Sweden Geothermal Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Sweden Geothermal Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The geothermal energy market in Sweden is expected to grow at a CAGR of more than 2.5% during the forecast period. The primary driver for the market includes the government initiatives to reduce the dependency on fossil fuel and thereby to have a cheaper form of heat source for space heating and hot water heating (HWH) applications. However, an increase in temperature over the years coupled with the availability of other alternatives for space heating applications are expected to reduce the uses of district heating in the country and thereby is expected to hinder the market to grow during the forecast period.

Key Highlights

• An increase in investment and financial incentives from the government is expected to drive the market during the forecast period.
• In the Swedish crystalline bedrock, which has a moderate geothermal gradient, very large borehole depths are required to reach sufficiently high geothermal temperatures. In Skane in the south of Sweden, where the geothermal gradient in the sedimentary rock is approximately 30°C/km, temperatures above 100°C may be reached at a depth of 3-3.5 km. Government participation and technological advancement are expected to produce both heat and electricity from Skane,and this, in turn, is expected to create an opportunity for the market to grow in the near future.
• Increasing deployment of bioenergy as a district heating solution is likely to restrict market growth during the forecast period.

Key Market TrendsIncreasing Investment to Drive the Market

• Investment for geothermal energy in Sweden is likely to get a boost, on account of its target to increase renewable energy share to reduce the CO2 emission by 19% by 2020. During 2018, nearly 44.8 million tons of CO2 were released, with a year-on-year (y-o-y) deduction of around 2.3%.
• During 2018, Sweden had an investment of over EUR 3000 million to install and to develop the geothermal energy sector in the country. Moreover, the country is exploring more areas for high-temperature gradient so that it can move on to power generation as well.
• As per the European Geothermal Congress, it is expected that Sweden is likely to invest EUR 3000 million in 2020 for the geothermal development activities.
• In addition to this, Baseload Capital, an investment entity, has issued a green bond of worth SEK 500 million, to finance low-temperature geothermal heat facilities.
• E.ON, a German-based electric utility company, is planning to build five geothermal power plants in Malmo by 2028, each with an installed capacity of around 50MWth. The company is investigating the geographical condition of the region and is expected to have an investment of around USD 6 million.
• Thus, the growing investment, along with the target to reduce carbon emission on account of change in climate, is likely to drive the market during the forecast period.

Increasing Deployment of Bioenergy to Restrict the Market

• District heating accounts for nearly 60% of the heat demand in Swedish buildings. During 2018, more than two-thirds of the heat supply to the district heating systems are based on biomass and waste.
• Bioenergy is a substitute to geothermal energy space heating and likely to act as a restraint for the market, with the growing popularity of bioenergy over the course of time.
• The total share of biomass for heating in the different sectors is around 45% in 2018. Heat output generated and sold by CHP (Combined Heat and Power) plants and heat plants represents about 35% of fuel/heat provided, of which, on average, 70% is produced from biomass (another 10% from the non-renewable part of waste).
• In the residential sector, direct use of biomass represents about 27% of fuel/heat consumption, and another 72% is provided through district heating (which is largely based on biomass).
• Moreover, with the target of increasing its share of renewable sources in district heating and cooling to around 62% by 2020, it is likely that the Swedish government is expected to focus more on bioenergy, on account of increasing waste in the country. This, in turn, is expected to hinder the growth of the market in the coming years.

Competitive Landscape

Sweden geothermal energy market is consolidated. Some of the key players in the market include WSP Global Inc., Climeon AB, MalmbergGruppen AB, Mincon Group Plc, and E.ON SE.

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