AI Boom Fuels New Geothermal Investment
Haley Zaremba

Massive energy demand growth from data centers is incentivizing an “all of the above” approach to energy security. The AI boom is driving investment in previously overlooked and underfunded alternative energy sources, including geothermal. While the carbon-free form of energy production provides just 0.4% of the United States energy mix for now, many experts believe it’s about to take off thanks to bipartisan support, advancements in geothermal technologies, and rapidly changing energy market realities. 

“It’s going to be the decade of geothermal,” Cindy Taff, chief executive of geothermal company Sage Geosystems, told The Hill earlier this year. Investments are sharply on the rise, and the policy environment is right for robust geothermal research and development. While geothermal remains “10 to 15 years” behind the wind and solar sectors, Taff and other industry insiders are bullish about the sector’s emergent commercial potential.

The United States Department of Energy projects that next generation geothermal projects – also known as ‘enhanced’ geothermal – could provide approximately 90 gigawatts of clean energy in the U.S. by 2050. That’s enough to power more than 65 million homes. But the sector still has some key challenges to overcome, including high up-front and operational costs impeding scalability. 

“To grow as a national solution, geothermal must overcome significant technical and non-technical barriers in order to reduce cost and risk,” says a 2019 U.S. Department of Energy (DOE) report — GeoVision: Harnessing the Heat Beneath Our Feet. “The subsurface exploration required for geothermal energy is foremost among these barriers, given the expense, complexity, and risk of such activities.” 

But the investment landscape has changed dramatically since 2019, especially as the tech sector has thrown its weight behind geothermal development as a response to runaway data center energy demand. Meta and Alphabet (the companies behind Facebook and Google) are among the growing number of Big Tech firms partnering with geothermal startups. Technology for deep drilling to reach high temperatures below the Earth’s surface has advanced by leaps and bounds in the few years since that report, with startups borrowing techniques and tools from hydraulic fracturing and even nuclear fusion. And geothermal startups are trying out new and innovative models that can solve other geothermal-related issues – such as high levels of water usage – as well, as cash flows into the sector. 

In Utah, a next-generation geothermal startup thinks that they have found a way to avoid at least some of these costs. Rodatherm Energy Corp., fresh off of a $38 million Series A fundraising round, is building a pilot closed-loop geothermal energy system that replaces water with refrigerants. “By creating an encased, closed-loop system that utilizes refrigerants similar to those used in heat pumps instead of water to generate electricity, Rodatherm will be able to lower costs and increase its projects’ bankability,” Bloomberg reports. Parts that are normally corroded by water will have to be replaced less often. What’s more, water conservation is a key concern in Utah, where the project is based. 

Bloomberg reports that Rodatherm is one of many geothermal firms cashing in on the “artificial intelligence-driven power boom.” Optimizing geothermal energy potential could be a game-changer for the AI sector and for U.S. energy security as a whole, since geothermal can provide near-limitless clean energy without the variability of wind and solar power. A reportreleased earlier this year by the New York-based independent research firm the Rhodium Group projects that “geothermal could economically meet up to 64% of expected demand growth by the early 2030s” as long as their basic assumptions about the sector and the political and economic environment hold true. 

“Policymakers, technology companies, and geothermal developers need to act quickly to achieve the speed and scale required to meet this opportunity,” writes the Rhodium Group. “Geothermal could be a key solution to meeting the growing electricity needs of data centers.”

By Haley Zaremba for Oilprice.com

Philip M. Giraldi, Ph.D., is Executive Director of the Council for the National Interest, a 501(c)3 tax-deductible educational foundation that seeks a more interests-based U.S. foreign policy in the Middle East. Website is www.councilforthenationalinterest.org, address is P.O. Box 2157, Purcellville VA 20134 and its email is inform@cnionline.org. 

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