Canada has the ingredients to be a leader in the geothermal energy industry, a report from RBC suggests, but needs a unified national strategy and support for young companies to tap into the opportunity.

Geothermal energy is a source of low-carbon, baseload power generated by extracting heat from below the surface of the ground. It makes up a minuscule portion of the country’s electricity; only six megawatts of geothermal energy is generated on a commercial-scale from the hybrid Swan Hills Geothermal Power Project in Alberta, a facility operated by FutEra Power.

“Canada doesn’t have the conventional geology that geothermal needs,” Vivan Sorab, the clean technology lead at the RBC Climate Action Institute and author of the report, told Sustainable Biz Canada.

He noted other impediments, such as the absence of a national strategy for geothermal energy and insufficient financial tools to derisk early-stage projects.

However, there are advanced geothermal technologies that could unlock potential “greater than we realized,” Sorab said. Additionally, the country has a strong industrial base to draw upon and policies that could patch the regulatory holes.

Canada’s ‘outstanding engineering and scientific expertise’

Sorab and the Canadian government found high potential for geothermal energy in provinces such as British Columbia, Alberta and Saskatchewan, and territories like the Northwest Territories and Nunavut.

Canada’s wealth of expertise in oil and gas is a major advantage, as the infrastructure, equipment and supply chains from the sector can be used in the geothermal industry.

Saskatoon-based DEEP Earth, for example, is partnering with oilfield services company SLB to develop a 30-megawatt geothermal power facility in southeast Saskatchewan. Eavor Technologies Inc., headquartered in Calgary, has its roots in oil and gas and is applying its knowledge toward the geothermal sector.

“Canada really has outstanding engineering and scientific expertise in subsurface technology. And that has been used in the geothermal context in very intriguing ways,” Sorab said.

Though Canada may not have many conventional geothermal resources, Sorab referenced research that has found underground temperatures in some regions of Western Canada are higher than expected, supporting the viability of projects.

Sorab noted two “advanced geothermal technologies” in his report which could improve the viability of such projects in Canada.

One is enhanced geothermal systems, where fluid is injected underground to create fractures to access more heat sources. The other is closed-loop geothermal systems, which involves creating a network of underground pipes resembling a radiator to take in the geothermal heat, even in areas that lack the geological features for conventional geothermal such as aquifers.

Policies, programs that could help geothermal adoption

The Canadian government supports geothermal energy under programs such as Natural Resource Canada's Smart Renewables and Electrification Pathways program. Geothermal equipment also qualifies for the clean technology investment tax credit.

While Canada may have some compelling systems and advantages which support geothermal energy, it risks falling behind countries like the U.S., China, Indonesia and the Philippines, Sorab said in the report. Without action, Canada “risks squandering subsurface expertise and geological endowment that offer natural advantages.”

Sorab said there is no national strategy for geothermal energy in Canada, with only Alberta, British Columbia and Nova Scotia having geothermal-specific legislation. Yukon is developing regulations for the sector, the Canadian government says.

There is potential for knowledge sharing and regulatory harmonization across the provinces, Sorab said. He recommends a nationwide regulatory template which provinces could adapt to their needs, combined with government incentives like the Alberta Drilling Accelerator to reduce the cost of drilling.

Canada could borrow from initiatives in the U.S., Sorab added, such as its federal programs aimed at lowering the costs of deploying advanced geothermal technologies.

A 2024 document written by the Canadian Geothermal Energy Association (which has since been acquired by industry organization Geothermal Rising) recommends a framework for geothermal carbon offset projects and a fund to reduce the drilling risks of geothermal exploration on the federal level.

For the provinces, the association suggests policies such as a geothermal incentive program for Alberta and a carve-out for geothermal energy in the Clean BC Industry Fund.

For the scale and expertise Canada has, “geothermal could occupy a stronger position in how we think about having support for commercialization and first-of-a-kind deployment,” Sorab said.