When geothermal startup Fervo Energy went out for its first round of venture capital funding in 2018, it pulled in $500,000, co-founder and CEO Tim Latimer recalled. “It’s just not a sector that the investment community was excited about.”

Fast forward to 2024, and investments in the company — which uses fracking technology to tap into hard-to-reach geothermal reservoirs — totaled just under $500 million, Latimer told the audience at a panel discussion hosted by the Atlantic Council on Feb. 20 in D.C.

The company’s roster of investors now includes cleantech leaders like Bill Gates’ Breakthrough Energy Ventures, as well as Devon Energy, a major oil and gas producer based in Oklahoma.

“I think this is a perfect example of the oil and gas industry getting into [geothermal],” he said. “People are viewing this as a bankable, mature technology for the first time. … It just has all these solutions that the world needs right now in terms of an energy resource, and so there’s enormous momentum to widen the aperture for what geothermal can do, and the technology to get it done.”

High-tech companies are looking for 24/7, carbon-free electricity to power their massive artificial intelligence data centers, and the “enhanced” geothermal systems developed by Fervo and others are increasingly seen as an essential part of the portfolio of resources that will be needed.

Fervo’s first demonstration project in Nevada is now providing power to Google data centers under an innovative “clean transition” tariff. The company is building its first utility-scale plant in Utah, with Southern California Edison signed up for two 15-year contracts for 320 MW.

Building on oil and gas industry buy-in, enhanced geothermal also has broad bipartisan support at the federal and state level.

The U.S. only has about 3 GW of geothermal energy online, most of it in California. But the Biden administration saw enhanced geothermal systems adding as much as 300 GW of new capacity to the grid by 2050, according to a report issued by the Department of Energy in March 2024.

New Energy Secretary Chris Wright is also a fan. Liberty Energy, the fracking company he led prior to being tapped to lead the department, is another one of Fervo’s investors, and in his first order as secretary, Wright listed geothermal as one of the advanced technologies the Trump administration will continue to develop and support.

Colorado Gov. Jared Polis (D) launched a regional effort, the Heat Beneath Our Feet Initiative, during his term as chair of the Western Governors’ Association from 2023 to 2024.

“If you look at a map of natural geothermal resources in the United States, you’ll see the West is a hot spot — pardon the pun, but it really is,” Polis said in an onstage interview with Jeremy Harrell, CEO of ClearPath, an energy policy nonprofit. “That’s where it is likely to be, and is, most economical, most deployable, [with] the highest levels of heat subsurface.”

Polis worked to restructure his state’s oil and gas commission into the Energy and Carbon Management Commission. While continuing to permit oil and gas projects, the renamed commission is now permitting geothermal in “an analogous way,” he said.

“They’ve done their rules around that in consultation with the industry and set up what I think is one of the most expedited, reliable permitting regimes for geothermal in the country,” he said.

The final report on the Heat Beneath Our Feet Initiative similarly calls for geothermal exploration to receive the same tax incentives as oil and gas exploration, a proposal that “has big bipartisan support in Congress,” Harrell said.

The Oil and Gas Connection

Traditional geothermal power plants draw superheated liquids from naturally occurring underground reservoirs to the surface to create steam to run turbines. These plants are typically located near underground tectonic rifts, meaning they are geographically limited.

For example, Iceland sits on the Mid-Atlantic Ridge, where the North American and Eurasian tectonic plates meet, allowing the island country to run its heat and electricity largely on geothermal energy.

The enhanced geothermal technology developed by Fervo and others uses the fracking and horizontal drilling technologies developed by the natural gas industry to tap into dry “hot rocks.” With horizontal, or directional, drilling, Fervo can drill multiple wells from a single site on the surface, according to the company.

Increased efficiencies in drilling are bringing down prices, according to the 2024 DOE report. The national average cost of enhanced geothermal could fall to $60 to $70/MWh by 2030 and drop still further to a highly competitive $45/MWh by 2035.

The quick movement down the price curve is drawing more investment to Colorado, according to Polis. Mt. Princeton Geothermal and Western Geothermal, both Colorado-based geothermal companies, are partnering with Iceland’s Reykjavik Geothermal on developing wells in the state.

But enhanced geothermal can also leverage other lessons learned from the oil and gas industry, said Morgan D. Bazilian, professor of public policy at the Colorado School of Mines. Geothermal researchers are looking at “what the oil and gas industry learned about community engagement, what the industry learned about project management, what the industry learned about finance and … what the industry learned about permitting and how to deal with mineral rights.”

The transferability of workforce skills between oil and gas and geothermal is another strong selling point.

Fervo’s Latimer noted that crews working on his company’s Utah project came from North Dakota, where they were drilling oil wells. While the U.S. has lost leadership in solar and storage manufacturing to China, “we have never lost the lead in drilling. Nobody in the world has the skilled workforce out there that the United States does when it comes to drilling.”

“We can easily transition those skills directly” to geothermal, he said. “There’s no retraining required. If you’re drilling an oil well one day, you can do geothermal the next.”

In the same way, coal plant operators can transition to operating geothermal plants, Latimer said. “You look at a geothermal power plant: You have rotating equipment and turbines and heat exchangers and pressure control equipment. It’s the exact same skills” as for coal.

Bazilian cautioned, however, that attracting and keeping a skilled workforce for geothermal could be difficult. Graduates from the Colorado School of Mines typically field multiple high-paying job offers, and not only in the energy sector.

“They’re going to where there’s excitement, or there’s some kind of value-add for them, or where they’re making the best salaries,” he said. “If we don’t find ways to make [geothermal] exciting … then we will fail to train the workforce of the future we need.”

National Security

The panel also touched on a less obvious but essential application for geothermal: providing emergency power and reliability at U.S. military bases.

“We’re in the midst of a decade of consequence in which potential adversaries are looking at ways to gain a strategic advantage against our nation,” said Ravi I. Chaudhary, former assistant secretary of the Air Force for energy, installations and environment.

“We’ve got to bring up our game in innovation over the next decade; otherwise our adversaries will; our global competitors will,” Chaudhary said. “Geothermal is a natural methodology by which we can build redundancy and ruggedize our installations against potential threats.”

He pointed to pilot projects at Air Force bases in San Antonio, Texas and Mountain Home, Idaho, where geothermal systems under development would be able to disconnect from the grid and keep operations going at the bases in case of a disturbance or other emergency on the grid.

At Mountain Home, for example, should a “civil disruption” affect the electric grid, an islanded geothermal system would allow the Air Force to “get the jets out of town quickly … and then plug back into the grid so we can distribute that energy to prevent more civil disruption,” Chaudhary said.

“We can ill afford to move at the speed of government these days,” he said. “We have to move at the speed of the threat … and when it comes to national security and across the board, the speed of innovation.”

The challenges for enhanced geothermal include transmission, permitting, and market and regulatory structures. Project and transmission permitting can be especially difficult in some Western states, which have millions of acres of public land under federal jurisdiction. In Colorado, public lands cover 36% of the state, Polis said, while in Nevada, the figure is more than 85%.

Google and the Grid

Brian George, the U.S. federal policy lead at Google, sees enhanced geothermal and partnerships with companies like Fervo as key components of the portfolio of clean energy resources his company is looking at to power its data centers.

“I tend to think a lot about what are the regulatory structures that we need to have in place to be able to bring on these types of new resources that are in stages where they require significant capital investment, right?” George said. “It’s going to require a little bit of a nudge from companies like Google … to bring on the resources that do provide that 24/7 baseload power in a way that all grid customers can benefit from the reliability and clean benefits of these resources.”

At the same time, he said, transmission must become a bipartisan issue, rather than being seen as “an enabler of wind and solar.”

“Transmission is a tool to unlock economic and national security. It is a tool for us to bring more loads onto the grid, for new manufacturing entities to bring new plants onto the grid, for new resource developers to bring new generators on the grid,” he said.

“There’s a ton of demand; there’s a ton of capital ready to go,” but it’s waiting to see if transmission will be built to connect new energy to the grid, George said. Federal, state and local governments will all have a role to play, he said.

“The last thing we need to do is come in with a very heavy-handed approach, and say, ‘This is the line that shall be built,’ without consulting governors and county councils and local entities. It has to be a collaborative process. …

“Our view is that the grid should be planned in close partnership with developers and off-takers and utilities in a way that enables that grid to grow and work for everybody,” he said.

Co-locating new data centers with generation could help “to accelerate the addition of new loads and new generation to the grid,” George said. “But I would just underscore that the reliability, resilience and economic points that the grid provides are difficult to match.”