Earth’s deep heat is inexhaustible, available at all times, and could provide clean firm electricity at the scale necessary to decarbonize the global economy. Innovations in next-generation geothermal have the potential to disrupt current global energy markets and transform the nation’s energy system. These technologies leverage heat extraction methods like Enhanced Geothermal Systems (EGS) and Closed Loop Geothermal Systems (CLGS) to access this inexhaustible heat source nearly anywhere. Pushing these heat extraction technologies into high temperature conditions (above the supercritical point of water), could increase their power production potential significantly and ultimately reduce the cost of this firm, renewable energy source to be competitive with fossils energy today, even in regions without subsidies. Experts refer to the use of EGS or CLGS to access these “superhot” conditions as superhot rock energy (SHR). None of these advancements in geothermal—EGS, CLGS, and SHR—receive the support required to reach their full potential. Due to its high energy density, superhot rock energy has the potential to meet long-term demands for cost-competitive 24/7 renewable energy while simultaneously providing grid stability to our aging transmission system. However, despite its immense potential, geothermal innovation is almost entirely unrecognized in decarbonization policy.
To understand the barriers to geothermal innovation and how to overcome them, Clean Air Task Force (CATF) embarked on a series of listening sessions. Between 2022 and 2023, CATF conducted 24 conversations with representatives from 21 organizations actively engaged in geothermal innovation. This included public and private research groups, drilling service companies, geothermal start-ups, and more. The focus of these listening sessions was to identify policy gaps related to the research, development, and demonstration of next-generation geothermal energy.
Seven policy solutions to barriers advancing geothermal energy
Barrier 1: Inability to deploy projects
Siting and deployment are critical bottlenecks for nearly all the stakeholders interviewed. Developing geothermal power facilities requires an extensive permitting process. In January 2022, Idaho National Labs modeled a hypothetical permitting scenario for a project in the western U.S., finding that it would take between 6 and 13 years to complete the environmental review and permitting process. Public land management is a key consideration in understanding this deployment issue – 67% of geothermal electricity generation capacity in the U.S. sits on Bureau of Land Management (BLM)-managed land alone. Numerous stakeholders indicated that staff at field permitting agencies such as the BLM have inadequate resources for tackling permits for geothermal technologies, with which they don’t often interface.
Slow and uncertain timelines for completing environmental reviews and obtaining permits cause early-stage investors and large developers to avoid investing in next-generation geothermal technologies, including SHR, and dramatically slow the process of testing and developing these technologies. To offset this risk, developers are attracted to locations that are expected to have reduced permitting obligations rather than places where the power is in demand or where the technology can be optimized.
There is growing conversation around establishing a categorical exclusion for geothermal deployment through legislation. While categorical exclusions may be suitable for some parts of the geothermal deployment process, agencies are best equipped to determine their appropriate scope and applicability. Retaining agency control may ensure that the process is guided by expertise and evidence from past environmental assessments (EAs) and Environmental Impact Statements (EIAs). Improving the environmental review process is an important part of geothermal deployment, and CATF will continue to consider opportunities to improve that process.
Solution: Expansion of permitting capacity
The following policy solutions could expand the capacity for Department of Interior (DOI) district or field offices to increase next-generation geothermal deployment:
- Establishing additional funding is available for technical assistance or additional staff in key field offices;
- Developing training modules for DOI field offices to review Enhanced Geothermal System and Closed Loop Geothermal System heat extraction methods; and
- Establishing and funding an internal software for consistent tracking and management of permitting in district or field offices.
Barrier 2: Lack of financial incentives for project development and deployment
All next-generation geothermal technologies carry high capital costs due to drilling. A lack of financial incentives during the initial stages of technology deployment can impede the progress and market entry due to this high initial financial burden. The absence of financial incentives for early-stage investment makes it difficult to overcome the cost barriers associated with testing, demonstration, and deployment. Consequently, the unique financial demands of the technology may stifle technology growth, delaying market entry, and limiting its overall impact as a climate solution.
Solution: Providing financial incentives for geothermal development
In 2022, the Inflation Reduction Act introduced tax credits for clean energy production and investment that included geothermal energy. While the current subsidy is well-designed for incentivizing the development of renewable energy sources with low capital costs, it does not sufficiently support high-capital-cost next-generation geothermal projects. In Colorado, this gap is being bridged with the Colorado Energy Office’s Geothermal Electricity Tax Credit. This state policy gives private entities, local governments, tribal governments, and public-private partnerships tax credits of up to 50% for investment in geothermal electricity, and tax credits of $0.003/kWh for production of geothermal electricity. Additional financial incentives and de-risking mechanisms, such as the development of a cost-share program for innovative drilling methods to reduce financial risk associated with the capital expenditure of drilling, should also be considered.
Barrier 3: Gaps in applied research and bench-scale testing
Closing the gap to commercialization for SHR, and increasing the resilience of existing geothermal technologies, involves addressing several crucial research gaps. It’s important that publicly-funded research is directed towards areas that aren’t already being explored by private industry. This is particularly pertinent for research domains lacking immediate demand, such as high-temperature downhole sensors. By defining specific research targets rather than providing unfocused funding, we can minimize the risk of leaving persistent gaps in research and testing unaddressed.
Unlike the oil and gas industry, the superhot rock industry is not vertically integrated. Rather, companies and national labs tend to work on only one or two siloed technology areas (cements, sensors, drilling, etc.). This is because each of these areas of work are unique, with specific technical expertise needed to make advancements. Siloed research and development efforts make superhot rock development more difficult by creating a complex web of intellectual property. To bring SHR to commercial scale, the innovations being developed will need to work together. When no company has access to all these innovations, they cannot be tested together – much less used together in a demonstration project.
Solution: Establishment of a targeted public-private research agenda
Private and public R&D play complementary roles in technology development, and funding for both is important. Public entities are well-suited to generate research and development in areas where learnings should be shared openly across stakeholders. Public entities can also work to develop technologies that do not have an immediate market on which private industry can capitalize. For example, high-temperature, high-pressure sensors may not have an immediate use case, beyond space exploration, until SHR is commercially viable. While it is reasonable to anticipate that private industry will ultimately be profitable in the SHR space, it cannot do so until the market exists.
Research grants for public institutions, including universities and national laboratories, could focus on investigating materials and methods in five technology areas at 400°C+ conditions: well materials development and testing, permeability creation materials and methods, water-rock geochemistry, rock properties (conductivity, heat capacity, fracture simulation, stress and strain responses, and seismic risk mitigation), and innovative drilling methods. Advancement of these technology areas would not only close the gaps to commercial viability for superhot rock energy, but they would also increase the lifetime and durability of tooling across the spectrum of geothermal when encountering hostile subsurface environments.
Alternatively, public grants that go towards industry R&D can also play an important role in driving rapid and impactful technology change. Industry can work quickly and agilely, make cost-effective decisions, and put money toward generating intellectual property that has financial value without future public sector support. This is important in developing technologies that will be competitive in the commercial market. Grants to support accelerated non-governmental research could focus on more applied research in 400°C+ conditions that optimize existing practices, specifically in the following four research areas: well design, permeability creation, downhole sensors, and deep drilling in the field. Within the set of research areas listed, grants for deep drilling should be structured as milestone-based payments distributed across the project’s lifespan and awarded to projects using innovative drilling methods in a minimum of three unique geodynamic settings. Milestones across a drilling projects lifespan could include successfully exploring and modeling the reservoir conditions, collaborating with national labs to study crustal stress and the geomechanics of SHR drilling, repeated drilling to 400˚C conditions with the goal of testing drilling methods until economic viability is achieved, creating permeability and demonstrating sustained circulation of fluid (e.g. fracture stimulation, fracture creation, closed loop emplacement), and demonstration of power production.
Supporting parallel public and private approaches to applied R&D allows for an agile path toward rapid technological advancement as well as a pathway that can be empowered by collaboration and breakthroughs that are shared across the broader spectrum of stakeholders. Additionally, the existence of a field-testing site (posed as a solution to Barrier 4, below) could offer those involved in R&D the opportunity to engage in both field and bench-scale testing. Establishing a vertically-integrated ecosystem of R&D would allow for the breakdown of research siloes, the leveraging of private industry for rapid decision-making, and the ability to share learnings across stakeholders throughout the technology development process.
Barrier 4: Limited access to in-field testing
Startups and laboratory researchers have very few resources to access in-field testing. The companies and research groups we spoke to saw field testing as a key need, with many ranking it as their most critical and/or immediate need. However, lack of coordinated partnerships and shared test sites were a barrier to companies and researchers to test their innovations in the field.
Both national labs and private companies play important roles in technological advancement, and a collaborative approach that leverages the strengths of both can lead to the greatest impact. There is a need for a program to provide funding for developers to test their technologies in the field at authorized field-testing centers and to iterate on these technologies at a bench scale by collaborating with a consortium of national labs.
An in-field testing site (the FORGE site in Utah) provides this service for low-to-mid-temperature enhanced geothermal systems. FORGE is an incredibly important asset for the enhanced geothermal community. Our interviewees recognized the value of FORGE as a testing site, and some had planned or wanted to work with FORGE. However, the heat at this site may not be close enough to the Earth’s surface at this location to act as a reasonable testing site for 400°C+ conditions.
Solution: Establishment of a superhot field testing site, complementary to Utah FORGE
A solution to expanding access to field testing for research groups and developers could be to establish an additional field testing center as a next step in the Frontier Observatory for Research in Geothermal Energy (FORGE) program. The Energy Act of 2020 authorizes the establishment of three FORGE sites. As of now, only one FORGE site has been established. To ensure that this field testing site expands on the success of the existing FORGE site in Utah, the new field-testing site should exist in a location with access to 400 °C conditions within 4 km from the Earth’s surface, and allow for testing of technologies relevant to both closed-loop systems and enhanced geothermal systems. Additional funding for the FORGE program would be necessary to support complementary sites to FORGE Utah.
Barrier 5: Need for an increased focus on superhot (400˚C+) geothermal resources at the agency level
In some cases, continued R&D of low-to-mid-temperature geothermal technologies has limited applicability to SHR because SHR requires the use of high-temperature, high-pressure equipment and tooling, as well as modeling assumptions that can deal with supercritical fluid. It also may take more resources for a federal agency to support high-temperature geothermal technologies like superhot EGS and superhot CLGS, because these technologies have high initial costs and a long timeline to demonstrate success. But despite the initial resource investment required for advancing EGS and CLGS into superhot conditions, federal agencies should recognize the long-term benefits they could offer. Boosting support for high-temperature innovation at the GTO, alongside maintaining current support for other geothermal methods, could enhance the performance of traditional technologies in tough conditions and speed up the commercialization of SHR. This could lead to a more effective and durable decarbonization strategy over time.
Due to the lack of specific structural support for high-temperature, high-pressure geothermal research within the agency, the U.S. is trailing international partners in superhot rock energy innovation. Countries like Japan, New Zealand, and Italy have been the sites of leading research projects in superhot rock energy. Domestic research groups routinely mentioned the need to collaborate with international partners on SHR and lamented the inefficiencies of working in siloes. Through Horizon 2020 initiatives like DEEPEN and DESCRAMBLE, the EU has spearheaded extensive research and development of SHR. It is imperative that research groups in the U.S. have the resources needed to collaborate and share data with international research groups.
Solution: Establishment of a program area within the GTO tasked with advancing heat extraction technologies like EGS and CLGS into superhot conditions
Providing direct support for high-temperature, high-pressure geothermal innovation through the GTO would not just help bridge the commercialization gap for SHR but also enhance the durability of conventional technologies and their ability to function in hostile subsurface environments. Without a program area tasked specifically with pursuing higher temperature (SHR) technology development, federal-level research on SHR is at risk of stagnation and the overarching geothermal power industry risks relying on subsidies into perpetuity. To be competitive in an unsubsidized power market, the industry needs a path to significant cost reductions. Higher temperature geothermal resources have been modeled to reach a price competitive with fossil resources in the U.S, provided public policy supports the research required to achieve these cost reductions. To ensure the allocation of funding, research, international collaboration, and the development of best practices specific to SHR, it would be useful for the GTO to have a program area dedicated to high-temperature geothermal innovation in addition to innovation of low and mid-range temperature geothermal technologies.
Barrier 6: Ineffective resources for data sharing
Multiple stakeholders CATF interviewed noted their interest in sharing reservoir characterization and drilling data. Data is a valuable resource for geothermal development, and access to subsurface data is critical for helping companies survey for heat and reduce the risk of well failure through well-informed drilling programs. Though there are existing data repositories at both the federal and state levels, they need to be better organized, centralized, and more widely accessible.
Solution A: Improvement and expansion of shared data resources
Improvement of the existing Geothermal Data Repository (GDR) could be particularly impactful.
Options could include:
- Making data more uniform so it can be analyzed across projects;
- Enhancing the accessibility of the data and usability of the site so users can use the repository to analyze opportunities on a regional, local, and site-specific scale; and
- Ensuring that data is viewable by map and downloadable by common attributes, such as region, not just distinct projects.
We also believe expansion of the GDR is an important part of improving shared data resources.
This would involve:
- Integrating more geothermal development data from beyond DOE-funded geothermal projects, including data from mining and fossil fuel projects, subsurface heat data, seismic data, lithology data, boundaries of state and federally protected areas, and existing transmission capacity.
Solution B: Support for regional deep data probes
An effective solution to increasing the availability of deep subsurface data would be for congress to direct the U.S. Geological Survey to commission the drilling of deep exploration boreholes deeper than 8 kilometers in depth in representative geological provinces in the U.S. to provide control points for deep heat mapping and geothermal development. The resulting data should include an exploration of heat, lithology, and strain profiles, and should be shared publicly on the geothermal data repository. While this data is paramount to de-risk the commercialization of next generation geothermal technologies, it is also anticipated that the data collected from these control points will heavily inform other critical industries such as mineral extraction and carbon capture and storage.
Five key themes throughout each of our recommendations
- Taking on risk: Public investment is not bound by private companies’ need to achieve short-term financial goals and thus is empowered to pursue high-risk, high-reward energy development projects that could have a large payout in the future (think jobs, energy security, grid stability, decarbonizing energy-intensive industrial processes). The public sector is in a unique position to bridge the gap between testing and deployment. Public funding can incentivize projects to advance and iterate on new technologies until private companies are willing to significantly invest and enable the technology to be competitive in energy markets.
- Catalyzing research and development: Funding for private research and development can support rapid technology acceleration, and funding for national labs and universities can help provide unbiased R&D support, as well as an unbiased roadmap to technology adoption. In addition, large-scale public investment inherently signals to industry participants that the industry is expected to play a significant role in the future, triggering a cycle of increased investment from the private sector.
- Establishing standards and best practices: Federal agencies are uniquely positioned to provide a common source for the development of best practices. These practices are necessary to ensure technology deployment, equity, safety, and efficacy of nascent energy types like SHR.
- Fostering collaboration: Achieving commercialization of superhot rock energy will be the result of a series of technology innovations in numerous areas, including drilling, stimulation, well completion, power production, and more. Work in these spaces occurs across a diverse set of stakeholders who are at risk of working in siloes. Federal programs can help SHR develop by encouraging collaboration between stakeholders at every level, including international allies, government agencies, academic institutions, and private companies.
- Expanding the size of the prize: The United States trails other countries in its investment in geothermal energy innovation. However, fossil fuel companies based in the U.S. hold nearly all of the skilled workforce and supply chains required for producing next-generation geothermal energy. Unlike many of the leading countries, the U.S. has a unique opportunity to rapidly scale up geothermal technologies by harnessing existing supply chains and become a global leader in the development of clean, 24/7 electricity.
Superhot rock energy is promising, but federal support is critical
Next-generation geothermal technologies, such as superhot rock energy, have the potential to make the United States a leader in the global energy transition. Harnessing the Earth’s unlimited source of heat energy could rapidly accelerate the decarbonization of U.S. energy sources and ensure energy security and economic prosperity in the U.S. and beyond. And while there is interest from a variety of stakeholders to advance this innovative, 24/7 energy source, support from the public sector is critical to addressing the challenges outlined above. As momentum continues to build rapidly around next-generation geothermal energy, the federal government has the unique ability to bring this technology from early maturity to commercial deployment.