PHOENIX, Ariz. — There is growing excitement about geothermal energy in the Western U.S., with billions of dollars invested in the industry, but panelists at a Western Governors’ Association workshop said supply chain issues and permitting complexity remain significant challenges.
Michael O’Connor, director of the Mountain West Geothermal Consortium, said during the Dec. 18 workshop that the U.S. leads the world in geothermal power with 4 GW of capacity and enjoys support from the Trump administration.
There has been about $2 billion in investment in the industry over the past few years. Fervo Energy announced Dec. 10 it has raised $462 million toward geothermal development, and other developers are expanding operations, according to O’Connor.
Despite this momentum, commercial lenders remain cautious because of project risks and the difficulty developers face in proving their models are accurate, making it challenging to scale the industry.
“There are some places where we can really see the West leading,” O’Connor said. “Getting to scale is going to require several different projects in several different environments. We need to get over that risk curve … in a lot of different places, and the West has all of that geological variability that you need to demonstrate it.”
Another key to ensuring geothermal success involves knowledge-sharing across state lines, O’Connor said.
“Each of these states should not have to learn how to permit this technology separately,” he said. “This is something that a lot of regional collaboration can be helpful for.”
Developers are testing several types of geothermal technology. The most mature approach is called a hydrothermal system and accounts for roughly 16 GW worldwide. The approach includes looking for naturally occurring conditions that allow hot fluids from underground to spin turbines, O’Connor said.
One of the most commercially viable approaches is called an enhanced geothermal system (EGS). The approach includes leveraging hydraulic fracking between wells in reservoirs to extract heat, O’Connor explained.
Fervo operates an EGS called Project Red in Nevada. One of the company’s main concerns is finding geologic conditions for its systems. Another is transmission availability, according to Marc Reyes, director of interconnection and transmission at Fervo.
“That is a key concern,” Reyes said. “As we all know, the grid is not built to have a lot of excess capacity. Ultimately, cost-causation drives the rates that we all see and pay in our electric bills and by and large, the grid is not built to accommodate very large projects. So that is one of the factors that comes into play … not just identifying perhaps incrementally available capacity on the transmission grid, but where the transmission grid might be suitable for expansion.”
Tim Kowalchik, research director at the Utah Office of Energy Development, said geothermal is “maybe the ideal co-location resource.”
“At its heart, you’re getting heat from the ground, maybe digging some holes, putting pipes in the ground and circulating a fluid,” Kowalchik said. “That really basic system is the same thing that can do district heating; it is the same thing that can give you process heat. That is not true of other generating technologies. There is a larger lift to being able to do sort of multi-use cascades.”
While there are a lot of “exciting” initiatives in the geothermal space, “none of that establishes you a supply chain,” Kowalchik said.
No single company or laboratory can reduce costs enough for utilities to choose geothermal as the least-cost option, he added.
“That takes building at scale, multiple regions to multiple ownership structures … to who is your offtake is going to be incredibly important,” Kowalchik said. “We need all of that to get fleshed out to make a healthy ecosystem for geothermal, and that takes building at scale. And I do not know if the industry has the scale capability for enhanced geothermal.”

