Geothermal is the hottest thing in clean energy. Here’s why
Earth’s interior contains an inexhaustible supply of heat, its many layers continuously warmed by the furnace-like core of our planet. For millennia, humans have tapped into this abundance for cooking food and keeping warm. More recently, over the last century, countries have harnessed geothermal energy to produce electricity from volcanoes in Iceland and Indonesia, underground heat pockets in Kenya, and bubbling hot springs in Italy and the United States. But these efforts have only scratched the surface of geothermal’s potential. As the urgency of addressing the climate crisis makes it necessary to find sources of always-on, emissions-free energy, the energy source is experiencing a surge of investment and policy support for new technologies that aim to access more heat in many more places. Solar, wind power and battery-storage projects are already cleaning up the U.S. electrical grid. But energy analysts warn that these technologies might not be enough on their own to fully buck America’s reliance on fossil-fuel-burning power plants, which are the second-largest source of U.S. greenhouse gas emissions after transportation. The grid also needs carbon-free electricity available on demand to guarantee it can provide the sort of 24/7 power needed by cities, data centers and industrial facilities like aluminum smelters or steel mills. At the moment, however, these so-called “clean, firm” sources remain elusive. Recent advances in geothermal technologies, demonstrated by a handful of real-world projects, suggest that harnessing the earth’s heat could be among the most promising ways to solve this clean-energy conundrum. But that can only happen if it can overcome the sizable challenges that stand in its way. “If we can crack the nut on this new-generation geothermal, it means we can put geothermal just about anywhere,” Cindy Taff, CEO of the Houston-based startup Sage Geosystems, said during a March 9 panel at SXSW in Austin, Texas. “We can complement the great things that solar and wind have already done — but with baseload energy,” she added. Where geothermal stands today Geothermal resources are available virtually everywhere. Getting to them is a different story. Today’s geothermal plants primarily pull hot water or steam from relatively easy-to-reach places like hot springs or geysers to drive turbines and generate electricity. That significantly limits the places where geothermal power plants can go. In the United States, just 3,700 megawatts (3.7 gigawatts) of geothermal power plants are operating across seven states, amounting to only about 0.4 percent of total U.S. electricity generation in 2023. In recent years, both the U.S. government and private investors have started spending hundreds of millions of dollars to develop “next-generation” technologies that make it easier and cheaper to access the earth’s heat nationwide. If these systems reach commercial scale, they could expand the nation’s geothermal capacity by more than twentyfold, adding at least 90 GW of firm and flexible power to America’s grid by 2050, the U.S. Department of Energy said in a report released on March 18. That’s equal to nearly 10 percent of current U.S. electricity capacity. Next-generation technologies include several different approaches, all of which rely to some extent on the expertise and deep pockets of another subterranean energy industry: oil and gas. One category in particular, “enhanced geothermal systems,” uses the same horizontal drilling and fracking techniques as the shale gas industry. Dozens of startups are now crowding into the space. So far, only a few — including Eavor, Fervo Energy and Sage Geosystems — have successfully deployed full-scale, real-world projects in North America. Many steps still need to happen before the sector can grow beyond its buzzy beginnings, including reforming federal permitting, finding corporate buyers for clean energy and mitigating the potential for environmental impacts. Still, the industry’s most pressing priority right now can be described simply as this: raising gobsmacking amounts of early-stage investment capital. Geothermal developers need the money so they can iterate — that is, drill lots of holes — to both refine their technologies and drive down construction costs. Signs of this improving-by-doing approach are already emerging. Utah Forge, a $220 million initiative led by the DOE, improved drilling speeds by over 500 percent in three years on its enhanced geothermal project in Beaver County, Utah. Just next door, Fervo Energy reduced its drilling times by 70 percent, which helped cut costs nearly in half, from $9.4 million to $4.8 million per well, at its Cape Station project, the startup recently announced. Utah Forge is a dedicated underground field laboratory led by DOE and the University of Utah. (Eric Larson, Flash Point SLC) If this trend continues, next-generation geothermal could follow a trajectory similar to that of solar power or batteries — two clean-energy technologies that have risen to the top of the energy system as they’ve tumbled down the cost curve, said Jonah Wagner, a principal assistant director at the White House Office of Science and Technology Policy. “If you look at why their costs have come down so fast, a huge part of it is driven by the nature of, as you expand your manufacturing base, as you make more repeat deployments of the same exact thing…you hit a point where you achieve cost-competitiveness,” Wagner said during the SXSW panel. “And then you can totally ramp up,” he added. Getting geothermal to stand on its own To make the leap from intriguing new technology to a commercially viable energy player, next-generation geothermal will have to lean much less on public funding and become self-sufficient. To reach that point — which the DOE calls “commercial liftoff” — the industry will need to deploy about 2 to 5 GW of projects across four to six states and in five to 10 different geologic settings to demonstrate to investors and utilities that the cutting-edge systems can deliver as promised. That scale of deployment would require about $20 billion to $25 billion of investment from government agencies, equity investors, corporate ventures and other capital providers. Of that total, about $5 billion is needed to finance first-of-a-kind developments in particular. Many of those projects will likely take advantage of federal tax credits provided by the Inflation Reduction Act, which offers incentives for both clean-energy producers and their investors. The Bipartisan Infrastructure Law also includes sizable funding for large-scale pilot projects. In February, the Biden administration awarded a total of $60 million to three geothermal developers — Fervo, Chevron New Energies and Mazama Energy — to support their first-of-a-kind developments. If everything goes to plan, commercial liftoff is “attainable as early as 2030,” according to the federal agency. But “liftoff” is just the start. To achieve commercial scale — and become a cornerstone of a clean and reliable U.S. power grid — next-generation geothermal will need an additional $225 billion to $250 billion in investment to deploy another 88 to 125 GW of projects, the DOE estimates. That’s a gargantuan leap from only a handful of megawatts in place today. Last year, Houston-based Fervo began operating a first-of-a-kind plant in Nevada. The 3.5 MW project is now supplying electricity directly to the Las Vegas–based utility NV Energy. The enhanced geothermal system uses horizontal drilling techniques and fiber-optic sensing tools to create fractures in hard, impermeable rocks found beneath the surface. Technicians then pump the fractures full of water and working fluids. The hot rocks heat those liquids, eventually producing steam that drives electric turbines.
Earth’s interior contains an inexhaustible supply of heat, its many layers continuously warmed by the furnace-like core of our planet. For millennia, humans have tapped into this abundance for cooking food and keeping warm. More recently, over the last century, countries have harnessed geothermal energy to produce…
Earth’s interior contains an inexhaustible supply of heat, its many layers continuously warmed by the furnace-like core of our planet. For millennia, humans have tapped into this abundance for cooking food and keeping warm. More recently, over the last century, countries have harnessed geothermal energy to produce electricity from volcanoes in Iceland and Indonesia, underground heat pockets in Kenya, and bubbling hot springs in Italy and the United States.
But these efforts have only scratched the surface of geothermal’s potential. As the urgency of addressing the climate crisis makes it necessary to find sources of always-on, emissions-free energy, the energy source is experiencing a surge of investment and policy support for new technologies that aim to access more heat in many more places.
Solar, wind power and battery-storage projects are already cleaning up the U.S. electrical grid. But energy analysts warn that these technologies might not be enough on their own to fully buck America’s reliance on fossil-fuel-burning power plants, which are the second-largest source of U.S. greenhouse gas emissions after transportation. The grid also needs carbon-free electricity available on demand to guarantee it can provide the sort of 24/7 power needed by cities, data centers and industrial facilities like aluminum smelters or steel mills.
At the moment, however, these so-called “clean, firm” sources remain elusive. Recent advances in geothermal technologies, demonstrated by a handful of real-world projects, suggest that harnessing the earth’s heat could be among the most promising ways to solve this clean-energy conundrum. But that can only happen if it can overcome the sizable challenges that stand in its way.
“If we can crack the nut on this new-generation geothermal, it means we can put geothermal just about anywhere,” Cindy Taff, CEO of the Houston-based startup Sage Geosystems, said during a March 9 panel at SXSW in Austin, Texas.
“We can complement the great things that solar and wind have already done — but with baseload energy,” she added.
Where geothermal stands today
Geothermal resources are available virtually everywhere. Getting to them is a different story.
Today’s geothermal plants primarily pull hot water or steam from relatively easy-to-reach places like hot springs or geysers to drive turbines and generate electricity. That significantly limits the places where geothermal power plants can go.
In the United States, just 3,700 megawatts (3.7 gigawatts) of geothermal power plants are operating across seven states, amounting to only about 0.4 percent of total U.S. electricity generation in 2023.
In recent years, both the U.S. government and private investors have started spending hundreds of millions of dollars to develop “next-generation” technologies that make it easier and cheaper to access the earth’s heat nationwide. If these systems reach commercial scale, they could expand the nation’s geothermal capacity by more than twentyfold, adding at least 90 GW of firm and flexible power to America’s grid by 2050, the U.S. Department of Energy said in a report released on March 18. That’s equal to nearly 10 percent of current U.S. electricity capacity.
Next-generation technologies include several different approaches, all of which rely to some extent on the expertise and deep pockets of another subterranean energy industry: oil and gas. One category in particular, “enhanced geothermal systems,” uses the same horizontal drilling and fracking techniques as the shale gas industry.
Dozens of startups are now crowding into the space. So far, only a few — including Eavor, Fervo Energy and Sage Geosystems — have successfully deployed full-scale, real-world projects in North America. Many steps still need to happen before the sector can grow beyond its buzzy beginnings, including reforming federal permitting, finding corporate buyers for clean energy and mitigating the potential for environmental impacts.
Still, the industry’s most pressing priority right now can be described simply as this: raising gobsmacking amounts of early-stage investment capital.
Geothermal developers need the money so they can iterate — that is, drill lots of holes — to both refine their technologies and drive down construction costs. Signs of this improving-by-doing approach are already emerging. Utah Forge, a $220 million initiative led by the DOE, improved drilling speeds by over 500 percent in three years on its enhanced geothermal project in Beaver County, Utah. Just next door, Fervo Energy reduced its drilling times by 70 percent, which helped cut costs nearly in half, from $9.4 million to $4.8 million per well, at its Cape Station project, the startup recently announced.
If this trend continues, next-generation geothermal could follow a trajectory similar to that of solar power or batteries — two clean-energy technologies that have risen to the top of the energy system as they’ve tumbled down the cost curve, said Jonah Wagner, a principal assistant director at the White House Office of Science and Technology Policy.
“If you look at why their costs have come down so fast, a huge part of it is driven by the nature of, as you expand your manufacturing base, as you make more repeat deployments of the same exact thing…you hit a point where you achieve cost-competitiveness,” Wagner said during the SXSW panel.
“And then you can totally ramp up,” he added.
Getting geothermal to stand on its own
To make the leap from intriguing new technology to a commercially viable energy player, next-generation geothermal will have to lean much less on public funding and become self-sufficient.
To reach that point — which the DOE calls “commercial liftoff” — the industry will need to deploy about 2 to 5 GW of projects across four to six states and in five to 10 different geologic settings to demonstrate to investors and utilities that the cutting-edge systems can deliver as promised. That scale of deployment would require about $20 billion to $25 billion of investment from government agencies, equity investors, corporate ventures and other capital providers. Of that total, about $5 billion is needed to finance first-of-a-kind developments in particular.
Many of those projects will likely take advantage of federal tax credits provided by the Inflation Reduction Act, which offers incentives for both clean-energy producers and their investors. The Bipartisan Infrastructure Law also includes sizable funding for large-scale pilot projects. In February, the Biden administration awarded a total of $60 million to three geothermal developers — Fervo, Chevron New Energies and Mazama Energy — to support their first-of-a-kind developments.
If everything goes to plan, commercial liftoff is “attainable as early as 2030,” according to the federal agency.
But “liftoff” is just the start. To achieve commercial scale — and become a cornerstone of a clean and reliable U.S. power grid — next-generation geothermal will need an additional $225 billion to $250 billion in investment to deploy another 88 to 125 GW of projects, the DOE estimates.
That’s a gargantuan leap from only a handful of megawatts in place today.
Last year, Houston-based Fervo began operating a first-of-a-kind plant in Nevada. The 3.5 MW project is now supplying electricity directly to the Las Vegas–based utility NV Energy. The enhanced geothermal system uses horizontal drilling techniques and fiber-optic sensing tools to create fractures in hard, impermeable rocks found beneath the surface. Technicians then pump the fractures full of water and working fluids. The hot rocks heat those liquids, eventually producing steam that drives electric turbines.