Geothermal — power drawn from the Earth's natural heat — is pulling off something remarkable in today's hyper-polarized America: Winning fans across the political spectrum.
Why it matters: The bipartisan appeal, combined with surging electricity demand from AI, is helping fuel investment in a niche energy source yet to prove it can compete at scale.
Driving the news: Geothermal received unusually extensive attention in a bipartisan Senate bill introduced late last month to expedite infrastructure permitting.
- The House this summer passed a package containing several of the same geothermal provisions, including measures sponsored by lawmakers as ideologically distant as Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Mike Kennedy (R-Utah).
The rising cachet of geothermal is the product of three trends converging:
- Technologies adapted from the oil and gas industry, including fracking, are making it possible to tap heat in more places than just far-flung hot springs and volcanoes.
- Tech companies, on the hunt for reliable electricity, are willing to pay a premium for next-generation geothermal to power data centers.
- Investment is surging as companies race to scale a renewable energy source that can generate power around the clock.
Catch up quick: The geothermal-specific provisions in the Senate bill go further than the broader permitting reforms offered to other renewable energy sources, including wind and solar.
- The bill would make it easier for geothermal developers to explore and lease federal land, speed up drilling permits and exempt certain activities from environmental reviews.
- Geothermal retained federal clean-energy tax credits in Republicans' sweeping tax law last year, even as wind and solar faced an accelerated phaseout.
State of play: Fervo Energy, an advanced geothermal company that went public earlier this year, is at the leading edge of this convergence. It was founded nearly a decade ago by Tim Latimer, a former drilling engineer in the oil and gas industry.
"I don't think any of us saw in 2017 that a few years later we would be in the biggest demand power boom for electricity that we had ever experienced," said Latimer during a recent on-stage interview with Axios in an event aptly titled "The energy source nobody argues about."
- The AI boom has "accelerated our business tremendously."
The intrigue: Geothermal's appeal crosses traditional political divisions precisely because it doesn't fit neatly into Washington's usual energy-policy boxes.
- Its renewable characteristics appeal to Democrats.
- Its reliance on drilling expertise and overlap with the oil and gas industry appeals to Republicans.
- Its ability to provide stable, carbon-free electricity makes it attractive to utilities and tech companies.
By the numbers: The average winning bid for federal geothermal leases has surged, reflecting growing commercial interest.
- The average winning bid in 2023 was $10 an acre, and so far this year, the average is $182, according to Guy Cohen, a geothermal analyst at the market intelligence firm Currence.
- A record $1,207-an-acre bid was placed for a single parcel in Utah this summer.
Reality check: Geothermal's political popularity and investment boom are running ahead of its commercial reality. The technology remains expensive, and questions persist about whether it can reliably generate electricity over decades.
- Geothermal currently generates less than 1% of U.S. electricity, and those eye-popping leases are for the right to explore for geothermal, not for active geothermal wells.
- Fervo's stock has fallen nearly 70% from its first-day closing price following its IPO earlier this year, amid what Axios Pro calls a broader slowdown among energy startups.
- Tom Erb, Fervo's government affairs and policy manager, says the construction costs at its flagship project in Utah are about half those of new nuclear plants. He acknowledged that underground heat can diminish over time, requiring additional drilling, but said those costs are factored into company projections.
What they're saying: Jigar Shah, a former Energy Department official under President Biden, says geothermal's current momentum still depends on state policies encouraging clean electricity and tech companies willing to pay a premium.
- "I don't think this moment would work without above market mandates from states or the data centers," Shah said.
Friction point: Geothermal has also encountered local opposition, particularly over water.
- Traditional geothermal projects can disrupt hot springs and wetlands critical to wildlife, said Patrick Donnelly of the Center for Biological Diversity.
- Newer technologies like Fervo's avoid some of those risks, he said, but questions remain about their water consumption.
What we're watching: Geothermal has found something rare in Washington: Political consensus. The test now is whether that consensus survives the industry's growth.