Geothermal Weekly - #4
Setting the stage for the IRA's second act and the hot highlights for the week
🏛️ Geothermal energy in the IRA: A mixed forecast
State of play:
The Inflation Reduction Act (IRA) has been a driving force behind geothermal energy growth through tax credits, grants, and funding. However, a Republican-led Congress threatens the stability of these provisions, raising concerns about the sector's future even as bipartisan support for geothermal energy endures.
Key IRA provisions for geothermal energy:
The IRA includes $145 billion in direct spending on energy and climate programs, as well as tax breaks estimated to be worth at least $527 billion.
Existing Provisions (read more here and here):
Heat pump tax credits: 30% tax credit for installations through 2032. 6% for businesses through 2032.
Electricity project tax credits: Up to 2.75 cents/kWh Production Tax Credit (PTC) or a 30% Investment Tax Credit (ITC).
Bonus tax credits: Additional incentives for projects meeting labor and apprenticeship standards or developing in brownfields/low income communities
Direct pay options: The IRA allows tax-exempt entities—such as nonprofits, state and local governments, and Tribal nations—to receive direct payments equivalent to the value of tax credits. This mechanism is designed to ensure these entities can participate in clean energy projects, including geothermal, even without tax liability.
See a geothermal example here
Future-focused updates (2025):
Tax credits become technology neutral, benefiting geothermal, nuclear, and carbon capture projects even more.
The Republican challenge:
Some Republicans aim to roll back IRA provisions, potentially using budget reconciliation, which requires only a simple majority. This same budget reconciliation process was used by Democrats to pass the IRA in 2022.
Many Republican districts have received significant IRA funding—$161 billion compared to $42 billion in Democratic districts—creating internal pressure to preserve certain provisions.
House Speaker Mike Johnson supports a "scalpel" approach to amend specific provisions rather than full repeal, but this view is not shared across all Republicans. Some are favoring a more aggressive rollback with a proverbial “sledgehammer” and with President Trump even advocating for a rescind of all unspent funds.
The GOP remains divided on which elements to cut, leaving uncertainty about geothermal-specific incentives. Overall however, geothermal seems like it will be a winner based on both the recent fervor for geothermal in Congress and the picks for executive branch positions. What has yet to be seen is how much of a winner.
Why it matters:
At risk: Given the IRA itself is expected to have a fiscal cost of 1.2 trillion in total costs (remember this is just fiscal, it does not necessarily account for economic savings), the GOP could provide “savings” by cutting large swaths of the program. Most of the cost comes from tax credits but, of the total $145 billion in direct spending, roughly $60 billion is under discussion to be committed based on an analysis from Politico. That means $85 billion is at risk of being cut.
Based on a separate analysis however, the Biden Administration has awarded $61 billion from the IRA for climate programs (excluding loans, direct government spending, and tax credits). The group estimates that the IRA has just over $33 billion (or 35 percent) in remaining funding, again not including federal spending, loans and tax credits. Should tax credits be included, the loss to renewable developers is likely to be much higher.
Disruption of IRA funding and tax credits could slow project development, increase costs, and deter private investment for geothermal energy projects. This would hinder much of the progress made over the last two years from the initial passing of the IRA.
The broader clean energy sector could also face delays as companies navigate regulatory uncertainty and potential court battles over future IRA rule changes.
What’s next:
State-level action: States like California (state level) and Nevada (at both state and federal levels) are expected to maintain geothermal-friendly policies, fostering growth even if federal support diminishes.
Private sector shifts: Developers may prioritize private financing and partnerships to address federal uncertainty.
Innovation as a buffer: Technological advances, such as Enhanced Geothermal Systems (EGS), could lower costs and mitigate reliance on federal incentives.
The big picture:
With clean energy demand increasing, geothermal’s ability to provide baseload power positions it as a key player in the energy transition. However, its success depends on maintaining critical funding mechanisms while balancing partisan divides over fiscal priorities and climate policy.
🌡️ Hot Highlights
New Project Announcements:
Vulcan Energy Resources has been hot in the last week with new announcments:
Vulcan and the City of Landau have formalized their partnership with the signing of an option agreement. This strategic move solidifies the groundwork for the construction of an integrated geothermal and lithium plant in Landau, Germany. The HEAT4LANDAU Project comprises of infrastructure necessary for 255MW of geothermal heat generation, transport, and delivery for the city of Landau starting in 2026. They recently won €100 from the German government to support this project as well.
Vulcan has also entered into a staged agreement with chemical producer BASF SE (BASF) to joint develop a geothermal heat project to supply BASF’s Verbund site in the city of Ludwigshafen in Rhineland-Palatinate, Germany. The partners will also evaluate the feasibility of constructing a lithium extraction plant within the BASF site to produce lithium from geothermal brine to generate approximately 2000–2500 GWh/a of heat
The SEER geothermal heating network by Sipperec (in partnership with ENGIE Solutions) will be expanding via a new dublet to serve three more municipalities in Essonne, France by 2032. From 130 GWh per year, energy production is expected to more than triple to 437 GWh; expanding heating from 23k homes today to 72k homes.
Türkiye has two major announcements in the last week:
Open Mountain Türkiye has started commercial operations of the 11-MW OME T-01 geothermal power plant in Alasehir, Manisa, Türkiye.
The first unit of Greeneco GPP-7 plant, owned by Greeneco Energy, has started production in Sarayköy district of Denizli with a capacity of 24.5 MWe following its acceptance by the Ministry. Once fully completed, GreenEco GPP-7 will have an annual electricity production capacity of 392 million kWh/49 MWe.
AP Renewables Inc. (APRI) has signed an Engineering, Procurement, and Construction (EPC) contract with Shandong Electric Power Engineering Consulting Institute Co. Ltd (SDEPCI) for the Bay Battery Energy Storage System (BESS) project in Bay, Laguna, Philippines. This project will provide battery storage for APRI’s 458 MW Makban geothermal power plant.
The OECS Commission (Organization of Eastern Caribbean States Commission) has partnered with IRENA (International Renewable Energy Agency) to accelerate geothermal energy development in Eastern Caribbean nations by providing a roadmap through the the GEOBUILD Program. Dominica, one of the member nations, is set to make history as the first geothermal power station in the English-speaking OECS and the Caribbean Community (CARICOM) by late 2025. Construction is expected to start in early 2025 for the 10-MW geothermal power plant in Dominica’s Roseau Valley and the country is partnering with Ormat who will finance the construction and transfer ownership of the plant to the Government of Dominica after 25 years.
ZGEO Energy has received state approval to drill two exploratory wells in western Montrose County, Colorado to assess its geothermal energy potential, aiming to develop a 20 to 80 MW power plant by 2029. Exploration drilling and data collection are scheduled for February to March 2025.
A new 400 kW geothermal pilot plant was opened in Roosna-Alliku, Järva County, Estonia, as part of the GEOENEST project supplying heat to buildings in the local district heating network.
Mitsubishi Heavy Industries Thermal Systems has received an order from Aisan Industry Co. for a large-scale Aquifer Thermal Energy Storage (ATES) system for the company's new Anjo Plant (tentative name). The project will be the first practical application of an ATES system in the Chubu region.
KenGen will conduct feasibility studies in three regions of Eswatini to determine the feasibility of developing a geothermal power plant in the country, after signing a contract with the state’s electricity provider.
Central Hudson Gas & Electric has received approval from state regulators to move forward with a pilot program for engineering design of a proposed Utility Thermal Energy Network (UTEN), or district geothermal network, in the City of Poughkeepsie. The geothermal network is expected to start serving customers in 2027.
Aspen Technology, Inc. has announced a strategic partnership with Landsvirkjun, Iceland’s largest power producer. Landsvirkjun will use AspenTech’s OSI Digital Grid Management software to improve real-time control and optimize power generation across its 18 power plants.
PT Pertamina Geothermal Energy (PGEO) has signed a strategic collaboration agreement wih the Universitas Pertamina (UPER) and the University of Auckland (UoA) for a capacity building program that combines academic study and practical experience. This initiatives is part of the Geothermal Energy Knowledge and Technology Based Advancement Certification (Geo-Elevate), a capacity-building program that aims to improve the competence of the PGE workforce and make sure that their skills are at par with global standards.
New Research:
The EU-funded GEOTHERM FORA project has published a report that looks at the research and innovation trends from the last five years (2019-2024) for geothermal systems for heating, cooling, generation of electricity, storage technologies, extraction of critical minerals from geothermal brine. Think Geoenergy does a great job summarizing the report, providing the following bullets based on how the report classifies identified research topics and innovation trends in terms of Technology Readiness Levels (TRL):
Low TRL research trends include:
ML/AI tools for geothermal exploration and operations; Digitization and digital twins; Advanced exploration tools (soil gas surveys, urban seismic exploration, forward modeling methods); the use of supercritical CO2 as a heat transfer medium; CO2 reinjection in geothermal brine; coupled thermal, hydraulic, mechanical, and chemical (THMC) modeling; smart monitoring for reservoir monitoring, well integrity, and pump lifetime; and geothermal exploitation in crystalline basement
High TRL research trends include:
Novel drilling technologies (high-pressure water jet-enhanced mud hammer, ANCHORBIT downhole walking system, Directional Steel Shot Drilling, dual circulation water hammer technology, laser drilling with cryogenic gas technology, electrical Pulsed Power technology, OptiDrill project); high-performance materials for high-temperature and high-salinity fluids; full reinjection geothermal power plants; underground thermal energy storage; and geothermal heat pump systems
Innovation trends and case studies - For technologies, that are already closer to market in their development, several trends can be observed for both the subsurface part and the surface system of the geothermal plant.
Large and high-temperature heat pumps; large-scale geothermal heat pump systems; 5th generation district heating and cooling; new casing materials; new drilling and well designs, and novel drilling equipment; larger ORC turbines; and district cooling
Close to market technologies - Technologies that are close to market-ready level, with demonstration projects expected to be on the market before 2030.
Medium and high-temperatures underground thermal energy storage; single well systems; deep closed-loop multi-lateral well systems; cooling for data centers; and co-production of critical raw materials
Calgary-based E2E Energy has announced the successful granting of patents for its Enhanced Geothermal Reservoir Recovery System (EGRRS) in both Canada and the United States. EGRRS dramatically increases the surface area for heat extraction, delivering up to 50% greater efficiency compared to traditional methods. This allows E2E to generate energy at a lower cost per kilowatt, making it competitive with both renewable and conventional energy sources while maintaining a zero-emission profile.
Researchers at Durham University are researching and developing resources to evaluate utilizing mine water for heating and heat storage. They’ve successfully developed:
The GEMSToolbox to predict the feasibility of mine workings to extract heat, and can also determine the longevity and thermal power output of such mine water heating systems.
A novel technique to effectively store heat to overcome fluctuations in heat demand. They investigated the potential of using commercial silica gel as an energy storage material in a bulk-scale open bed adsorption-based system, to achieve efficient domestic heating using renewable energy sources.
An understanding of how end users view mine water heating and the clean energy transition, and how such a transition could be achieved by collaboration between local councils, industries and end users.
New Policy Announcements:
Alberta has allocated $50M from it’s carbon tax revenue to develop a technology-agnostic drilling hub with the location announced in early 2025 and operations planned to begin in 2026, with the project managed as a non-profit by a newly formed industry association. The hub will offer an open-access site for testing advanced drilling technologies, supporting innovation at extreme depths, high temperatures, and across diverse rock types.
The Nouvelle-Aquitaine region in France has launched a three-year geothermal energy action plan (2024–2027) in partnership with ADEME and the regional prefecture, aiming to produce 3,500 GWh of geothermal energy by 2030. With a €196 million budget for renewable energy development from 2022 to 2028, the plan has already facilitated 71 feasibility studies and 31 investment projects, totaling €7.9 million in aid in 2024, and includes geothermal heating systems in 11 high schools, with additional installations underway.
ADK Holdings Ltd., the economic development corporation of the Acho Dene Koe First Nation in Canada, is receiving over $2 million in federal funding to kickstart a geothermal energy project to help reduce the community’s reliance on diesel fuel.
U.S. company DeGolyer and MacNaughton met with the State Oil Company of Azerbaijan (SOCAR) representatives and discussed potential opportunities to work together on carbon capture and geothermal projects.
Italy has shown a strong interest in partnering with Ethiopia to explore renewable energy opportunities. Ethiopian Minister of Water and Energy, Habtamu Ittefa, held discussions with Italian Deputy Minister of Foreign Affairs and International Cooperation, Giorgio Silli, to explore potential collaborations.
The Turkish Geothermal Energy Association (Jeotermal Enerji Dernegi / JED), which unites the Turkish geothermal energy sector under one roof, has called for geothermal energy investments to be included within the scope of strategic investment incentives.
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