up well enough to justify real money.
The real investment test
If you had $1 billion to deploy in geothermal, you would not start with hype. You would start with bankability, because geothermal is a business of drilled wells, long timelines, heavy upfront costs, and a very unforgiving path from theory to cash flow.
A project can look excellent on a resource map and still underperform badly if permitting drags, community consent is weak, tariffs are mispriced, or the grid cannot absorb the power. That is why this article focuses on where you would not put capital, and why.
The point is not that these countries lack geothermal potential. The point is that some places can turn a strong reservoir into a weak investment, and some can turn a difficult reservoir into a great one if the commercial structure is right.
Geothermal projects usually fail for a few repeatable reasons. The first is exploration risk, because one dry or underperforming well can erase years of work and a serious amount of capital. The second is commercial risk, because investors may own the subsurface risk while a utility or government captures most of the upside through tariffs, regulation, or contract terms.
The third is social and permitting risk, which is often underestimated by engineers and financial models alike. If local communities oppose the project, if land access is unclear, or if traditional and environmental concerns are mishandled, the project can stall for years. The fourth is execution risk, because geothermal is not a passive asset class. It needs drilling expertise, service capacity, financing discipline, and the ability to keep moving even when the first plan breaks down.
Why not every hot zone is investable
A country can have strong heat, deep reservoirs, and excellent long term potential, but still be a poor place for a large allocation in 2026. Investors need to separate resource abundance from investment quality. In geothermal, those are not the same thing.
A good investment market usually has at least four things. It has proven geology or enough drilling data to reduce uncertainty. It has permitting and land processes that move in a predictable way. It has offtake or heat demand that supports revenue. And it has a financial structure that does not punish the private investor for taking all the early risk.
Tanzania has emerged as one of East Africa’s more intriguing geothermal markets. The government has been actively courting investors, strengthening legal and regulatory frameworks, streamlining licensing, and improving access to geothermal data. Through the Tanzania Geothermal Development Company, priority projects include Ngozi, Songwe, Kiejo Mbaka, Natron, and Luhoi, with a first geothermal plant targeted for the end of the decade.
That makes Tanzania attractive in a long term sense. It has Rift Valley geology, a growing policy focus, and a clear national ambition to move geothermal from planning into execution. In a world that is short on new bankable geothermal markets, that alone makes it worth watching.
But if you had $1 billion, you would still be selective. Tanzania is still building its commercial track record, so the central risk is not the existence of heat, it is the pace at which policy, drilling, infrastructure, and financing can be converted into revenue. Large capital should go only into projects where exploration risk has already been reduced and where the development partner can actually deliver.
Ethiopia deserves serious attention because it combines high geothermal potential with an urgent need for diversified power. The country has major Rift Valley prospects, including projects such as Corbetti, Tulu Moye, Aluto Langano, and Tendaho. Recent reporting has pointed to revived project activity and a broader push to reduce diesel dependence while expanding clean energy supply.
That matters because Ethiopia has a real structural use case for geothermal. It is not chasing geothermal for symbolism. It needs firm power, and geothermal can help reduce fuel imports, stabilize supply, and support industrial growth.
Still, Ethiopia is not a place to treat casually. Frontier markets can be rewarding, but they also bring financing complexity, policy shifts, and execution risk. If you invest there, you would want phased exposure, strong development partners, and legal protections that survive the long drilling cycle. Ethiopia is investable, but only with discipline.
Djibouti is not the kind of market people usually associate with geothermal scale, but that is exactly why it is interesting. The country is working on geothermal and solar expansion to support its role as a logistics hub, and reports in 2026 pointed to a planned 20 to 50 MW geothermal plant at Lake Assal alongside other power upgrades.
Djibouti’s current power system is still heavily reliant on imported electricity and thermal generation, which means dependable domestic supply has strategic value. That creates a genuine logic for geothermal. A small country with high energy dependence can sometimes make a geothermal project more attractive than a larger market, because local power reliability is worth a lot.
However, small markets are also fragile markets. A single project can become politically important but financially delicate. Demand may be limited, financing may be dependent on multilaterals, and construction delays can have outsized consequences. Djibouti is a place for targeted, strategic capital, not a massive blind allocation.
Kenya, On paper is still a geothermal leader, but with real friction
Kenya remains one of the world’s most important geothermal countries. It has proven steam fields, operating infrastructure some lingering into obsolescence, and a long history of geothermal development at Olkaria and elsewhere. That is why many investors still look to Kenya as a flagship East African market.
But Kenya also has high end friction that investors should not ignore. The clearest signal came in 2026 when Pertamina withdrew from the Suswa geothermal project after concluding that the economics did not meet its investment criteria. The Indonesian company had previously explored a partnership with Kenya’s Geothermal Development Company, but ultimately said the investment was not attractive enough.
That is a very important signal. Kenya is not a bad geothermal country. It is a country where the commercial bar is high and to date the laid down policies can't even serve investors leave alone project developers. The resource may be there, but the return profile, contract structure, or development conditions may still not satisfy international capital. In other words, Kenya can be excellent geopolitically and technically while still being demanding financially.
That friction is why a serious investor would be careful. You would still respect Kenya, but you would also demand stronger terms, better payment security, and better risk allocation than many projects can currently offer and much more important much sane reservoirs not just on paper figures. The lesson from Pertamina is simple: even a top tier geothermal country can fail the investor math.
The Kenya lesson from Suswa
The Suswa withdrawal is a reminder that resource strength alone is not enough. In early 2026, Pertamina Geothermal Energy withdrew from plans to co develop the Suswa geothermal field in Kenya, saying the project did not meet its investment criteria and was not attractive after due diligence. Did you know what they found out? Your gues is good as ours.
This is exactly the kind of event investors should study. The decision was not about whether geothermal exists in Kenya. It was about whether the project terms, resource conditions, and return profile justified the capital. That distinction matters. When a serious developer walks away because the economics do not work, that is not a technical failure. It is a commercial warning.
For investors, Suswa says something very simple. If the tariffs, equity split, drilling risk, or offtake structure are not compelling, the project should not be funded just because the map looks promising. In geothermal, capital should chase bankable cash flow, not just heat.
The UK, promising but still early
The United Kingdom is not the first country people think of when they think geothermal, but 2026 changed that conversation. The United Downs project in Cornwall began generating the UK’s first geothermal electricity and also started commercial scale production of lithium carbonate from geothermal fluids.
That is a major milestone, because it proves two things at once. First, the UK can generate geothermal electricity from deep resources. Second, geothermal brines may also support mineral value, which improves the project economics. Octopus Energy has a long term power purchase agreement for power from the site, and the project also received support through the UK’s Contracts for Difference framework.
So why not put huge capital there immediately? Because one success does not yet equal a mature market. The UK still has limited commercial geothermal depth compared with places like Kenya or Indonesia. Permitting, drilling cost, and market scale still need to mature. United Downs is a breakthrough, but it is still more of a proof point than a fully liquid investment market.
The UK is interesting for strategic, first mover capital, especially where geothermal can pair with lithium and always on baseload demand. But if you had $1 billion, you would not overallocate to a market that is still building its track record.
Germany and other high cost European plays
Some European markets look excellent technically, but difficult economically. Germany is a good example of the broader problem. In these markets, drilling costs are high, permitting can be slow, and project timelines can stretch long enough to test even patient capital. Geothermal can still work there, especially in heat networks or industrial applications, but it often requires a stronger balance sheet and a longer time horizon than many investors want.
The key issue is not whether the technology works. The issue is whether the capital structure can survive the timeline. If a project takes years before meaningful revenue starts, and if cost overruns are common, the returns can be squeezed badly. That makes these markets better suited to strategic investors, infrastructure funds, or utility aligned capital than to fast moving growth money.
Basel, why EGS deserves discipline
Basel is one of the classic cautionary tales for enhanced geothermal systems. The city experienced induced seismicity during a deep geothermal project, and the event became a symbol of what can go wrong when the subsurface response is not fully controlled.
That is why EGS deserves a separate capital allocation rule. EGS is exciting because it could expand geothermal beyond naturally permeable reservoirs. But it also comes with seismic, regulatory, and public acceptance risks that are not minor. In a dense urban or politically sensitive area, even a modest tremor can stop a project, trigger investigations, and damage trust for years.
If you are allocating serious money, you should be very selective about EGS. Better candidates are remote or controlled environments with good geomechanical data, serious monitoring, and transparent risk communication. Basel teaches a hard lesson. In geothermal, the public reaction to induced seismicity can be as expensive as the seismic event itself.
The United States, still the most investable frontier
If you had to choose one country for aggressive geothermal capital in 2026, the United States would likely be near the top of the list. The reason is not just geology. It is the combination of private capital, drilling expertise, market demand, and a growing policy tailwind.
The 2025 U.S. Geothermal Market Report says next generation geothermal is progressing rapidly, EGS costs are declining, private investment has risen strongly, and data center demand is creating a new market for firm clean power. That is a powerful signal, because it means the sector is moving from theory into commercial demand.
The biggest proof point is Fervo Energy. In May 2026, Fervo launched and then raised a $1.89 billion IPO, at a valuation that showed just how much investor appetite exists for the category. That kind of event matters because it shows the market now believes geothermal can scale like infrastructure, not just like niche cleantech.
Fervo is also relevant because it connects geothermal to data center growth. AI demand has created a serious appetite for 24/7 power, and geothermal fits that need better than intermittent renewables alone. That means the U.S. is not just a resource story. It is also a demand story.
Still, even the U.S. is not a place to invest blindly. Some projects remain expensive, some basins are competitive, and drilling rigs are in demand. But compared with many other markets, the U.S. offers the best combination of scale, capital access, technology depth, and offtake logic.
Ormat, Sage, and what serious capital looks like
The most important thing about U.S. geothermal in 2026 is not only the headline names, it is the quality of the partnerships. Ormat’s long term geothermal power purchase agreement tied to Google’s Nevada energy needs, and its collaboration with Sage Geosystems, show how the market is evolving toward contracted demand and technology diversification.
Sage closed a $97 million Series B round in 2026 with Ormat and Carbon Direct Capital co leading the deal, and Ormat also reported long term geothermal PPA activity supporting Google operations in Nevada. That is exactly the kind of structure investors should like. It links technology, project development, and buyer demand in one financial chain.
If you are deciding where not to invest, the contrast is useful. You should avoid places where no buyer exists, no contract is bankable, and no development pathway is visible. In the U.S. market, the opposite is becoming true. That is why capital is flowing there.
Countries you would avoid for now
You would avoid any country where commercial geothermal has not yet been proven at scale, especially if permit timelines are unclear and private developers have no strong route to revenue. You would also avoid markets where political instability can freeze projects midstream, because geothermal cannot tolerate long interruptions without bleeding capital.
You would be especially cautious in markets where:
1. No commercial plant has operated reliably.
2. Exploration has stalled for years.
3. Public opposition is strong and unresolved.
4. Regulation is too vague to price risk.
5. Currency instability can destroy returns.
This does not mean these countries have no geothermal future. It means they are not good homes for a billion dollar allocation today.
Where the smarter money goes
If the question is not where not to invest, but where to invest instead, the answer is more focused.
You would prioritize the United States because it combines private capital, technology scale, and strong demand from data centers. You would prioritize Kenya because it has proven geothermal generation and ongoing expansion at Olkaria, which gives you operating evidence instead of theory. You would prioritize Indonesia selectively because the resource base is huge, but only where permits and community consent are already manageable.
You would also consider the United Kingdom for first mover positions in projects like United Downs, especially where geothermal can pair with lithium and district heating. Türkiye is worth watching because it has long geothermal experience and strong direct use potential. The Philippines remains attractive because of its geothermal heritage and operational know how. Iceland and New Zealand remain high quality markets, though many investors there will be competing for limited premium opportunities.
The best use of capital is not always the biggest resource. It is the most financeable, scalable, and durable market.
How to think like an investor
A geothermal investor should think in layers. The first layer is geology. The second is drilling and reservoir risk. The third is contract structure. The fourth is policy and permitting. The fifth is social license. The sixth is macro and currency risk.
If any one of those layers is weak, the project becomes fragile. If multiple layers are weak, no amount of optimism will save it. That is why the best geothermal capital is selective. It is patient where the track record is good, and ruthless where the return math is bad.
The Suswa withdrawal, Flores opposition, Basel seismic lesson, and Fervo surge are all part of the same story. Geothermal is moving from niche to mainstream, but the winners will not be the loudest believers. They will be the best allocators of risk.
Final verdict
You would not put a billion dollars into geothermal just because the ground is hot. You would put money where the geology is supported by contracts, the permits move, the community accepts the project, and the power or heat can actually be sold.
Tanzania, Ethiopia, Djibouti, the United States, parts of Indonesia, the United Kingdom, Türkiye, the Philippines, Iceland, and New Zealand all deserve attention, but not all deserve the same weight. Kenya also deserves respect, but it is a market that comes with high end friction and demands sharp commercial judgment.
The biggest geothermal resource is not always the best investment. In 2026, the best capital allocation strategy is to back places where geology, regulation, infrastructure, financing, and market demand all move in the same direction. In geothermal, that alignment matters more than the headline reserve.
Related: Doug Copeland Interview: Geothermal Industry Insights for USA and Global Renewable Energy Markets
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