Saudi Aramco’s Geothermal Pivot: 2025 Strategic Analysis and Market Outlook

Industry Adoption: How Saudi Aramco is Shifting from Geothermal Exploration to Execution in 2025

Between 2021 and 2024, Saudi Aramco’s engagement with geothermal energy was foundational and exploratory. The company initiated a strategic pivot, leveraging its world-class subsurface expertise to assess the Kingdom’s vast, untapped geothermal resources. This period was defined by building a research-driven ecosystem rather than direct commercial deployment. The most significant moves included a planned $100 million R&D funding commitment to King Abdullah University of Science and Technology (KAUST) in August 2024 and the initiation of a pilot research well in December 2023. This well, a collaboration involving KAUST and the newly formed TAQA Geothermal joint venture, represented the first tangible step to de-risk geothermal potential along Saudi Arabia’s west coast. The strategy was clear: build domestic knowledge and validate resources before committing major capital.

The year 2025 marks a distinct inflection point, where the broader Saudi geothermal market is accelerating from research toward commercial execution, compelling a strategic response from Aramco. While Aramco has yet to announce its own utility-scale project, the ecosystem it helped foster is now activating. The landmark Memorandum of Understanding (MoU) between TAQA Geothermal and EDF Saudi Arabia in February 2025 to develop solutions for both power and cooling highlights a critical shift toward dual-use applications. This is commercially astute, as cooling accounts for nearly half of the country’s electricity consumption. Furthermore, the completion of drilling and testing campaigns by service company Strataphy by April 2025 demonstrates that a domestic supply chain is becoming operational. This ground-level activity is underpinned by Aramco’s new financial firepower; its May 2025 allocation of 10% of its roughly $50 billion annual CAPEX to renewables creates a potential $5 billion annual investment pool, ready to be deployed as geothermal projects become commercially viable.

Table: Saudi Aramco’s Geothermal-Related Capital Commitments

Table: Strategic Geothermal Alliances Forged by Saudi Aramco and the Kingdom

Geographic Focus: Saudi Aramco’s Geothermal Hotspots Along the Red Sea

Between 2021 and 2024, the geographic scope of geothermal activity was centered on assessment and validation. Aramco’s exploration initiatives firmly established Saudi Arabia’s west coast as the premier region of interest, leveraging subsurface mapping to identify promising volcanic areas like the Harrat Rahat field. This region was not just a theoretical target; it became the site of the Kingdom’s first modern geothermal pilot well in late 2023, a collaboration involving KAUST and TAQA. The entire focus during this period was on confirming the resource potential within this specific, high-gradient geological corridor.

In 2025, the geographic activity has intensified and become more granular, though it remains concentrated along the Red Sea coast. The focus is shifting from broad regional assessment to specific site identification for development. A 2025 study on the northern Harrat Rahat volcanic field provides the kind of detailed data necessary for siting future pilot plants. The TAQA and EDF partnership also explicitly targets this coastal region. A significant new development is the national program that has completed 25 shallow wells for district cooling applications. While the exact locations are not detailed, this initiative demonstrates a broadening of geothermal applications beyond deep power generation, likely targeting industrial clusters or new urban developments like NEOM, thus expanding the geographic and economic footprint of geothermal energy within the Kingdom.

Technology Maturity: Aramco’s Path from Geothermal R&D to Commercial Application

In the 2021–2024 period, geothermal technology within the Aramco framework was firmly in the R&D and adaptation phase. The company focused on repurposing its sophisticated oil and gas technologies, such as advanced seismic imaging and reservoir modeling, for geothermal resource assessment. A pivotal, if indirect, validation came from a 2023 pilot of in-situ CO2 mineralization, which proved the viability of injecting fluids into the region’s volcanic rock—a technique directly relevant to future Enhanced Geothermal Systems (EGS). The technological journey was one of simulation and de-risking, culminating in the drilling of the first pilot research well, which moved the needle from digital modeling to physical data acquisition.

Since the start of 2025, the technology has advanced towards pilot application and early commercialization, driven by the wider ecosystem. While Aramco explores next-generation concepts like Advanced Geothermal Systems (AGS) and repurposing old wells, others are proving the market’s readiness. Strataphy’s successful completion of drilling campaigns and its stated goal to deploy a geothermal cooling system within the year is the first signal of commercial application for direct-use heat. Simultaneously, the government’s shallow well program for district cooling shows that this specific application is now considered commercially mature enough for state-led deployment. Deep geothermal for power remains in the pre-commercial phase, but the rapid maturation of cooling applications provides a crucial, lower-risk pathway to build scale, experience, and a domestic supply chain.

Table: SWOT Analysis: Saudi Aramco’s Evolving Geothermal Position (2021-2025)

2026 Outlook: Key Signals in Saudi Aramco’s Geothermal Journey

The data from 2025 signals that Saudi Arabia’s geothermal sector is entering a new phase of market-driven growth, and Aramco is positioned to act as a strategic enabler rather than the sole pioneer. The most critical development to watch is the progress of ecosystem players like TAQA and Strataphy. Their ability to deliver commercial projects will validate the domestic business case and supply chain, creating the conditions for Aramco to make a large-scale investment or act as a primary offtaker for new capacity.

The pronounced strategic focus on geothermal for cooling is the second key signal. This application directly addresses a massive driver of the Kingdom’s energy demand, offering a more immediate and compelling economic case than power generation alone. Expect to see the first wave of projects center on direct-use cooling for industrial facilities, new real estate developments, and district energy systems. The most significant milestone for Aramco itself will be the announcement of its first official geothermal pilot project, which will signal its transition from exploration to development. A specific capital allocation from its $5 billion annual renewable energy fund toward a geothermal venture would be the definitive confirmation that the company is ready to commit. Without it, Aramco risks being an observer in a market it is uniquely positioned to lead.

Frequently Asked Questions

What is the main shift in Saudi Aramco’s geothermal strategy in 2025?
In 2025, the strategy is shifting from foundational research and exploration toward commercial execution. While Aramco itself has not launched a utility-scale project, it has allocated a potential $5 billion annual investment pool for renewables and the ecosystem it fostered (involving partners like TAQA and Strataphy) is now advancing toward commercial applications, especially for cooling.

How much money has Aramco committed to its geothermal pivot?
Aramco has committed up to $100 million for R&D with KAUST, where geothermal is a key focus. More significantly, as of May 2025, it has allocated 10% of its roughly $50 billion annual CAPEX to renewables, creating a potential $5 billion annual investment pool that can be deployed for viable geothermal projects.

Which geographic region is the focus for geothermal development in Saudi Arabia?
The primary focus is Saudi Arabia’s west coast along the Red Sea. This area contains promising volcanic fields, such as the Harrat Rahat field, which was the site of the Kingdom’s first modern pilot research well and is being studied for future pilot plants.

Besides generating electricity, what is the other key application for geothermal energy in the Kingdom?
Geothermal for cooling is a critical application. Cooling accounts for nearly 50% of the country’s electricity consumption, making dual-use (power and cooling) systems a commercially astute strategy. A national program has already completed 25 shallow wells for district cooling applications.

Who are the main players, besides Aramco, in Saudi Arabia’s emerging geothermal sector?
Key players in the ecosystem include TAQA Geothermal (a joint venture leading development), EDF Saudi Arabia (partnering with TAQA for power and cooling solutions), King Abdullah University of Science and Technology (KAUST) for R&D, and the service company Strataphy, which is building a domestic supply chain and aims to deploy a commercial cooling system in 2025.