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If you read about the energy industry in the ’00s and ’10s, you probably caught some excited, hopeful stories about geothermal, the renewable energy source that harnesses heat hundreds of meters below the earth’s surface. “Enhanced geothermal” — a novel approach in which fluids are poured deep underground, heat up, and then are recovered for their steam heat and used to generate electricity — got particular attention, because it promised a geothermal technique that could work most places on earth, not just in volcanic areas like Iceland or Indonesia.
Enhanced geothermal is “increasingly being eyed as an enormous potential source of pollution-free energy,” science journalist David Biello wrote all the way back in 2008. Enhanced geothermal has “often been touted as the answer to the tepid growth of the geothermal industry,” reporter Megan Geuss wrote in Ars Technica in 2014, already with a bit of jaded weariness that the promises were yet unfulfilled. Startups like AltaRock Energy got press for their promises of a clean energy source, deployable in any geography, that still worked when the sun wasn’t shining and the wind wasn’t blowing.
But as of 2022, a mere 0.4 percent of US electricity generation came from geothermal. That’s some eight times less than solar, 25 times less than wind, and 45 times less than nuclear. If that weren’t depressing enough, consider those numbers still meant the US produced more geothermal electricity than any other country that year, even surpassing heavily volcanic Indonesia.
But some significant breakthroughs have recently earned geothermal renewed attention. Fervo Energy, an enhanced geothermal company, announced that it was able to build and perform tests on a well in Nevada for 30 days, which it claims is capable of generating 3.5 megawatts of power. That’s not a lot (a typical natural gas power block produces over 800 megawatts), and it’s still much more expensive to produce than solar or gas power, but it’s the furthest an enhanced geothermal project has gotten to date. Last year, Energy Secretary Jennifer Granholm announced a major initiative promising to slash the cost of geothermal generation by 90 percent by 2035. That announcement put the current cost at about $450 per megawatt-hour, compared to around $30 to $50 for onshore wind and solar.
On one reading, geothermal is finally getting the private finance, the technical progress, and the government support it needs to thrive. But having read the old press, I had a more pessimistic reaction. Is this turning point for geothermal for real, or just more hype? And if it is for real, what took so long? We have known for decades that geothermal has the potential to provide carbon-free energy that, unlike rapidly growing wind and solar, is constantly available, which we desperately need. Why, then, is its market share still stuck at 0.4 percent? What went wrong, and how can we fix it?
Why enhanced geothermal is promising, and why it hasn’t happened yet
The crust of the earth (the outer layer on top of which we all live) contains a lot of heat, ultimately generated by the radioactive decay of elements in the mantle, which sits below the crust. So beneath us, at all times, are deep rock formations with regular temperatures far hotter than those above ground. In certain locations, these rock formations also contain considerable amounts of fluid (mostly water with some salts in it). When these boiling fluid reservoirs burst through the surface, they appear as hot springs.
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Those sources have provided heat for centuries, and in 1904 the first successful effort to use this liquid to spin a turbine for electrical generation occurred in Italy. A key limitation, though, is that most areas of the earth do not have easily accessible and/or sufficiently large reservoirs for this kind of “hydrothermal” system to work. Iceland runs largely on geothermal, but it’s very much the exception, and a beneficiary of an unusual geology that leads to a volcanic eruption every five years on average.
This has provoked a search for geothermal methods that are not limited to places with existing, accessible reservoirs of water underground. Perhaps the most famous is “enhanced geothermal” (EGS), which Fervo and other companies are pursuing. The idea here is to drill deep into the earth, pour in a liquid to be heated by the hot rocks down there, and then provide a way for steam or very hot water to exit, either to use directly for heat or to spin a turbine.
If successful, this approach would mean that geothermal plants could be built in a wide range of areas, with many different geologies. That would provide a useful source of low-carbon “base load” power: a source, like hydroelectric dams or nuclear plants or most coal plants, that produces a consistent electric output all the time. That would be invaluable in moments when intermittent sources like solar and wind are insufficient to meet energy demand.
In the mid-’00s, experts believed that we had the technical tools to vastly scale up enhanced geothermal. A panel report released in 2006 by an MIT-led team concluded, “Most of the key technical requirements to make EGS work economically over a wide area of the country are in effect, with remaining goals easily within reach.” But in the 17 subsequent years, surprisingly little progress has been made.
Jefferson Tester, then a professor at MIT and now at Cornell, chaired the panel behind that report. When I asked him what happened, he pointed me to the report’s recommendations: accelerated permitting and licensing for geothermal projects, loan guarantees for businesses, tax credits and portfolio standards like those that benefit wind and solar, large investment from the Department of Energy (DOE) in setting up demonstrations in a large number of locations. Very little of that actually happened — and the problem is that very little isn’t enough to get geothermal going.
“The scale of geothermal is such you can’t do it just by putting up a solar collector or one wind turbine somewhere,” he explains. “You have to do it at a reasonably higher scale, which means there has to be more net money put in at the front end to drill holes and to evaluate that resource.”
Compare geothermal to solar power. A solar plant is just an array of individual solar panels, each of which might cost a few thousand dollars. It’s totally doable for a small company without much capital to build out a single panel and show that it works — which is precisely what’s happened, as solar generation grew globally from around 1 TWh in 2000 to nearly 1,300 TWh in 2022.
Geothermal drilling operations, by contrast, are massive, much more expensive endeavors. The largest federally supported demonstration, the FORGE project in Utah, has an initial budget of $220 million, with another $115 million in funding expected. That is well outside the budget of most energy startups, and the kind of thing where government support is usually necessary. Part of why Fervo’s breakthrough raised so many eyebrows is that, according to company claims, most of its funding is private. CEO Tim Latimer says the company has raised over $200 million to date, only a small share of it from DOE. Getting that level of funding for a geothermal endeavor is highly unusual.
There have been occasional bursts of federal interest in supporting the technology, but they’ve been partial and abortive. The 2009 Obama stimulus included $368.2 million earmarked for the Geothermal Technologies Office at DOE, but negative headlines followed when some supported projects struggled. Although the loan guarantees actually wound up being profitable, they earned huge Republican opposition in Congress that prevented the program from continuing. Throughout the 2010s, the investment tax credit (ITC) included in the corporate income tax as a subsidy to clean energy offset 30 percent of the cost of solar and wind projects, but only 10 percent for geothermal.
“By the early 2010s, natural gas prices got really cheap, solar prices got really cheap, and the market support for geothermal basically evaporated,” Latimer told me. “The irony is that tech for drilling got really good by the early 2010s,” as fracking transformed the oil and gas sector, helping drive those cheap natural gas prices. “But there was no investment or market demand for geothermal. It was this cool technology that just had nowhere to go.”
The typical tools used for supporting renewable energy also might not work as well with geothermal. The loan guarantee program, for example, is primarily for projects ready for commercialization, with minimal technical progress needed — just add money. “What they fund meets a certain threshold of proven commercial viability,” Arnab Datta, a senior counsel at Employ America who has studied policy barriers to geothermal, tells me. That doesn’t describe most enhanced geothermal, where commercial viability hasn’t yet been shown.
Equity investments — which provide more upside for investors if a project succeeds while minimizing risk for companies should they fail — might work well, but government accounting rules treat such investments as grants and assume they will never make back any money. Normally, government budgeting operates on a cash flow basis, and in an equity investment, the only cash flow at the time of investment is from the government to the firm in which the government bought equity. But the effect is that even government offices authorized to make such investments are hesitant to do so, knowing they will never be credited, either politically or in their future budgets, for any money earned.
Is geothermal finally turning around?
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Fervo’s bet is that progress in drilling technology due to the fracking revolution in oil and gas has changed the dynamics that have historically held geothermal back. Historically, geothermal projects have involved drilling vertically downward. But fracking has made horizontal drilling cheaper, which enabled a different approach Fervo is using: drilling vertical wells several hundred meters apart, and connecting them underground through horizontal drilling. They argue this lets them move fluid along a larger segment of rock underground, producing more steam and making the well more efficient.
Fervo claims its system is ready for commercialization: It just needs to scale up the test well that it’s already shown works, and it’ll be in business.
Still, there are hang-ups. Geothermal drilling, unlike some oil and gas projects, is subject to challenge under the National Environmental Policy Act (NEPA), which can lead to years-long regulatory delays in getting projects off the ground. (Yes, you’ve read that right — it’s legally easier to permit an oil or gas well that will add further greenhouse gases to the atmosphere than it is to drill geothermal wells that can provide near-zero-carbon electricity.) Adding in a “categorical exclusion” for geothermal, similar to that for oil and gas, could help a bit. So too would directing some of the resources in the Inflation Reduction Act and the 2022 infrastructure law toward geothermal projects in the stage between speculative R&D and full-scale commercialization.
“Theoretically, the place that should be doing this is the Office of Clean Energy Demonstrations, which has about $25 billion,” Datta says. “But that doesn’t have the authority yet to fund exactly this type of thing.” It would need more direct authority from Congress to deploy that money for large-scale geothermal demonstrations. With authority to support geothermal, OCED could use the kinds of creative funding mechanisms it has used to promote the hydrogen industry to geothermal companies.
Some critics are also worried that enhanced geothermal is not as ready for primetime as boosters like Latimer claim. “I think Fervo has done an incredible job of raising money, getting customers, raising awareness, etc.,” Austin Vernon, an engineer who writes extensively on geothermal, told me in an email. “But if you read their paper they were losing 10-20 percent of the fluid they circulated. The cost of that water would be more than the electricity is worth in most wholesale markets.”
Worse, he claims, “if you are losing that much fluid in the granite you are almost certainly going to induce seismicity on longer time horizons.”
This is not a theoretical concern. In 2017, a geothermal project in South Korea caused a 5.5 magnitude earthquake, which luckily did not kill anyone but did cause dozens of injuries. A sizable enough earthquake problem could not only doom specific geothermal pilots but also lead to a perception of the whole technology as dangerous.
Fervo, naturally, disputes these critiques. The 10 to 20 percent figure, Fervo’s Latimer tells me, “is actually a positive result and good news for project viability as the number will only decline from there.” He disputes the notion that this “leakoff” will result in increased seismic risk, because Fervo’s projects “bring injected fluid back to the surface, limiting stress state changes.”
Vernon is more optimistic about “closed loop” systems, like the one the company Eavor is building in Germany, in which horizontal drilling is used to place an enclosed pipe that runs from one well to another. That way, the fluid is never released directly into the rock, meaning you don’t need to worry about losing it or it causing earthquake problems; he notes that Fervo itself could easily pivot to this kind of system. Even without liquid concerns, Vernon argues that geothermal’s niche will be in providing hot water directly to heat buildings (like a massive underground radiator) or provide steam to factories, rather than producing electricity, given the efficiency losses involved in converting steam to electricity. Useful, but not exactly world-changing.
The ultimate dream is “superhot rock energy.” wherein geothermal firms would drill 4 kilometers or even deeper into the earth’s crust, to the point where the surrounding rocks exceed 400 degrees Celsius (752º F). At this temperature, and sufficient pressures, water goes “supercritical”: Liquid water and steam become indistinguishable and hold more energy, which enables turbines to operate much more efficiently. That could make electricity generation much more viable.
“Imagine if you could drill down next to a coal plant and get steam that’s hot enough to power that plant’s turbines,” the CEO of Quaise, a startup attempting to develop this technology, told the New York Times’s Brad Plumer. (The reason coal plants burn coal, after all, is to generate steam to power electric turbines, which is why coal and natural gas and, for that matter, nuclear plants are all known as thermal power plants.) “Replacing coal at thousands of coal plants around the world. That’s the level of geothermal we’re trying to unlock.”
This vision is incredibly exciting, because it offers the promise of ultra-low-cost, ultra-abundant zero-carbon energy basically anywhere on earth, a form that could seamlessly fit into existing energy infrastructure. It would mean not just cleaner energy, but more energy. Vernon and analyst Eli Dourado wrote a report laying out what the economy could look like with ultra-abundant geothermal, nuclear, or solar power: It includes things like vertical farming (enabling massive food production on a tiny land footprint), intercontinental travel via rocket, and mass desalination to end water scarcity around the world. It’s all very sci-fi.
For the time being, the “fi” part still applies: We simply do not have the technology to drill deep enough to access this geothermal resource right now at a reasonable cost. (The deepest hole ever drilled in the earth, the 7.6 mile/12.2km Kola Superdeep Borehole in the Russian Arctic, took decades before ultimately being abandoned.)
What super-deep drilling, Fervo’s enhanced geothermal project, Eavor’s “closed loop” project, and every other next-gen geothermal project have in common is a need for patient capital investment, perhaps through government subsidy. There are major steps needed to make that happen, but they tend to be fairly technocratic: empowering more equity investments from the Energy Department, offering a categorical exclusion to geothermal projects, empowering the Office of Clean Energy Demonstration to spend big on geothermal. They seem, in other words, like the kinds of things that even a divided Congress might be able to make happen, not ridiculous pie-in-the-sky aspirations.
If the economics can be made to work, geothermal would provide a renewable energy source that’s always on, and that employs plenty of ex-oil and gas workers, to boot. That has been its promise for decades. Maybe the 2020s will end up being the time that promise is finally fulfilled.
