Building a clean, reliable, cost-effective power grid will require many different types of energy. The bulk will come from solar and wind; but since these aren’t available 24/7, 365 days a year, they must be paired with a smaller amount of clean, “firm” power that’s always available when needed. Geothermal energy, nuclear energy and hydropower all fit the bill — and many see geothermal as especially promising right now thanks to recent innovations.
Geothermal power has played a small role in the electric grid to date, supplying less than 1% of the world’s electricity. But the next generation of technologies could spark a geothermal renaissance, tapping into Earth’s heat energy in places where it has never been possible before. New geothermal technologies in development today are already rapidly falling in cost and could play an important role in achieving a zero-carbon energy grid affordably and reliably.
We analyzed the benefits, costs and potential risks of next-generation geothermal, zooming in on the U.S. to explore real-world opportunities for growing the industry quickly and safely. As these technologies continue to evolve around the globe, here’s what to know.
The Promise of Next-Generation Geothermal
Geothermal power has been in use for more than 100 years, but with limited reach. Conventional geothermal involves drilling into natural underground hot water reservoirs to access the earth’s heat, which turns steam turbines that generate electricity. This method can only be used in areas with naturally occurring heat, fluid and permeable rock; conditions that are relatively rare. As a result, conventional geothermal is confined to a small number of places, such as Kenya, Iceland, Indonesia and a handful of states in the western U.S.
By contrast, next-generation geothermal doesn’t require natural underground reservoirs. All it requires is the heat of the earth, which could be available nearly everywhere with the right technologies. This means it has the potential to unlock massive amounts of clean energy around the world.
In the U.S., geothermal energy capacity could cost-effectively grow from 4 GW today to 90 GW by 2050 and expand from seven to at least 18 states, according to the Department of Energy (DOE). DOE’s high-end estimates say it could reach 300 GW by 2050, which is about a quarter of the country’s total electricity capacity today.
This promise isn’t just theoretical. Several next-generation geothermal projects are already underway both in the U.S. and elsewhere, and major tech companies and electric utilities are actively signing deals for more geothermal power.
How Do Next-Generation Geothermal Technologies Work?
There are three primary types of next-generation geothermal energy in development. These use advanced drilling techniques — in some cases borrowed from the oil and gas industry — to access Earth’s heat and transform it into usable energy.
Enhanced geothermal systems (EGS) are currently the most advanced. EGS projects drill down into hot rock to create an artificial underground reservoir where there wasn’t one previously. This involves creating or expanding cracks in the rock through hydraulic fracturing (fracking) and other techniques. Water or another fluid is injected down one well, heats up as it circulates openly through the cracks, then is pumped up a separate “production well” to generate energy.
The U.S. Department of Energy has already funded several demonstration projects using this technology, including the FORGE project in Utah, which has played an important role in testing and developing the latest advances in EGS. The company Fervo Energy has one commercial EGS project operating in Nevada and another in development in Utah. Multiple European countries, including France and Germany, have variants of EGS projects operating.
Closed-loop geothermal systems use sealed wells arranged either in a single circuit or multiple circuits. Water or fluid pumped down through the well heats up without ever directly touching the rocks around it. Typically, no fracking is necessary. Closed-loop geothermal is slightly behind EGS in its stage of development, although the company Eavor is successfully operating a demonstration project in Canada and is working on its first commercial project in Germany.
Further away on the horizon is the prospect of superhot geothermal systems. These would use conventional, EGS or closed-loop geothermal technologies in superhot environments with rock over the 374-degree-C (705-degree-F) supercritical threshold, where water can hold far more energy per unit of mass. This would require nascent drilling techniques and technologies to get to deeper, more extreme environments. Multiple companies are beginning to explore these innovations, such as Quaise Energy and GA Drilling. If successful, tapping just a small amount of the total theoretically available superhot geothermal energy could singlehandedly meet all global electricity demand.
What Are the Environmental Benefits of Geothermal?
Geothermal has myriad benefits as an energy source. For one, it has extremely low lifecycle greenhouse gas emissions, on par with other renewables like solar and wind. While geothermal won’t replace wind or solar — which are the cheapest sources of clean energy — it offers a clean, firm option to supplement them as needed.
Unlike fossil fuel plants, geothermal plants emit minimal to no conventional air pollutants like particulate matter, sulfur dioxide and nitrogen oxide. That means they can avoid the human health risks, such as lung and heart disease, that have often plagued communities near fossil fuel plants.
While geothermal projects use more water than solar and wind, they require less than coal, nuclear, hydropower and biomass energy. These systems can also use non-freshwater sources, such as treated wastewater.
In addition, geothermal relies less on critical minerals like lithium and zinc that are in demand by other technologies, such as batteries. It can even be a source of critical minerals in certain cases. It does create some solid wastes, but less than coal, natural gas or nuclear plants.
Finally, geothermal has a smaller land footprint than other power sources. Conventional geothermal is second best only to nuclear in this regard. Next-generation technologies are also expected to have a substantially smaller footprint than fossil fuels and renewables.
What Are the Potential Risks?
Fracking for oil and gas has received much attention for contributing to earthquakes and contaminating groundwater. Enhanced geothermal systems, and potentially some closed-loop systems, also use fracking. However, fracking for heat resources is different than fracking for fossil fuels and generally comes with lower risks.
In the central and eastern U.S., the number of earthquakes has risen dramatically in recent years in line with the growth of fracking used in unconventional oil and gas production. However, fracking itself is not the primary reason for this. Unconventional oil and gas production methods cause huge buildups of pressure and produce large amounts of wastewater. Injection of this wastewater underground to dispose of it is the primary cause of human-induced earthquakes. In the Permian Basin in Texas, which is the biggest oil field in the country, only 5% of all human-caused seismicity is attributed to fracking while approximately 95% is attributed to wastewater disposal wells.
By contrast, geothermal energy keeps water circulating, maintains consistent pressure, and does not produce large amounts of wastewater that must be disposed of. Without the primary cause of earthquakes, and with the right safeguards in place, earthquake risks are lower for geothermal systems than for oil and gas.
Still, that doesn’t mean the risk can be ignored. Several earthquakes that caused damages in France, Switzerland and South Korea were likely linked to EGS projects, particularly those located near natural faults or with poor underground mapping. These types of incidents need to be prepared for and avoided. In the U.S., most EGS projects receive at least some federal government funding and therefore must comply with the Department of Energy’s Induced Seismicity Protocol, which has successfully avoided earthquakes related to enhanced geothermal for over a decade.
Fossil fuel fracking has also raised concerns about impacts on water supplies. Fracking for oil and gas typically involves the use of chemical additives in the fracking fluids, which can contaminate water supplies. By contrast, fracking fluids for EGS have very little to no chemical additives, though this varies by project and may change as the industry continues to grow and innovate. Underground geothermal systems are also thoroughly protected and sealed in the areas where they pass through aquifers, which limits the possibility of contact with groundwater. To date there have been no cases of groundwater contamination from geothermal projects.
Is Next-Generation Geothermal Affordable?
The costs of next-generation geothermal have already fallen dramatically, with big potential for further reductions. Drilling rates at the DOE FORGE site in Utah improved 500% between 2017 and 2022. For Fervo Energy, the costs of drilling fell from $1,000 per foot in its first project to $400 per foot in the second. The latest modeling estimates find that, on average, EGS projects at optimal depths would cost $64 per megawatt-hour (MWh), which would be competitive with solar plus battery storage and cheaper than conventional geothermal.
Closed-loop projects are typically less efficient and therefore more expensive than EGS, but those costs have potential to improve as well as technology advances.
It’s worth noting that costs will vary substantially by region depending on the local geology. In the U.S., Western states will likely see the lowest costs, but many parts of Eastern states are promising as well.
Although costs are still dropping, companies are already signing deals for next-generation geothermal as they seek the benefits of an always-on clean power source. For example, Google has agreed to pay a premium for next-generation geothermal energy purchased by NV Energy from Fervo Energy as part of an innovative “Clean Transition Tariff.” Southern California Edison (one of the state’s largest electric utilities) has also entered into two power purchase agreements with Fervo. Meanwhile, Meta recently signed a deal with Sage Geosystems.
What’s Needed to Scale Up Geothermal Power?
Next-generation geothermal is already showing immense promise, but more support is needed to clear the remaining hurdles and grow it fast enough to meaningfully contribute to a zero-carbon grid.
1) More government funding
Next-generation geothermal has received some U.S. government support already, but it is in the millions of dollars rather than the billions of dollars provided to other clean energy technologies. The federal government should invest in research, development and demonstration to reduce costs of existing techniques, develop and validate new techniques and materials, and support mapping of underground heat resources, which will all help commercialize the industry.
One major barrier to next-generation geothermal is that drilling and well creation requires high upfront spending years before a project begins bringing in revenue. And interest rates are higher for next-generation geothermal projects given that it’s a nascent industry.
These costs will go down as the industry develops, but in the meantime, the government could help by de-risking exploratory drilling. It could provide financial support such as loan guarantees, cost-sharing programs or drilling risk insurance programs. The government helped kick-start the conventional geothermal industry in the 1970s and 1980s; now it can do the same for next-generation geothermal energy.
More broadly, the government can support the uptake of all types of clean, firm power sources through procurement requirements and reforming grid and market rules to give these technologies the high prioritization they deserve.
2) Faster permitting
Next-generation geothermal projects can be developed in a wide variety of locations, but many will be on lands managed by federal and state government and subject to mandatory environmental reviews. These reviews serve an important purpose, but the processes can be lengthy and uncertain. This is often due to a lack of government staff capacity, limited knowledge on geothermal energy, and overlapping jurisdictions between agencies that haven’t always been clearly defined. A geothermal project sited on federal land may trigger official National Environmental Policy Act reviews up to six times.
Federal and state government should help expedite permitting by increasing funding for relevant agencies like the Bureau of Land Management and helping coordinate and centralize permitting across all agencies that work on it.
In addition, the Bureau of Land Management recently proposed a categorical exclusion which would allow geothermal to skip an environmental review at the exploratory drilling stage and thus speed up timelines. (Other project stages would still go through environmental review.) It may be appropriate for the federal government to expand categorical exclusions for exploratory drilling on federal lands in circumstances where data shows the project is not expected to have significant environmental impact.
3) Guardrails to minimize risks
The government and private sector should proactively address environmental risks and concerns by commissioning new environmental impact analyses to assess next-generation geothermal technologies as they evolve.
Moving forward, the government should require the use of DOE’s Induced Seismicity Protocol for all projects, whether or not government funding is involved. The protocol requires companies to do extensive site evaluation, set up seismic monitoring networks, complete risk hazard assessment, communicate with local stakeholders, and create a management plan that includes explicit rules to adjust or stop activities when certain risk thresholds are exceeded.
It will also be important to enable the public disclosure of any chemical additives that end up being used in geothermal fracking fluids to guard against groundwater pollution risk. NGOs could expand the existing voluntary disclosure database for fossil fuel fracking fluids to cover geothermal fracking fluids. Governments could make disclosure a requirement.
Completing the Clean Energy Puzzle
Clean, firm power is a missing piece of the 100% clean energy puzzle. Having dispatchable sources of power that are available when needed is key to cost-effectively and reliably decarbonizing the power grid. Geothermal energy can help fill this need. What’s more, the benefits of geothermal aren’t limited to the electricity sector — geothermal energy can also be used to decarbonize the buildings and industrial sectors.
The latest geothermal innovations are unlocking new possibilities but commercializing them will require multiple generations of demonstration projects. Given the urgency of the climate crisis, the more we can accelerate the development of next-generation geothermal, the better.
For more information, read WRI’s issue brief: Next-Generation Geothermal: Overview and Considerations for Responsible Development
