Who Is Really Funding Next-Gen Geothermal in 2026? Next-generation geothermal has moved beyond laboratory research into a capital-intensive commercialization phase. In 2026, the most important financing is no longer coming from one investor category: venture capital funds are financing drilling, subsurface modelling and hardware; strategic energy companies are providing equipment, project access and market credibility; banks are beginning to lend against contracted projects; and governments are absorbing exploration and first-of-a-kind technology risk. The strongest financing activity is concentrated in the United States and Canada, but Europe is becoming increasingly important through Germany-based deployment, European Union grants, UK innovation support, and strategic participation from European energy companies. The central investment question is changing from “Can this technology work?” to “Can the developer deliver repeatable, financeable projects at commercial cost?” The 2026 fun...
The 2025 U.S. Geothermal Market Report published by the National Laboratory of the Rockies & Geothermal Rising
The 2025 U.S. Geothermal Market Report published by the National Laboratory of the Rockies (NLR, formerly NREL) in collaboration with Geothermal Rising and supported by the U.S. Department of Energy's Geothermal Technologies Office (GTO), provides a comprehensive update on the geothermal sector since the 2021 report.
By: Robert Buluma
Released in 2025 (with data through mid-2025), it expands coverage to include geothermal heat pumps (GHPs) for single-building and district applications, alongside power generation and direct use. The report highlights steady growth in installed capacity, accelerating investment in next-generation technologies like enhanced geothermal systems (EGS) and closed-loop geothermal (CLG), cost declines, policy support, and emerging opportunities driven by demand for reliable, 24/7 clean energy.
Geothermal Power Generation: Steady Growth and Momentum
U.S. geothermal power has seen consistent expansion, with nameplate installed capacity reaching 3,969 megawatts-electric (MWe) as of 2024 an 8% increase from 3,673 MWe in 2020. This net gain includes 246 MWe of new plants, 132 MWe from expansions and additions, offset by 82 MWe in retirements. Net summer and winter capacities also rose, from 2.56 GWe and 2.96 GWe in 2019 to 2.69 GWe and 3.12 GWe in 2023.
Development remains concentrated in the western U.S., where high thermal gradients and known resource areas enable viability. California dominates with 53 of the nation's 99 plants and 2,868 MWe (72% of total capacity). Nevada follows with 32 plants and 892 MWe. Smaller contributions come from Oregon, Utah (four plants each), Hawaii and Alaska (two each), and Idaho and New Mexico (one each).
A surge in power purchase agreements (PPAs) signals strong future growth. Since 2021, 26 new PPAs represent over 1.64 GWe in commitments. California's 2021 procurement order drove at least 616 MWe in agreements, including imports of firm power from Nevada and Utah. Next-generation systems (EGS and CLG) comprise 60% of recent PPAs, totaling 984 MWe across states like California (439 MWe), Nevada, New Mexico, Texas, and undisclosed eastern locations. The first EGS PPA was signed in 2022 between Fervo Energy, Google (via NV Energy), and others for 3.5 MWe, with expansions following.
Projects under development increased from 54 to 64 since 2020. Ormat leads conventional hydrothermal with 37 projects, while Fervo (four), Sage Geosystems, and Eavor (two each) pioneer next-gen.
Technological progress is rapid. DOE's Frontier Observatory for Research in Geothermal Energy (FORGE) in Utah has drilled seven wells, slashing on-bottom drilling hours from 310 in 2020 to 110 in 2023. Fervo's 2023 Nevada pilot marked the first commercial-scale EGS, with their Cape Station project in Utah targeting a 500-MWe scale (100 MWe Phase 1 by 2026, 400 MWe Phase 2 by 2028). Eavor achieved a U.S. first in 2022 with a deep multilateral CLG well in New Mexico reaching 18,000 ft and 250°C.
Costs reflect advancement: EGS levelized cost of energy (LCOE) is declining sharply per the 2024 Annual Technology Baseline (ATB) Moderate Scenario, projected to match 2024 conventional flash levels (~$63–74/MWh) within a decade. Conventional hydrothermal LCOE remains stable ($63–74/MWh flash, $90–110/MWh binary), competitive with recent PPAs.
Investment in next-gen geothermal exceeds $1.5 billion since 2021, with EGS firms raising $990 million and CLG $604 million. Fervo secured $642 million equity plus $331 million debt; Eavor raised $387 million equity and $142 million loans. Resource potential is vast: average EGS at 1–7 km depth estimated at 27–57 terawatt-electric (TWe), including 4.35 TWe on public lands (BLM/USFS). Economically developable portions offer significant upside.
Policy support is robust: 29 states provide incentives (grants, rebates, tax credits) for geothermal power; 42 states have regulatory frameworks (e.g., standards, net metering). BLM lands host 51 plants generating 11.1 TWh in 2022.
Geothermal Heating and Cooling: Nationwide Adoption and Grid Benefits
GHPs offer reliable, efficient heating/cooling across all U.S. climates. Extrapolations from EIA's RECS and CBECS estimate 1.27 million residential units and 27,300 commercial buildings with installations. Residential hotspots include Florida, Tennessee, and North Carolina.
Incentives abound: 34 states and D.C. offer GHP support; federal Inflation Reduction Act (IRA) provided a 30% residential tax credit (through 2025) and 6% base commercial credit, with leasing now permitted.
Mass GHP deployment could save up to $1 trillion in grid infrastructure by 2050 (ORNL estimates), reducing generation needs by 585–937 TWh, capacity by 173–410 GW, and transmission by 3.3–65.3 TW-miles.
Thermal Energy Networks (TENs)—fifth-generation district systems with shared ambient loops—are rising. States like California, Colorado, Massachusetts, and New York advance regulations. Eversource's 2024 Framingham, MA pilot connects 36 buildings via borehole fields, modeling utility-led growth.
Geothermal direct use (GDU) includes ~500 installations: resorts/pools (59%, 281 sites), space heating (77), aquaculture (47), greenhouses (37), district heating (25), and others. California leads with 89.
Emerging Opportunities: Resilience, Data Centers, and Innovation
Geothermal bolsters energy security: DoD funded 10+ projects (2023–2025) at bases like Fort Wainwright (AK) and Joint Base San Antonio (TX) for conventional and next-gen tech. Federal GHP projects (2001–2014) delivered cost savings.
Data centers, with load tripling and projected doubling/tripling by 2028, favor geothermal's firm power and thermal storage. PPAs include Meta (150 MWe with Sage, 150 MWe with XG5) and Google (115 MWe expansion with Fervo).
Superhot geothermal could boost well output 5–10x. DOE funds R&D for shallow resources.
Hybrids (e.g., Ormat's Tungsten Mountain), GeoTES (demos in California oil fields), and oil/gas co-production ($8.4 million DOE awards) enhance flexibility. Brine mineral extraction (e.g., 3,400 kilotons lithium at Salton Sea) addresses critical materials.
As of early 2026, momentum continues: Fervo's Cape Station Phase 1 targets grid delivery in October 2026, backed by recent financings ($462 million Series E in late 2025, prior tranches). The sector is poised for exponential growth, unlocking vast domestic potential for decarbonization, resilience, and energy independence.
Source: NRel
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