Overview
Geothermal energy has emerged as a rare winner from President Trump’s government-wide effort to unwind Biden-era federal support for renewable energies. The technology, which uses heat drawn from the earth’s crust to create electricity, is seen as a potential answer to the increasingly urgent conundrum of how to power crucial, but power-hungry, data centers, and is being championed on both sides of the aisle. Geothermal energy – which currently provides less than 0.5% of the US electricity supply – is being touted as the answer to the US’ looming electricity demand crisis and a secret weapon to overtake China in next-generation technology development, creating significant upsides within the energy sector and for the high tech industry writ large. However, the technology still faces an uncertain regulatory environment, high costs, and concerns about environmental damage. Further, the rise of geothermal – as the bipartisan renewable of choice – may come at the expense of other clean energy sources, further destabilizing the renewable industry and progress towards decarbonization.
What is Geothermal Energy?
Simply put, geothermal energy is energy generated by latent heat within the earth. Constant radioactive decay of unstable isotopes in the earth’s core produces the vast majority of geothermal heat, with a smaller fraction produced by friction and gravitational pull. Geothermal energy is typically used for basic heating and cooling by accessing warm water from shallow sources like hot springs. Another way is to use geothermal heat pumps, which drill some three to 90 meters into the earth’s crust and use the earth’s heat to warm homes in the winter or act as a heat sink in the summer.
Harvesting geothermal energy for electricity is more involved but is increasingly the subject of significant optimism in the public and private sectors. Geothermal power plants use water heated by geothermal heat to generate steam, power turbines, and generate electricity. In areas with underground heat but no natural water (geothermal, not “hydrothermal”), a new technique called enhanced geothermal system (EGS) is used. EGS involves drilling into hot bedrock, fracturing it, and injecting water to create a reservoir of underground heated fluid. EGSs can cause seismic activity, even after the injection has halted, as the reservoir expands and settles. Despite this, EGSs are considered extremely promising by the geothermal industry for expanding the geography of where geothermal energy can be tapped.
There are three types of geothermal power plants. Dry-steam power plants, the most straightforward and oldest type of geothermal electricity production, use natural underground steam reservoirs which are piped directly into the power plant and used to fuel turbines and generate electricity. There are only two naturally occurring sources of underground steam in the US – Yellowstone National Park, a protected area, and The Geysers in California, which houses one of the largest geothermal energy complexes in the world and provides about a fifth of all renewable energy in the US. Unlike dry-steam power plants, flash-steam power plants pump the heated water into a low-pressure area, where some of the water “flashes” or evaporates rapidly into steam, which is then piped out to power a turbine. Flash-steam power plants are the most common variety of geothermal power plants and are widespread in tectonically or volcanically active areas, like Iceland and the Philippines. Binary-cycle power plants, which are growing in popularity, use geothermal heat reservoirs that are not hot enough to generate steam. Warm water flows through the power plant in a pipe and transfers heat to a liquid organic compound (like industrial refrigerant) with a lower boiling temperature than water. This secondary liquid creates steam, which in turn powers the generator.
Positives and Negatives
The rising popularity of geothermal as an alternative energy source stems from several significant advantages it has over traditional energy sources and even other renewable technologies. Geothermal energy plants have very low emissions, emitting 99% less CO2 than fossil fuel plants of a similar size. A study of the Ohaaki geothermal project in New Zealand found that given the natural outflow of CO2 from venting gasses at geothermal sites, no additional CO2 is added to the atmosphere as a result of the operation of the power plant. Unlike wind or solar, the energy produced by geothermal plants is constant and uninterrupted, allowing developers to make stable, long-term output predictions. While not as inexhaustible as the sun or the wind, geothermal energy hotspots are almost indefinitely renewable if properly managed as the earth is expected to continue producing latent heat for billions of years. If water is not reused (perhaps due to risks of destabilization by reinjecting cold water into geothermal sites), the water used in binary-cycle plants is encased in piping, not exposed to pollutants, meaning that it can be repurposed for other uses.
Practically, the biggest drawbacks to geothermal energy are costs and site availability. The initial drilling of reservoirs is expensive – in 2021, the capital costs for conventional geothermal power plants in the US were about $2,500 per installed kilowatt hour (kwh) of capacity, almost $1,000 more than solar. While suitable geothermal sites in the US are plentiful (a recent study by the US Geological Survey (USGS) found that geothermal sources in Nevada’s Great Basin region could provide up to 10% of the country’s electricity supply), a geothermal energy advocate told the House Committee on Natural Resources that roughly “90%” of suitable sites are on federally-managed land. This poses not only permitting and access concerns but environmental ones, given that many promising sites are in environmentally protected areas.
There are further environmental concerns. While geothermal energy is a renewable resource, individual geothermal reservoirs are not inexhaustible. Wells that extract heat will eventually cool, especially if heat is extracted too quickly. The world’s first geothermal electrical plant in Larderello, Italy, has seen its steam pressure fall by more than 25% since monitoring began in the 1950s. While reinjecting water can help forestall cooling, doing this can cause small earthquakes, just like EGSs. Geothermal plants have also been linked to subsidence or land sinking, a phenomenon that can cause sinkholes in extreme cases and damage to infrastructure like pipelines and roadways in milder cases. Finally, the potential construction of geothermal power plants in federally protected areas will disturb and damage fragile ecosystems.
Geothermal: Enabling US AI Boom?
Geothermal energy – until now rarely a headline renewable – has garnered increasing attention as bipartisan efforts to build geothermal capabilities have gained steam. While the Trump administration has been openly antagonistic to wind and solar power, geothermal has been dubbed an “awesome resource” and was included, alongside oil and gas and nuclear, in the President’s day one national energy emergency executive order. Geothermal is being touted as part of the answer to the US’ looming data center power crisis: AI is set to drive surging electricity demand from the construction of new data centers, with data center load growth projected to double or triple by 2028 to consume up to 12% of all electricity generated in the US. Powering AI data centers, enabled by increasingly powerful chips and intensive cooling systems, is considered an economic imperative as the US competes, primarily with China, to foster a cutting-edge economy. A recent study by the Rhodium Group found that geothermal power could meet some 64% of data center power needs by the early 2030s, or 100% of demand if data centers are located near prime geothermal sites. Geothermal is argued to be especially well-suited to meet rising data center power demands due to its high-capacity output, geographic dispersion, and sheer volume of untapped power.
Geothermal also benefits from being less reliant on a Chinese supply chain to scale. Analysts have suggested that geothermal drilling rigs, a key component in geothermal projects, are largely similar to the rigs used in traditional oil and gas extraction, opening up a vast secondary market for geothermal developers and reducing reliance on foreign heavy industry manufacturing. The majority of the manufacturing of ORC turbines, the turbines that are spun by steam to generate electricity, are already produced outside of China (per a Carnegie Endowment paper, some 99% of ORC turbine output is outside of China). Meanwhile, wind and especially solar heavily rely on the Chinese-dominated green technology supply chain, making geothermal understandably more popular in Washington amidst the stop-start US-China trade war.
Geothermal energy has long garnered bipartisan support. Federal momentum for geothermal energy began to build prior to Trump’s second term in office. The Energy Act of 2020 included a mandate for the USGS to assess geothermal energy potential across the entire US, and the Biden administration in 2022 announced a target to reduce the costs of geothermal energy to $45 per megawatt-hour (MWh) by 2035 (a once lofty goal that seems increasingly possible, in large part due to EGS technology).
However, as a green energy technology that was also supported heavily by Biden-era efforts to supercharge the domestic renewable sector, geothermal is also caught up in the President’s efforts to walk back renewable investment, resulting in an uncertain regulatory market. On the one hand, the geothermal sector stands to benefit significantly from Trump’s efforts to slash red tape around permitting new energy developments, given that many geothermal sites are on federal land. Trump’s Department of Energy (DOE) has also hinted that the billions under management by the DOE’s Loan Programs Office could be diverted away from wind and solar projects to “emerging tools” like geothermal, which has not received a new DOE loan since 2011. On the other hand, the industry is a beneficiary of Biden’s clean energy tax cuts, which are on the chopping block currently as the Senate considers President Trump’s “big, beautiful bill” on taxes. The version passed by the House indiscriminately slashed credits, including for geothermal, but bipartisan members of Congress have since called for the Senate to reconsider geothermal credits for the final version.
Despite regulatory uncertainty and high costs, rising momentum for the geothermal industry presents significant upside risks for the high-tech industry. Amid President Trump’s “energy security national emergency,” geothermal is the rare renewable, low-emission, and low-impact energy set to receive significant government support. The US has thus far tapped just 0.7% of potential geothermal electricity resources, a number that is certain to rise in the coming years as the Trump administration aggressively streamlines permitting for energy projects – a trajectory that could lower costs for data centers, consumers, and other businesses, as well as enable the Trump administration’s accelerating decoupling from the Chinese tech supply chain. On the other hand, the rise of the industry poses downside risks for more established renewable tech, as well as for nature conservation. Ultimately, however, geothermal’s ability to scale – to be determined in large part by the final version of President Trump’s tax bill – will set costs and make or break the technology’s ability to make good on its lofty promises.
