Next-generation geothermal: Opportunities for federal action to support domestic energy production and innovation
This blog is part of a series that explores the federal policies and actions needed to deploy next-generation geothermal, sources of nuclear energy (both fission and fusion), and carbon capture and storage – technologies the Trump administration indicated as priorities on Earth Day. The policy brief highlighting these technologies can be found here.
The U.S. is a leader in geothermal energy innovation and is well-positioned to lead the emerging next-generation geothermal market because of its vast domestic resources, top-tier energy companies, and globally recognized research and development expertise from U.S. universities and national labs.
But despite bipartisan support for next-generation geothermal – including support in the Trump administration’s statement on Earth Day – Congress has made the future of this innovative energy source uncertain. Recently passed legislation in the House would pull critical support for geothermal projects, functionally excluding any projects that aren’t already well underway given the years they take to plan and construct.
Next-generation geothermal can drive American energy abundance and support energy security, all while adding clean, firm power to the grid with adequate support across the value chain. Federal investment in research, development, demonstration, and deployment, along with sustained support for federal offices like the Department of Energy’s Geothermal Technologies Office (DOE GTO) and Loan Programs Office (DOE LPO) will help advance American leadership and innovation in next-generation geothermal technologies.
Next-generation geothermal energy can increase domestic energy production and provide 24/7, clean firm baseload power.
Next-generation geothermal is an emerging renewable energy source that builds on innovations from the oil and gas sector, and it holds immense potential for supporting domestic energy production at a time of growing energy demand. The IEA estimates that geothermal could rise from meeting less than 1% of global energy demand right now to meeting 8% of global energy demand by 2050. And CATF’s mapping finds that superhot rock geothermal, which is the hottest, highest-energy-density form of next-generation geothermal, could produce 4.3 terawatts of clean firm power in the U.S. alone – 8 times the United States’s 2021 electricity consumption. Research from CATF also indicates that, at high enough temperatures, next-generation geothermal can be cost-competitive in unsubsidized energy markets.
The U.S. is a cutting-edge innovator and leader in next-generation geothermal because of the overlap between American shale gas extraction techniques and those used to harvest deep geothermal heat, but to maintain its position as a global leader and achieve its potential for abundant domestic energy production, sustained federal investment is critical.
Technology-neutral tax credits and continued federal investment in research, development, demonstration, and deployment for next-generation geothermal are essential for U.S. leadership.
Congress must preserve the technology-neutral investment tax credit (ITC), including its timing and transferability provisions. Next-generation geothermal technologies need more lead time to commercialize, and the ITC provides much-needed financial runway for geothermal companies. The ITC currently runs through 2032 at the earliest, and it allows projects to receive the tax credit based on the date they commenced construction (rather than the date they were placed in service). These factors give developers certainty that their long-lead-time geothermal projects will be eligible for the tax credit. The transferability provision is also a critical component to the ITC, ensuring startups without significant tax liability can still benefit from the credit. Shortening the timeline and removing transferability would make the ITC essentially meaningless for geothermal, affecting only a few projects. The ITC spurs innovation by reducing risk and unlocks private finance, which drives the development of next-generation geothermal technologies. Without it, leading U.S. geothermal companies risk shutting down or never launching, undermining innovation, competitiveness, and the growth of the sector.
Congress must support research and development for superhot rock geothermal. The federal government plays an important role, particularly in the research and development stages of the value chain. Superhot rock geothermal has the potential to unlock lower-cost electricity and be deployed nearly anywhere on Earth, but it needs federal support to reach commercial scale. The 118th Congress introduced a bill that would promote targeted public and private research, break down silos, and leverage vast subsurface expertise that already exists in the U.S. to advance superhot rock geothermal energy.
Congress must support demonstrations to de-risk development of innovative projects. By providing financial support for geothermal demonstrations in different regions of the country, the U.S. can de-risk first-of-a-kind projects. These projects will not only prove out next-generation geothermal technologies but will also support the gathering of critical subsurface data. By ensuring that data is shared across the industry, Congress can accelerate the timeline for sector-wide geothermal deployment.
Congress must fund subsurface mapping. Lack of knowledge of subsurface characteristics is one of the biggest hurdles to geothermal project deployment in new areas. The U.S. should fund subsurface mapping around the country, ensuring that geothermal energy can be fully developed across the U.S.
The administration must adequately staff the offices and national labs undertaking this important work. Multiple government agencies and national labs serve critical functions for supporting next-generation geothermal. Appropriate staffing levels at these organizations are crucial to ensure that geothermal research and project deployment progress:
- The Geothermal Technologies Office funds cutting-edge research and development programs and supports sector-wide coordination and information-sharing.
- National laboratories have specialized scientific expertise and facilities to solve technical challenges in geothermal exploration, drilling, and energy production.
- The Loan Programs Office could provide critical financing for first-of-a-kind geothermal projects that are too risky for traditional lenders but essential for industry advancement.
- The United States Geological Survey conducts resource assessments and provides the foundational geoscience data that helps identify the most promising locations for geothermal projects. The Bureau of Land Management manages the leasing and permitting processes for geothermal development on federal lands.
Congress and the administration must provide sufficient funding and agency staff to maintain the U.S.’s position as a global leader and stay at the cutting edge of geothermal innovation.
