Next-generation geothermal technologies are at the frontier of energy development in the United States. Drawing on drilling techniques developed during the shale boom, enhanced geothermal drilling can open newer geologic formations with lower permeability to injected liquids. Heated liquid is then piped up to power turbines, generating a source of clean firm power that can run 24/7, 365 days a year. The United States is a prime location for the development of these geothermal technologies: next-generation geothermal promises 5,500 GW of power production, particularly in Western States.
While next-generation geothermal technologies have achieved significant technical advances— bringing them to the cusp of commercial viability—they are not yet at the point where individual projects can attract finance on the terms necessary for developers and investors to deploy it at scale. Investors in the position to provide bulk project finance need to see additional evidence of project viability and drilling cost reductions. However, providing this evidence requires additional drilling and larger operational datasets, which require capital the sector does not possess. The bottleneck in project financing has created a vicious cycle that slows deployment and obstructs the technological progress necessary to lowering deployment costs in the first place.
States can cut through this cycle and build America’s energy future by working together to create new tools to support catalytic public investment in and financing for next-generation geothermal. CPE recommends that Western states establish a Mountain West consortium to advance regulatory harmonization and coordinate a regional investment strategy. The regional consortium can cooperate on surmounting the many barriers to growing the industry—including but not limited to outdated regulation, interconnection challenges, access to capital, development finance obstacles, and state and federal land utilization restrictions.
This report describes how states can create such a geothermal consortium and the toolkit it needs to be successful. The first section discusses obstacles to further deployment of geothermal and the difficulties faced by the private sector in pursuing development alone. The second proposes a series of steps Western states can take to begin creating a consortium with real powers to coordinate regulatory actions and investments in next-generation geothermal projects.