Geothermal energy, which harnesses the Earth's natural heat, is gaining bipartisan support in the United States, reflecting a growing interest across the political spectrum. This development is significant due to the increasing electricity demand driven by advancements in artificial intelligence (AI), which is encouraging investment in this renewable energy source that has yet to demonstrate its scalability.
Recently, geothermal energy received notable attention in a bipartisan Senate bill introduced to expedite infrastructure permitting. The House passed a related package this summer that included geothermal provisions sponsored by lawmakers from both sides of the aisle, including Representatives Alexandria Ocasio-Cortez (D-N.Y.) and Mike Kennedy (R-Utah).
The rising interest in geothermal energy is attributed to three converging trends: - Technologies adapted from the oil and gas industry, such as fracking, are enabling access to geothermal resources beyond traditional locations like hot springs and volcanoes. - Tech companies are seeking reliable electricity sources for data centers and are willing to invest in next-generation geothermal solutions. - Investment in geothermal energy is increasing as companies aim to scale this renewable energy source capable of providing continuous power.
The geothermal-specific provisions in the Senate bill are more extensive than those for other renewable energy sources, including wind and solar. The bill aims to simplify the process for geothermal developers to explore and lease federal land, expedite drilling permits, and exempt certain activities from environmental reviews.
Geothermal energy retained federal clean-energy tax credits in a tax law enacted by Republicans last year, while wind and solar faced a phaseout of similar incentives. Fervo Energy, a geothermal company that went public earlier this year, exemplifies this trend. Founded by Tim Latimer, a former drilling engineer, Fervo is at the forefront of the geothermal sector's growth. Latimer noted that the current demand for electricity has exceeded expectations.
Geothermal's appeal spans political divides, as it aligns with Democratic priorities for renewable energy and Republican interests in drilling expertise. Its capacity to provide stable, carbon-free electricity is also attractive to utilities and tech companies.
Commercial interest in geothermal is reflected in the rising average winning bids for federal leases, which increased from $10 per acre in 2023 to an average of $182 this year. A record bid of $1,207 per acre was recorded for a parcel in Utah this summer.
Despite its political popularity and investment surge, geothermal energy faces challenges in commercial viability. Currently, it generates less than 1% of U.S. electricity, and the high lease bids are primarily for exploration rights rather than active geothermal wells. Fervo's stock has declined nearly 70% from its initial public offering price amid a broader slowdown in energy startups.
Tom Erb, Fervo's government affairs and policy manager, stated that construction costs for their flagship project in Utah are about half those of new nuclear plants, although he acknowledged that underground heat may diminish over time, necessitating additional drilling.
Jigar Shah, a former Energy Department official, emphasized that geothermal's momentum relies on state policies promoting clean electricity and tech companies willing to invest. Local opposition has also emerged, particularly regarding water use, as traditional geothermal projects can disrupt vital ecosystems. Patrick Donnelly from the Center for Biological Diversity noted that while newer technologies like Fervo's mitigate some risks, concerns about water consumption persist.
Geothermal energy has achieved a rare political consensus in Washington, and the challenge ahead is whether this consensus can endure as the industry develops.