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Was 2024 a breakout year for next-generation geothermal energy?

By Rachael TisonJanuary 2, 202511 min read

Geothermal startups hit funding and project milestones this year, buoyed by growing demand for carbon-free energy from data centers, factories, and EVs.

Geothermal energy today plays only a minor role in the U.S. electricity mix. Most of the country lacks natural features like hot springs and geysers, where Earth’s simmering heat is relatively easy to reach.

But an array of next-generation technologies is emerging that can access geothermal resources in places where conventional tools can’t. Meanwhile, the country’s soaring electricity demand — spurred by the data-center boom and the electrification of vehicles, buildings, and factories — is accelerating investment in new geothermal systems as companies seek out carbon-free energy available around the clock.

Thanks to these developments, “This very well may be geothermal’s breakout moment,” said Jamie Beard, founder and executive director of the nonprofit Project InnerSpace.

In 2024, startups including Fervo Energy, Sage Geosystems, Eavor, and Quaise Energy raised significant funding and hit key milestones to demonstrate their novel technologies. Tech giants like Google and Meta and major utilities committed to buying geothermal electricity to satisfy their growing energy appetites. And U.S. policymakers put forward legislation that could lift regulatory barriers for exploratory drilling on federal lands.

The momentum may well continue under President-elect Donald Trump and a Republican-controlled Congress. Geothermal is the rare energy source to garner bipartisan support — it’s a way to both reduce planet-warming emissions and put America’s drilling rigs and oil-and-gas engineers to work. Trump’s pick for energy secretary, Chris Wright, is the CEO of a fracking company that invested $10 million in Fervo.

Today, the country has about 3.7 gigawatts of geothermal power capacity, which supplied 0.4 percent of total U.S. electricity generation last year. But the U.S. Department of Energy (DOE) estimates that geothermal could provide up to 90 GW of flexible, baseload power to America’s grid by 2050, complementing the surge in intermittent renewables like wind and solar power.

Worldwide, next-generation geothermal might represent as much as 800 GW of clean electricity capacity by 2050 — or roughly 50 times the world’s current geothermal capacity, according to a new analysis by the International Energy Agency and Project InnerSpace, which advocates for geothermal heat and power use globally.

For all of the progress in 2024, the geothermal industry still faces major hurdles and has far to go to achieve those numbers, experts say.

Venture-backed startups are struggling to access the types of private project financing and public investment needed to lower the high cost of exploring and deploying first-of-a-kind projects. Lengthy permitting delays and the backlog in the U.S. transmission-grid buildout are slowing the pace of development. Next-generation geothermal also faces reputational concerns that could hinder future progress, including the industry’s close ties with oil and gas firms and public uncertainty (or misconceptions) about environmental risks.

As it stands, the current pace of deployment isn’t enough for geothermal to make a meaningful dent in the world’s emissions, at least not in the near term.

“If geothermal is going to thrive and compete, it’s going to have to grow exponentially, not a little bit,” Beard said. “We’ve got a hell of a lot more to do.”

Fervo Energy drives down time, cost of drilling geothermal wells

Perhaps no geothermal startup made more headlines in 2024 than Houston-based Fervo.

The seven-year-old company is developing “enhanced geothermal systems,” which use the same horizontal drilling and fracking techniques as the shale-gas industry. The startup creates fractures in hard, impermeable rock deep underground, then pumps them full of water and working fluids. The hot rocks heat those liquids, eventually producing steam that drives electric turbines.

Fervo began operating America’s first enhanced geothermal project in late 2023, with backing from Google. Since then, the 3.5-megawatt pilot system in Nevada, named Project Red, has consistently provided power directly to the utility NV Energy for more than 12 months.

“It’s the most exciting, boring flat line ever,” Dawn Owens, Fervo’s vice president and head of development and commercial markets, said of the system’s performance.

In February, Fervo said that its experience drilling two horizontal wells for Project Red allowed the company to significantly improve its process — so much so that it reduced drilling times by 70 percent at its second project: the 400 MW Cape Station geothermal plant in Beaver County, Utah. The increased drilling efficiency helped cut costs nearly in half, from $9.4 million to $4.8 million per well, according to Fervo.

Also in Beaver County, the DOE-backed Utah Forge initiative said it improved drilling speeds at its enhanced geothermal research project by more than 500 percent in three years. The $220 million field laboratory recently received an additional $80 million from the DOE to fund the project through 2028.

“Both at Forge and companies like Fervo, the industry is seeing really dramatic drilling-cost declines and other cost declines, especially in the enhanced geothermal space,” said Katrina McLaughlin, a clean energy associate on the U.S. Energy team at World Resources Institute.

“That’s one of the things that makes it so promising” as an option for delivering clean electricity on demand, she said. McLaughlin noted that geothermal can also provide a “full suite of grid services,” including energy storage; black-start services to restore power after widespread outages; and grid balancing to ensure that power supply matches demand every second.

These qualities help explain why California’s utility regulator is looking to boost geothermal energy within the state — a push that is driving interest in developers like Fervo.

In August, the California Public Utilities Commission adopted a strategy for procuring massive amounts of clean energy to meet the state’s long-term climate goals and energy reliability requirements. The plan calls for adding up to 1 GW of geothermal, as well as 7.6 GW of offshore wind and 2 GW of long-duration energy storage. Separately, the commission’s 2021 midterm reliability decision requires utilities to procure an additional 1 GW from “clean, firm resources,” such as geothermal.

Spurred by the 2021 mandate, in June the utility giant Southern California Edison agreed to purchase 320 MW of power from Fervo’s $2 billion Cape Station project in western Utah. The companies declined to disclose the value of the power purchase agreements. But Fervo said that, in terms of megawatts, the deal is the largest of its kind for any next-generation geothermal project worldwide.

Fervo has so far drilled 20 of what will eventually be 80 wells for Cape Station’s two initial phases, with the project’s first 90 MW slated to come online in 2026, Owens said.

On December 19, the startup announced it had secured $255 million in new funding to support its ongoing work. That’s on top of a $100 million bridge loan and the more than $400 million in venture funding that Fervo has raised since 2017, including a round led this year by shale oil-and-gas company Devon Energy.

Other next-gen technologies get closer to producing heat and power

Enhanced geothermal is one of three main types of next-generation technologies and the nearest to commercial viability, followed closely by closed-loop systems. These projects circulate fluids through a long series of sealed-off tubes, collecting heat from rocks below and bringing it to the surface. The third and earliest-stage category — superhot rock — involves using cutting-edge drilling tools to access massive amounts of geothermal energy at extreme depths and temperatures.

The Canadian startup Eavor, which is pursuing the closed-loop method, made “terrific progress” in 2024 on its first commercial pilot project in Geretsried, Germany, said Jeanine Vany, Eavor’s executive vice president of corporate affairs.

The company is drilling a four-loop system that will supply 8.2 MW of electricity to the regional grid and 64 MW of district heating to nearby towns, with a grant of 91.6 million euros from the European Union. Vany said the first loop should start delivering power in mid-2025 and then heat in 2026. When completed, the novel geothermal system will reach nearly 2.8 miles below the surface and connect nearly 200 miles of boreholes underground.

“We’re learning and iterating as we go, and there are some speed bumps; things go wrong, tools break,” she said. “But we’ve done all of the things we need to do to demonstrate the commercial viability already.” Vany added that Eavor aims to have its first closed-loop systems deployed in the United States before the end of this decade.

Quaise Energy, a startup with MIT origins, is laser-focused on unleashing geothermal energy from the third category, superhot rock formations. The Cambridge, Massachusetts-based company is developing high-frequency beams that melt and vaporize rocks to tap resources that aren’t technically or financially feasible to reach with existing techniques.

In November, Quaise decided that it was ready “to go beyond the lab” and drill outdoors, said Carlos Araque, the company’s CEO and co-founder.

Quaise is now building machines to conduct two yard tests, with the first slated to take place at the company’s Houston facility in January. The second test involves drilling into rocks placed inside an existing well owned by Nabors Industries, one of Quaise’s investors. After that, the geothermal startup plans to conduct its first field test by boring a 330-foot-deep hole at a quarry outside Austin, Texas.

All those steps are intended to help Quaise validate its drilling technology — and raise significantly more funding — as it works to complete its first commercial pilot and begin producing superhot steam, potentially as early as 2026. On December 3, Quaise said it was partnering with Nevada Gold Mines to pursue another initiative: a “deep geothermal” power plant at a mining site in Elko, Nevada.

“Nothing but tailwinds is what I’ve seen,” Araque said of the geothermal industry in 2024. “The recognition of geothermal as an important piece of the puzzle has only gained traction year after year.”

Geothermal joins the race to supply 24/7 carbon-free energy

That recognition comes at a pivotal time for providers of “clean, firm” energy.

Soaring U.S. power demand is causing states, utilities, and major energy buyers to scramble for electricity. The country’s five-year forecast for load growth has increased almost fivefold in the past two years, to nearly 128 GW, driven primarily by tech companies’ plans to build giant AI data centers.

“It’s catapulting and helping to remove some of the development barriers” for geothermal, said Fervo’s Owens. She added that rising load growth, together with Fervo’s recent cost improvements, has changed the conversations the startup is having with potential off-takers.

“All of a sudden it’s ‘how much [power] can you give me, and how fast can you give me it?’” Owens said. “It feels like the industry and the world has woken up to the problem being real, and realizing that the solution is right there.”

Along with the Utah project, Fervo is developing a 115 MW geothermal plant in northern Nevada, which could start delivering electricity to the grid by 2029. This summer, Google and NV Energy sought state regulators’ permission to enter into a power supply agreement around Fervo’s project, based on a proposed “clean transition tariff.” The idea is that Google will pay a premium in order to help bring the carbon-free energy resource online faster, ideally without raising other ratepayers’ electric bills.

Meta, the owner of Facebook, is also turning to geothermal to support its data-center ambitions. But the tech company is partnering with a different U.S. enhanced geothermal startup: Sage Geosystems.

In August, Houston-based Sage announced plans to supply Meta with 150 MW of baseload geothermal power from a first-of-a-kind installation. The details remain vague, but Sage said it will build its geothermal system in a state “east of the Rocky Mountains,” with the goal of bringing the project’s first phase online in 2027.

That same month, the startup launched a separate geothermal project not for generating new electricity but for storing excess clean energy in the ground.

Sage is building a 3 MW installation in Christine, Texas, that will pump water underground and build up pressure that can be released as needed, spinning a turbine and sending electricity back to the grid. The company successfully tested its “earthen battery” system at an abandoned gas well in 2023. In February, Sage raised $17 million in Series A funding to advance the technology, in a round led by the pioneering fracking company previously named Chesapeake Energy.

Emerging success brings more scrutiny

Companies like Sage and Fervo say that they benefit from using the same tools and workforce as fossil-fuel companies. But there are key differences in how the two industries operate, said McLaughlin of World Resources Institute.

To extract oil and gas, shale developers use a slurry of toxic chemicals, sand, and water. Copious volumes of wastewater are then reinjected into old wells — a practice that has caused damaging earthquakes in Texas, Oklahoma, and other states. Scientific research has also shown that fracking practices have contaminated groundwater and surface water in some areas.

Closed-loop systems don’t directly inject fluid into the ground. Enhanced geothermal systems largely recirculate fluids and don’t produce lots of wastewater; they also typically use very few or no chemical additives to fracture rocks. Although earlier enhanced geothermal projects did trigger earthquakes in Switzerland, South Korea, and France, geothermal companies in the U.S. now follow DOE’s protocol to mitigate the risk of induced seismicity.

As next-generation geothermal projects multiply, the industry must stick to those protocols and be transparent about the types and volumes of fluids used for drilling to limit the risk of environmental impacts and community pushback, McLaughlin said.

“We see these measures as being something the industry can do to help it scale responsibly … and earn public trust,” she added.

Geothermal developers will also have to keep chasing the goal of “deeper and hotter” if the world’s enormous heat and electricity needs are to be met without cooking the planet, said Quaise’s Araque. Recent computer modeling suggests that a superhot system can deliver five to 10 times more power than is produced today from enhanced systems for up to two decades.

“The companies that are already in this space and are scaling geothermal … are just the tip of the iceberg,” he said. “Given the scale of the challenge ahead, this is not the end of the road. It’s just the beginning.”

Source: https://www.canarymedia.com/articles/geothermal/was-2024-a-breakout-year-for-next-generation-geothermal-energy