Unlike solar, where you can see the sun. Unlike wind, where you can measure the breeze. Geothermal demands faith backed by millions of dollars. You spend first. You discover later. A geothermal project begins long before a drilling rig arrives. Geologists spend months analysing satellite imagery, studying fault lines, collecting rock samples, measuring underground temperatures and mapping reservoirs hidden several kilometres beneath the Earth’s surface.
Even after all that science, nobody can guarantee what lies below.
Early exploration alone can consume between US$2 million and US$5 million before a single production well is drilled.
That’s why geothermal developers often say they are not building power plants. They are managing geological uncertainty.
Drilling: Where the Budget Disappears
If geothermal has a financial black hole, it is drilling. Every production well resembles digging for oil except hotter, harder and with even less certainty. A single unsuccessful well can cost several million dollars.
Successful wells are even more expensive because developers rarely stop at one. A commercial field may require dozens of production and reinjection wells before electricity generation can begin. Industry studies consistently show drilling accounts for roughly 40% to 60% of total geothermal project costs, making it the single largest capital expense.
In Kenya’s Menengai field, researchers from the Geothermal Development Company found that drilling dominates project economics, with everything from diesel, casing materials and drilling fluids to specialist crews influencing final costs. Miss the reservoir by a few hundred metres, and millions disappear. Hit it perfectly, and you’ve unlocked clean electricity for decades. That is the economics of geothermal.
Building the Power Plant Is the Easy Part
Ironically, once the steam has been proven, investors relax. Because now they are building something familiar. Steam gathering systems. Cooling towers. Turbines. Transmission lines. Control rooms. Depending on project size and technology, constructing the generating station typically costs between US$2.5 million and US$5 million per installed megawatt, but by this stage, the greatest uncertainty has already been removed. The expensive mystery was the underground resource.
Why African Projects Cost More
Developing geothermal in Africa comes with a unique price tag. Many promising geothermal fields sit far from major roads, ports and industrial centres. Heavy drilling rigs, steel casing, transformers and turbines often travel thousands of kilometres before reaching site. Engineers, drilling specialists and support crews may need temporary camps, water infrastructure and logistics support in remote locations.
Then there is financing. Because exploration carries significant geological risk, lenders demand higher returns or government guarantees before committing capital. It explains why institutions like development banks frequently finance the exploration phase while private investors enter later, once much of the uncertainty has been reduced. In geothermal, confidence is almost as valuable as capital.
Why Kenya Became Africa’s Geothermal Leader
Kenya changed the financing model. Instead of expecting every independent developer to absorb exploration risk, public institutions invested heavily in resource confirmation. The result? Private power producers could invest in generation with greater certainty because someone had already taken the biggest geological gamble.
That model has helped Kenya become Africa’s geothermal powerhouse while countries with similar resources continue struggling to attract investment. The lesson isn’t that Kenya has better steam. It reduced investor fear.
Can Costs Come Down?
Yes. And they already are. The global geothermal industry is borrowing drilling techniques from oil and gas, improving drill bits, increasing drilling speed and using better subsurface imaging to reduce expensive surprises. Recent research suggests improved drilling methods could reduce well costs by 12% to 26%, while new commercial approaches continue shortening drilling times.
For Africa, these improvements matter enormously. Every dollar saved during drilling makes previously marginal geothermal fields commercially viable.
The Real Cost Isn’t Money
When people ask how much a geothermal project costs, they expect a number. US$300 million. US$500 million. Perhaps even US$1 billion for very large developments. But those figures miss the point. The defining cost of geothermal is uncertainty.
Developers commit hundreds of millions before knowing exactly what lies beneath them. Investors wait years before earning their first dollar. Governments build policies around resources they cannot see. Yet when the gamble succeeds, the reward is extraordinary: reliable, 24-hour renewable electricity that can operate for generations with relatively low operating costs and without depending on sunshine or wind. That is why geothermal remains one of Africa’s most expensive energy investments to start and one of its most valuable assets to own.
