Dive Brief:
- Deploying commercially mature next-generation geothermal systems in California could reduce the state’s annual electricity supply costs by around $44 billion beginning in 2045, the state’s legal deadline for 100% of its electric retail sales to be carbon-free, according to a Clean Air Task Force report that was shared first with Utility Dive.
- This would represent a 52% cost reduction, the report’s authors said, “compared with scenarios where [next-generation geothermal] power and other clean firm generation technologies are unavailable due to development barriers.” On the lower end of their estimate, this deployment would reduce costs by an estimated $10 billion, or 23%.
- “The need for interregional transmission expansion, which can be particularly challenging, is reduced by 28% to 53% in scenarios where [enhanced geothermal] can be built in California,” the report said.
Dive Insight:
Conventional geothermal can only be deployed in specific places with naturally occurring heat, fluid, and permeable rock. Next-generation geothermal technology can be deployed in far more locations because it provides the fluid and creates engineered pathways into the hot rock.
There are three kinds of next-generation geothermal projects: “enhanced geothermal,” or EGS, which use drilling and hydraulic fracturing to create a reservoir to deposit fluid into; “closed-loop” systems with enclosed pathways drilled in rock; and hybrid systems that combine the two techniques, the report said.
California currently leads the U.S. in conventional geothermal deployment, with 2.87 GW across 53 power plants that account for 72% of the nation’s total geothermal capacity, the National Laboratory of the Rockies said in a February report.
“Though conventional geothermal power is a critical part of California’s electricity mix, it is also geographically limited,” CATF’s report said.
The mobility of next-generation geothermal, and the fact that construction takes place largely underground, means it could be deployed “in cases where land use limitations restrict clean infrastructure buildout,” the authors note.
California has already begun to purchase EGS power. In 2024, Southern California Edison executed two power purchase agreements with EGS developer Fervo Energy, agreeing to take 320 MW of power from the company’s 500-MW Cape Station project under construction in southwest Utah.
“Enhanced geothermal systems complement our abundant wind and solar resources by providing critical base load when those sources are limited,” said California Energy Commission Chair David Hochschild in Fervo Energy’s news release about the deal.
The CATF report notes that “deploying 30 GW of EGS would allow California to maintain its current pace of solar installation at around 3 GW/year, rather than requiring a three-fold increase in the buildout of solar to almost 10 GW/year, along with the associated transmission.”
However, next-generation geothermal technology requires significant upfront capital, which the report identifies as a deployment risk. The well-drilling that takes place during the exploration phase can “cost between $5 million and $13 million, and costs could rise as high as $20 million,” the report said, with no revenue anticipated to flow for several years.
The report notes that while next-generation geothermal projects “are planned or underway in Utah, Nevada, Oregon, New Mexico, and Texas … relatively few projects have been announced in California despite the state’s rich subsurface heat endowment” and the “high expected quality” of its geothermal resources, which CATF said could yield “many gigawatts of development” at a single site.
“This is due to various hurdles that make the development environment riskier and more uncertain in California than it is in other states,” including regulations and agency processes, the report said. “The local geology is not as thoroughly characterized for geothermal purposes as it is in some other western states … California will face significantly higher technical uncertainty than follow-on projects in other, better understood regions with ongoing geothermal development.”
CATF’s report suggests California take public sector action to accept the financial risk of starting to “acquire and distribute subsurface knowledge,” noting that the Department of Energy Frontier Observatory for Research in Geothermal Energy project in Utah resulted in the department releasing publicly available data that led to the development of Fervo Energy’s Cape Station project.
