Geothermal: Clean Energy for People Who Like to Drill 

Today, most people view artificial intelligence (AI) as a cultural phenomenon—think chatbots, deepfakes, existential essays on consciousness, and fears about AI replacing jobs. Beneath these ideas lies the AI industrial effort—artificial intelligence as physical infrastructure, including transformers, substations, and silicon warehouses that operate nonstop. They are forcing the idea of reliable power, a concept California once outsourced to natural gas. 

In 2024, clean energy accounted for about 60 percent of California’s power mix. It’s one of the Golden State’s crowning achievements, built on hard policy and harder engineering, such as the Renewables Portfolio Standard and a mandate for 100 percent clean electricity by 2045. Natural gas still supplied roughly 40 percent of the state’s electricity. The state decarbonized the noon hour faster than the evening peak, the heat wave, and the smoky day, when solar output is low. Wind and solar are indispensable. Batteries are getting bigger and cheaper. But they are not 24/7 insurance and won’t be for years. America needs clean power beyond wind and solar. 

Right on cue, geothermal makes its grand re-appearance. 

Early versions of California’s geothermal energy are still working well. The Geysers, north of San Francisco, is a 725-megawatt geothermal complex delivering electricity 24/7. Since the 1960s, the 45-square-mile complex in the rolling hills of Sonoma and Lake Counties has supplied electricity to over 1 million homes. The Geysers are still gushing and generating electricity. 

Insatiable electricity demand is changing the equation for geothermal.  

This renewable energy technology, once considered a niche, has been revitalized by bipartisan politics, financial backing, and, especially, new drilling technology: Enhanced Geothermal Systems, or EGS. The technology is controversial because it involves fracking. EGS uses techniques from shale extraction—high-skill drilling, subsurface mapping, and controlled stimulation—to create permeability in hot, dry rock. This fluid circulation brings usable heat to the surface as electricity. It’s “fracking” for steam, not oil. 

EGS is one of the few ways to harness the existing drilling economy—rigs, crews, geologists, completion services, everything you see on Landman—toward a clean product. To a polity split on renewables and Donald Trump’s administration fetishizing fossil fuels like coal and oil, geothermal’s politics are refreshingly weird: clean energy for people who like to drill. California’s oil-rich Kern County and the state’s Central Valley would gain from a geothermal buildout—in part, by using tapped-out oil wells to store thermal energy and in part by pivoting phased-out oil drilling labor and expertise. 

Trump’s Department of the Interior has announced emergency permitting procedures to accelerate geothermal reviews on federal lands, tied to the president’s national energy emergency declaration. Whatever you think of MAGA, the administration’s backing of EGS is a win.  

The purveyors of AI should pay for expanding geothermal—and increasingly they are. President Trump’s State of the Union address announced a “ratepayer protection pledge” that major tech players and hyperscalers are expected to sign. That could lower consumer prices, shift demand, and alter funding for other power projects. Unfortunately, there are scant details about the “pledge.” The administration’s plans often have, shall we say, an inability-to-execute problem. But the idea is right: User pays. 

Meta has entered geothermal agreements aimed at 150 megawatts with Sage Geosystems, a Houston-based green energy supplier, using a new pressurized geothermal system for carbon-free energy, and another 150 megawatts from New Mexico, using the geothermal-focused XGS firm. The project generates electricity without drawing on new water resources. Additionally, Google is leveraging Nevada Energy’s tariff structure for the Silver State utility’s high-demand corporate customers, as part of a deal to generate up to 150 megawatts of new geothermal capacity from an Ormat Technologies company that also uses waste heat to help power data centers. 

And those dollars are pushing the geothermal frontier, finding novel ways to make it cheaper, better, more usable. Companies like Fervo Energy, another Houston-based firm, are applying shale-style horizontal drilling to engineer geothermal reservoirs in hot dry rock, while Sage Geosystems is turning those reservoirs into heat and steam you can turn on and off as needed. Ormat is scaling these techniques into standard, large-scale power plants. Since 2015, next-generation geothermal cost estimates have fallen from over $120 per megawatt-hour to projections below $70 per megawatt-hour in certain areas, with some analysts forecasting costs closer to $50 per megawatt-hour over time.  

Southern California Edison, the huge public utility, signed a contract for 320 megawatts of geothermal power from Fervo Energy’s Cape Station project in Utah. Even California’s long-term capital is helping. Fervo’s $462 million Series E funding round last December included returning investor California’s CalSTRS, the world’s largest educator‑only pension fund and America’s second‑largest public pension fund. 

One problem: these plants are often directly connected to data centers and locked into long-term agreements. They don’t add to the public burden, but neither do they provide abundant public energy. They just keep AI servers powered. So, while these newly developing geothermal energy projects are essentially for data centers, they do not lower consumer energy prices or contribute to upgrades to public distribution networks. Some California lawmakers want to make sure that California’s public funds are used for California public goods and jobs. 

In the meantime, California’s policy support and public capital are buying clean reliability from out of state because that is where the project moved first. So while California can envision and regulate, it often struggles to build in-state major infrastructure for its taxpayers.  

That might be changing. Near the inland Salton Sea, Controlled Thermal Resources is a company partnering with energy experts at Baker Hughes to develop Hell’s Kitchen. This project develops geothermal power while also extracting valuable lithium (used in batteries) in the process. The next phase aims to deliver 500 megawatts of geothermal power to data centers—a clean energy source for the AI economy, built on California land using oilfield expertise.  

California has more to do: First, procure what the grid needs: 24/7 clean power. 

Second, de-risk early drilling. Drilling risk is the geothermal tax, paid up front and before the first kilowatt-hour arrives. California could partner with the federal government’s Department of Energy to ensure and co-invest in early drilling. This may be a heavy lift with the Trump administration, but “drill baby drill” and serving AI energy demands have appeal in Trump’s Washington, especially given the war in the Mideast. In this case, however, drilling would be for carbon-free energy. If Congress becomes Democratic next year, this is an area for common ground between the president and the legislature. 

Third, build the connective tissue—interconnection and transmission to residential consumers—so geothermal projects are not stranded behind queues or marooned exclusively with big tech data centers. 

AI demand is forcing a demand for reliable, clean power. The drilling economy can deliver it. The remaining question is whether California will lead this revolution—or continue to fund and build it elsewhere, only to buy it back at a premium. 

The post Geothermal: Clean Energy for People Who Like to Drill  appeared first on Washington Monthly.