Geothermal handbook: PlanninG and Financing power Generation t e c h n I c a L r e p o r t 2 / 2

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Investment Cost Breakdown of Utility Scale Geothermal Power Development Based 
on Data from Iceland
Source | Gunnarsson 2011.
Geothermal Power Development
Cost Components of the Value Chain
35%
Power Plant
Miscellaneous
5%
Interconnection
6%
Drilling
34%
Infrastructure
2%
Steam Gathering System
13%
Early
Development
5%
In principle, the market structure and competitive environment is different for each component in the 
value chain.
Table 1.3 describes key features of the market at each stage of geothermal power production. As the 
table shows, each development phase can be viewed as a separate business segment, with a market 
structure being anything from highly concentrated (oligopolistic), as in the case of manufacture and 
supply of geothermal turbines and generators, to highly competitive, as in the case of power plant 
construction and installation of steam gathering systems. 
A peculiar feature of the drilling segment is the interaction with the oil and gas industry. Generally, 
while the drilling techniques for geothermal energy are somewhat different from drilling techniques for 
oil and gas, the type of equipment used in both cases is often the same. On the one hand, geothermal 
drillings can be done by oil and gas companies, contributing to greater geothermal production 
capacity and expanding the overall geothermal market size. On the other hand, the geothermal 
industry competes with oil and gas companies for drilling rigs, and this competition sometimes causes 
rig costs to rise to levels that are difficult for geothermal companies to pay.
The market environment for the manufacture and supply of power plant equipment for geothermal 
energy generation is very competitive for most types of equipment, except for turbines and generators 
(gensets), which currently are available from only a small number of large suppliers. Japanese 
companies currently have the largest share of the geothermal genset market. Combined, the three 
market leaders (Mitsubishi, Toshiba, and Fuji) have produced about or over 80 percent of all gensets 
sold to date. Ormat from Israel/USA and UTC/Turboden from USA/Italy are the market leaders for 
binary power plants, which are preferred for low and medium temperature resources (based on Bertani 
2010). 

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