Geothermal energy investment certainly requires a high dose of risk. The problem does not always lie in the losses, because both project investors and their developers are aware of the fact that there are some projects that will not end up generating any electricity at all. The problem has more to do with quantifying and understanding the risks and uncertainties of geothermal investment. What are the chances of the project failing? What is the potential reward of the investment? And the most important question of all is ‘how high is the probability of a zero return’?


On the surface, geothermal energy investment looks like the best possible option out of the green energies, even much more so than wind or solar power. Geothermal power has very low level production costs, as reported by the US Department of Energy. Also, geothermal energy is not variably dependent on weather conditions, as in the case of wind, solar, and tidal energy. The heat from the earth is enough to supply baseload power without the costs of fuel. The development of geothermal energy has a tiny environmental footprint in terms of CO2 production and land use, and it can be a source of heat and electricity at the same time. This makes geothermal power a clean, cost-effective source of renewable energy. And this begs the question why geothermal investment is not the first choice of the savvy investor.

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