Geothermal Energy Aside, US Energy Policy Gets Dumber

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With newly minted Energy Secretary Chris Wright at the helm and a slew of Executive Orders from President Trump to fulfill, the US Department of Energy is shifting into full carbon mode. Well, not quite. Nuclear energy is still part of the plan. Hydropower and biofuels made the cut, too, along with the critical materials needed for EV batteries and other clean tech. Geothermal energy also survived, somehow. Why geothermal? Well … follow the money.

Geothermal Energy Is Coming For Your Fossil Fuels

In years past, the US geothermal industry was limited to a few hotspots, mainly in western regions where the right combination of heat, rock, and water is available by circumstance of nature.

Nevertheless, the Energy Department continued to support innovations in the industry throughout the early 2000’s, partly in order to maintain global competitiveness. Now the chickens have come home to roost.

The taxpayer-supported R&D pathway lead to the deployment of hydrofracturing technology, borrowed from the oil and gas industry, to create human-made underground reservoirs. Without the need for natural rock formations, these enhanced geothermal systems (EGS) can reach a much broader swath of the US, where their ability to deliver zero emission energy on a 24/7 basis will pose a new threat to gas power plants.

The EGS industry is still in the formative stages but leading players in the oil and gas services field have already spotted an opportunity to develop a new branch of business. So, it’s no surprise to see Energy Secretary Wright in the mix. The US oil and gas fracking firm Liberty Energy, founded and CEO’d by Wright, invested $10 million in the promising EGS startup Fervo Energy back in 2022.

“Unconventional geothermal applications offer a potential pragmatic solution for a reliable source of low-carbon electricity, and we’re excited to be a part of the journey,” Wright explained at the time.

Dumb, Dumber, & Geothermal

So, where does this leave the fossil energy stakeholders that Trump promised to protect? Holding the bag, that’s where. After all, look what Trump did for the US coal industry, which he promised to protect during his first term.

Now that the cost of renewable energy has gone down, oil and gas are next on the chopping block. That task was just made easier by Trump himself, when he included geothermal energy in his “National Energy Emergency” declaration.

The timing is perfect for startups like Fervo, which have benefited from a series of Energy Department funding programs aimed at fine tuning their EGS systems and shuttling them into the market. That includes a new $60 million round of EGS funding split among Fervo, Chevron New Energies, and the startup Mazama Energy last year.

No word yet on whether or not the Trump administration will try to claw that back, but for Fervo the money issue is probably moot. In December the company announced that it also nailed down a new $255 million funding round from private sector investors, smoothing the road to its EGS plans Trump or no Trump.

“The demand for 24/7 carbon-free energy is at an all-time high, and Fervo is one of the only companies building large projects that will come online before the end of the decade,” stated Fervo CEO and Co-Founder Tim Latimer in celebration of the new cash inflow.

“Investors recognize that Fervo’s ability to get to scale quickly is vital in an evolving market that is seeing unprecedented energy demand from AI and other sources,” Latimer added.

Geothermal Is Coming For Your Fossil Fuels, Part Deux

The big question, of course, is cost. Let’s turn to the oil and gas services industry for some insights on that. The global, Texas-headquartered firm SLB (formerly Schlumberger) is among the fossil energy stakeholders enthusiastically promoting geothermal energy.

“Today, the calculated LCOE for geothermal energy is competitive with that of natural gas and coal—USD 82/MW.h versus USD 70–$117/MW.h, respectively,” explains SLB Power Industry Director Vijay Betanabhatla, who runs the company’s New Energy branch.

Here’s Where It Gets Really Dumber(er)

Betanabhatla also draws attention to the plummeting cost of wind and solar energy, two industries that also benefited from publicly funded R&D programs, as an indicator that the geothermal industry can follow the same trajectory.

Despite the availability of cost-competitive wind and solar today, and despite the vast wind and solar resources enjoyed by the US, Trump excluded both industries from the energy emergency declaration. That looked pretty dumb when he signed the declaration on January 20. It looked dumber on February 5, when Energy Secretary Wright attempted to explain the “energy dominance” them of the declaration to a confused public. And, it looked dumberer than ever on February 6, when BNEF released its latest global report on the levelized cost of electricity.

BNEF noted that “new wind and solar farms are already undercutting new coal and gas plants on production cost in almost every market globally.”

“The cost of clean power technologies such as wind, solar and battery technologies are expected to fall further by 2-11% in 2025, breaking last year’s record,” the firm added.

Despite the current round of trade wars, BNEF anticipates another 22-49% drop in the cost of clean electricity by 2035. In contrast, BNEF indicated that the cost of gas in the US will rise if Trump follows through on his plans to boost LNG exports.

“New solar plants, even without subsidies, are within touching distance of new US gas plants,” Vasdev explains. “This opens up the likelihood that solar will become even more compelling in the coming years, especially if the US starts exporting liquified natural gas and exposes its protected gas market to global price competition.”

Ouch! So much for fighting inflation. Gas consumers here in the US are in for a wild ride.

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Image (cropped): Fossil fuels face a new threat from the US geothermal energy industry, which stands to benefit from the purportedly fossil-friendly Trump administration (courtesy of US DOE).