US Geothermal Tax Credits in 2026: What Is Actually Still Alive After OBBBA For an industry that spent more than a decade building financial models around a stable federal incentive structure, 2026 has been a year of whiplash. The 30% federal geothermal tax credit that developers and homeowners built forecasts around is gone in one form and still alive in another, and even the IRS’s own public guidance has been confusing enough to trigger uncertainty across the market. That confusion is not a minor clerical issue. It is shaping investment decisions, contractor sales pitches, homeowner timelines, and project finance assumptions right now. If you work in geothermal, the key question is no longer whether federal incentives exist, but which incentive applies, to which project type, and under what ownership structure. The law that changed the timeline To understand where things stand in 2026, you have to start with the Inflation Reduction Act of 2022, which created a long runway for clean e...
For years, geothermal energy has lingered in the shadows of wind and solar power. Now, it's stepping into the spotlight, attracting big-name investors, political endorsements, and global attention as a reliable, renewable, and baseload power source.
However, while geothermal is experiencing an unprecedented rise, a series of unexpected challenges so-called "black swan" events are casting shade over its growth.
In this article, we’ll explore why geothermal is finally getting the recognition it deserves, why former President Donald Trump has endorsed geothermal while dismissing solar and wind, the high-level negotiations within Chevron and BP on integrating geothermal with oil and gas, and the major hurdles geothermal faces along with strategies to overcome them.
The Rising Popularity of Geothermal Energy
1. A Reliable and Baseload Renewable Energy Source
Unlike wind and solar, which depend on weather conditions, geothermal energy provides a constant and uninterrupted power supply. As governments push for energy security amid geopolitical tensions, geothermal is becoming an attractive solution.
2. Increased Investment from Oil & Gas Giants
Major players like Chevron, BP, and ExxonMobil are exploring ways to transition their expertise in oil and gas drilling into geothermal energy. These companies own the technology, infrastructure, and drilling expertise that can be leveraged to extract heat from the Earth's core.
3. Government and Policy Support
Countries worldwide are offering tax credits, research grants, and streamlined regulations for geothermal development. The United States, Kenya, Iceland, and Indonesia are leading the charge in unlocking geothermal’s full potential.
Donald Trump’s Surprising Nod to Geothermal Energy
While former U.S. President Donald Trump has historically dismissed solar and wind power, calling wind turbines "bird killers" and criticizing their intermittency, he has surprisingly shown support for geothermal energy.
During his presidency, Trump’s administration prioritized "energy dominance," which included oil, gas, and even high-enthalpy geothermal. Some key points include:
In 2020, the U.S. Department of Energy (DOE) under Trump launched the "GeoVision" report, which highlighted geothermal’s potential to provide 16% of U.S. electricity by 2050.
He praised geothermal’s ability to deliver 24/7 power, unlike wind and solar, which he argued were unreliable.
He supported deep-drilling technologies, which share similarities with oil and gas extraction, making it easier for the fossil fuel industry to pivot to geothermal.
This political endorsement has bolstered investor confidence in geothermal while solar and wind continue to face policy uncertainty in Republican-led states.
The Black Swans Casting Shade Over Geothermal's Future
Despite its growth, geothermal energy is facing serious hurdles that could stall its momentum.
1. High Upfront Costs & Financing Challenges
One of the biggest drawbacks of geothermal energy is its expensive upfront investment. Unlike solar and wind, which can be built relatively quickly, geothermal plants require extensive drilling, resource assessments, and infrastructure development before producing electricity.
How to Overcome This Challenge
✅ Government-backed risk insurance can mitigate the financial burden for investors.
✅ Public-private partnerships (PPPs) can spread risk between governments and corporations.
✅ Innovative financing models, such as carbon credits and green bonds, can make projects more attractive to investors.
2. Geothermal Exploration Risks
Unlike oil and gas, where exploration success rates are high, geothermal drilling remains a gamble. Some wells turn out to be dry or underperforming, leading to significant financial losses.
How to Overcome This Challenge
✅AI-driven subsurface imaging can improve drilling accuracy and reduce the risk of dry wells.
✅ Enhanced Geothermal Systems (EGS) can help unlock geothermal potential even in areas with low natural permeability.
3. Permitting Delays & Bureaucratic Red Tape
Geothermal projects often face years of permitting and regulatory hurdles. In contrast, solar and wind farms are much faster to deploy. How to Overcome This Challenge
✅ Governments must streamline regulatory approvals to fast-track geothermal projects.
✅ Standardized drilling permits can reduce unnecessary bureaucratic delays.
4. Public Perception & Environmental Concerns
Despite being a clean energy source, some geothermal projects have raised concerns about seismic activity (e.g., small earthquakes triggered by deep drilling in Switzerland and South Korea).
How to Overcome This Challenge
✅ Public awareness campaigns can educate communities on the benefits and safety measures of geothermal energy.
Advanced drilling technologies can minimize the risk of induced seismicity.
Chevron and BP’s High-Level Negotiations on Geothermal-Oil & Gas Integration
With the world moving toward clean energy, oil and gas companies are actively looking for ways to integrate geothermal into their operations. Both Chevron and BP are in high-level negotiations on how best to transition their expertise into geothermal.
1. Utilizing Existing Oil & Gas Wells
Many depleted oil and gas wells still contain significant amounts of heat. By converting these wells into geothermal sites, companies can extract clean energy without new drilling costs.
2. Co-Production of Geothermal and Fossil Fuels
Some oil fields produce hot water as a byproduct. Instead of discarding it, companies can use it to generate geothermal power.
This strategy would allow oil and gas companies to reduce their carbon footprint while still producing hydrocarbons.
3. Expanding Direct Heat Applications
Companies like Chevron and BP are exploring geothermal for industrial heating, greenhouses, and district heating in cities.
These applications could provide a new revenue stream while utilizing the companies’ existing infrastructure.
These negotiations indicate that oil and gas giants are serious about integrating geothermal into their future energy portfolios, which could lead to massive scaling of geothermal projects worldwide.
Why Geothermal Could Still Win the Energy Transition
Despite the hurdles, geothermal has unique advantages that position it as a long-term winner in the global energy transition:
1. Geothermal Can Provide Continuous Power
Unlike wind and solar, which require battery storage, geothermal operates 24/7 without the need for backup energy sources.
2. Advanced Technologies Are Unlocking New Potential
Innovations such as Closed-Loop Geothermal (Eavor-Loop), Supercritical Geothermal**, and EGS (Enhanced Geothermal Systems are making it possible to generate power from more locations than ever before.
3. Geothermal is Ideal for Hydrogen Production
With the rise of green hydrogen, geothermal can be used to produce hydrogen without relying on fossil fuels, creating a truly clean energy economy.
A Critical Crossroads for Geothermal Energy
Geothermal energy is having its moment in the sun, with growing investments, political endorsements (including from Donald Trump), and major oil and gas players like Chevron and BP seeking to integrate geothermal into their business models.
However, black swan events ranging from high costs, regulatory hurdles, and exploration risks to competition from solar and wind could slow down its momentum.
To ensure geothermal’s success, industry leaders must:
✅ Leverage AI and advanced drilling technologies to reduce exploration risks.
✅ Push for policy reforms that streamline permitting and regulatory processes.
✅ Partner with oil and gas companies to accelerate geothermal adoption using existing infrastructure.
✅ Invest in hybrid energy systems, such as geothermal + hydrogen or geothermal + direct heat applications.
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