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Welcome to the latest installment of Climate Law Matters. At a time when renewable energy deployment faces very real challenges—from political headwinds and regulatory uncertainty to funding challenges and supply chain limitations—we take this opportunity to spotlight a renewable resource enjoying a moment of momentum and growth: geothermal energy.
Geothermal energy generation is nothing new. In fact, companies in the US have been generating electricity from geothermal resources since as early as 1960, and humans have been tapping into the Earth's subsurface heat resources for centuries. So what brought us to this moment?
- Technological innovations: Historically, primary challenges for the geothermal industry have been cost and geography: market standard methodologies for siting and drilling geothermal projects have often been cost-prohibitive. As a result, those methodologies were best deployed in very specific environments with optimal geological conditions, such as the southwestern United States. Today, geothermal developers are advancing next-generation projects by adapting proven techniques from the oil and gas industry—such as directional drilling, hydraulic stimulation, and advanced subsurface imaging—and deploying them in innovative new configurations. Technologies such as enhanced geothermal systems (EGS), closed loop systems and "super-hot" geothermal (targeting super-hot reservoirs often exceeding 375-400°C), combined with the use of artificial intelligence, are simultaneously bringing down costs, increasing project outputs and expanding geographic reach across the country. This is not a speculative bet on unproven science; it is the creative redeployment of well-understood technologies to unlock a resource with enormous untapped potential.
- Demand: It is not news to our readers that the US and many other markets are grappling with rapidly spiking energy demand, largely driven by the global proliferation of data centers in the proverbial "gold rush" to advance the AI revolution. Critically, much of this new demand requires around-the-clock, reliable power—and geothermal is one of the few renewable energy sources capable of providing baseload, dispatchable electricity that is not dependent on weather conditions or time of day. Coupled with numerous geopolitical crises causing volatility in traditional energy markets, many hyperscalers and other large energy users are looking to geothermal's unique ability to deliver firm, carbon-free power is positioning the industry for rapid expansion
- Political support: In a polarized political climate, geothermal energy seems to be one of the few technologies which most political actors are enthusiastically supporting. As a result, the federal government and numerous states are actively pursuing ways to incentivize, support, fund, and accelerate research and development for geothermal technologies.
In this issue, we explore recent regulatory actions that impact this industry and key considerations for financing geothermal projects.
In New Daylight for Geothermal: How Federal Support and Bipartisan Permitting Reform Are Fueling a Geothermal Boom, our team details a number of examples of legislative support for geothermal technologies at both the federal and state levels, including available incentives and efforts to implement permitting reform.
In Full Steam Ahead: Financing Geothermal 2.0, we break down some of the nuances of structuring project finance transactions for geothermal projects.
As these "Geothermal 2.0" projects start coming online, the Energy & Climate Group will be closely monitoring this market and assessing the corresponding novel legal issues that may arise for our clients.
Finally, we celebrate and share with you several other writings by our colleagues further exploring a variety of themes across the energy and climate landscape.
Read full report here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
