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...
Unlocking the Heat Beneath Whakatāne: University of Auckland’s $3 Million Geothermal Exploration Project Signals a New Era for Renewable Energy in New Zealand
Posted on| March 24, 2026 By Robert Buluma
On March 17, 2026, the New Zealand Government made a significant announcement that could reshape the energy landscape of the eastern Bay of Plenty. Alongside the launch of the country’s first national geothermal strategy, From the Ground Up – A Strategy to Unlock New Zealand’s Geothermal Potential, the University of Auckland’s Geothermal Institute secured $3 million from the Regional Infrastructure Fund (RIF) for the Whakatāne Geothermal Temperature Gradient Well Programme.
This initiative marks an important early step in assessing whether reliable geothermal heat resources lie beneath parts of Whakatāne, a region long associated with volcanic activity, cultural significance, and a strong desire for sustainable economic development.
What Is the Whakatāne Geothermal Project?
The project, led by Associate Professor Dr John O’Sullivan, co-director of the University of Auckland’s Geothermal Institute, will involve drilling a small number of exploratory temperature-gradient wells. These are typically shallow to moderate-depth holes designed primarily to measure how temperature increases with depth underground.
Unlike full production wells that extract hot water or steam for electricity or direct heat use, these gradient wells are scientific tools. They collect critical data on underground temperatures, geological formations, permeability, and fluid chemistry. This information helps scientists and engineers build accurate models of the subsurface geothermal system and determine whether the resource could one day support community heating, industrial process heat, or even electricity generation.
Dr O’Sullivan emphasised the exploratory nature of the work:
“Geothermal heat is one of New Zealand’s most reliable renewable energy resources. Projects like this help communities understand what resources exist beneath the ground so that informed decisions can be made about how they might be used in the future.”
The programme aims to strengthen regional energy resilience while contributing to New Zealand’s broader transition to secure, low-emissions energy sources. Any future development decisions will occur separately, in close partnership with local iwi, landowners, and community leaders.
Why Whakatāne? Understanding the Geothermal Context
Whakatāne sits on the edge of the Taupō Volcanic Zone (TVZ), one of the most geothermally active regions on Earth. The TVZ stretches from the central North Island toward the Bay of Plenty and hosts the majority of New Zealand’s high-temperature geothermal systems. While famous fields such as Rotorua, Kawerau, and Wairakei have been developed for decades, many peripheral areas — including parts of Whakatāne — remain relatively unexplored at the detailed level required for modern investment.
Geothermal systems in this region often manifest at the surface through hot springs, fumaroles, and altered ground. Local Māori have utilised these natural features for centuries for cooking, heating, and spiritual purposes. Today, the challenge is to blend this deep cultural knowledge with cutting-edge science to unlock sustainable benefits without compromising environmental or cultural values.
Recent studies have highlighted geothermal’s potential role in decarbonising industrial heat, greenhouse heating, and even residential and commercial space heating across the Bay of Plenty. Whakatāne, with its mix of agriculture, forestry, tourism, and light industry, could benefit enormously from reliable baseload renewable heat that does not depend on fluctuating weather patterns like solar or wind.
The University of Auckland’s Geothermal Institute: A World-Class Partner
The Geothermal Institute at the University of Auckland is internationally recognised for its research, training, and advisory work. Established to support evidence-based geothermal development both in New Zealand and overseas, the Institute combines expertise in reservoir engineering, geophysics, geochemistry, drilling technology, and environmental science.
Associate Professor Dr John O’Sullivan brings deep technical knowledge in numerical modelling and geothermal technology. His research focuses on using sophisticated computer simulations to support strategic decision-making for geothermal projects. As co-director, he oversees a team that has trained hundreds of geothermal professionals and contributed to major developments across the Asia-Pacific region.
Deputy Vice-Chancellor Research and Innovation, Professor Frank Bloomfield, noted that the project showcases the University’s wider contribution to Aotearoa’s energy future:
“The University of Auckland has deep geothermal expertise and research leadership through the Geothermal Institute, which is internationally recognised for its research and training. This project reflects the role universities can play in supporting communities and government with the knowledge needed to explore sustainable energy opportunities.”
National Context: New Zealand’s Push for Geothermal Expansion
The $3 million grant to the Whakatāne project forms part of a larger $50 million ringfenced allocation within the Regional Infrastructure Fund specifically for geothermal development. So far, three projects have received support totalling $23 million:
- Two $10 million suspensory loans to Eastland Generation for the Taumanu and Kopura geothermal projects near Rotomā and Kawerau. These joint ventures with local Māori land trusts aim to explore and potentially develop small-to-medium geothermal power stations.
- The $3 million grant to the University of Auckland for Whakatāne exploration.
Resources Minister Shane Jones highlighted the importance of early-stage investment:
“Early-stage geothermal exploration involves high upfront costs. Targeted government investment will help de-risk exploration and get more projects off the ground.”
This funding announcement coincided with the release of the national geothermal strategy, which sets an ambitious target to double geothermal energy use by 2040. Geothermal currently supplies around one-fifth of New Zealand’s electricity and provides direct heat for manufacturing, food processing, tourism, and building heating. The strategy, titled From the Ground Up, seeks to accelerate development, improve investment confidence, reduce regulatory barriers where appropriate, and ensure that growth respects environmental and cultural values.
How Temperature-Gradient Wells Work
Temperature-gradient drilling is a relatively low-impact method of geothermal exploration. Wells are typically drilled to depths of a few hundred metres up to 1–2 kilometres, depending on the target. Specialised temperature sensors (thermistors or optical fibre distributed temperature sensing) are lowered into the hole to record precise temperature profiles.
By analysing how temperature changes with depth, scientists can identify:
- The presence of a convective geothermal reservoir (where hot fluids circulate).
- Heat flow rates from deeper magmatic sources.
- Potential cap rocks that might trap heat and fluids.
- Indications of permeability and fluid pathways.
Combined with geophysical surveys (gravity, magnetotelluric, seismic), geochemical sampling of surface features, and geological mapping, this data builds a three-dimensional conceptual model of the system. Only if the model looks promising do developers proceed to deeper, more expensive slim-hole or production test wells.
The Whakatāne programme will drill a small number of such wells at carefully selected sites following extensive consultation.
Community Engagement and Cultural Considerations
Dr O’Sullivan has stressed that the University’s next priority is meaningful engagement with local stakeholders, including landowners, iwi, hapū, and community leaders.
“We look forward to working closely with local partners as the project develops… to discuss how this work can be undertaken in a way that reflects local priorities and values.”
Geothermal development in New Zealand has sometimes faced opposition due to concerns over land use, cultural impacts (particularly on wāhi tapu and taonga), induced seismicity, or changes to surface features. The best modern projects succeed when they incorporate mātauranga Māori, co-design processes, and long-term benefit-sharing agreements from the outset.
Whakatāne District Council, Bay of Plenty Regional Council, and local iwi such as Ngāti Awa and others will play crucial roles. Discussions for potential drilling sites were already underway shortly after the funding announcement.
Economic and Environmental Benefits for the Region
If the exploration confirms a viable resource, geothermal heat could deliver multiple benefits to Whakatāne and the eastern Bay of Plenty:
1. Energy Resilience — Geothermal provides baseload power and heat 24/7, unlike intermittent renewables. This strengthens energy security in a region prone to extreme weather events and transmission vulnerabilities.
2. Decarbonisation — Replacing coal, diesel, or gas boilers with geothermal heat for industries such as wood processing, dairy, or horticulture could slash emissions significantly.
3.Economic Development— New heat supplies could attract investment in greenhouse agriculture, aquaculture, tourism wellness facilities, or advanced manufacturing. Jobs would be created in drilling, engineering, operations, and maintenance.
4.Direct Use Opportunities— Lower-temperature resources are ideal for space heating, hot water, or even binary-cycle electricity generation if temperatures allow.
5. Export of Expertise — Successful projects enhance New Zealand’s reputation as a geothermal leader, supporting education and consulting exports through institutions like the University of Auckland.
Environmentally, properly managed geothermal systems have a very low carbon footprint compared to fossil fuels. Reinjection of cooled fluids maintains reservoir pressure and minimises surface subsidence or induced seismicity.
Challenges and Realistic Expectations
Exploration always carries risk. Not every temperature-gradient programme leads to commercial development. Some systems may prove too deep, too low-temperature, or insufficiently permeable. Regulatory processes under the Resource Management Act, health and safety requirements, and environmental consents add time and cost.
Cultural and social licence remains paramount. Communities must see tangible, equitable benefits rather than external extraction. Transparent data sharing and independent monitoring will be essential.
The national strategy acknowledges these barriers and proposes actions to streamline consenting where risks are low, while maintaining strong protections for high-value surface features.
Broader Geothermal Landscape in 2026
New Zealand already operates around 1,000 MW of geothermal electricity capacity, with recent expansions at Ngā Tamariki and other fields. Direct-use applications continue to grow, from the famous Rotorua tourism sector to industrial plants in Kawerau and Taupō.
Internationally, countries such as Indonesia, the Philippines, Kenya, and Iceland are rapidly expanding geothermal. New Zealand’s expertise — honed over decades — positions it well to collaborate and export technology, particularly in binary plants for lower-temperature resources and advanced reservoir modelling.
Supercritical geothermal research (targeting >400°C resources at greater depths) is also advancing, promising higher efficiencies in the future.
Looking Ahead: What Happens Next in Whakatāne?
Over the coming months, the University team will:
- Conduct further desktop studies and non-invasive geophysical surveys.
- Engage extensively with iwi, hapū, landowners, and the wider community.
- Select and gain consents for drilling sites.
- Drill and log the temperature-gradient wells.
- Analyse data and publish findings in a way that supports informed local decision-making.
The $3 million funding covers the scientific programme itself; any subsequent development would require separate commercial investment and approvals.
This project represents more than just another drilling programme. It embodies a collaborative, science-led approach to understanding our natural resources in a way that respects Te Tiriti o Waitangi principles and supports a just energy transition.
Conclusion: A Geothermal Future for Whakatāne and New Zealand
As the world grapples with climate change and energy security, New Zealand is fortunate to possess one of the best renewable resources on the planet — geothermal energy that is clean, reliable, and largely domestic.
The University of Auckland’s involvement in Whakatāne demonstrates how world-class research institutions can partner with government, industry, and communities to de-risk opportunities and build knowledge. Whether the subsurface ultimately yields a major new resource or a more modest direct-heat opportunity, the data gathered will be invaluable.
For Whakatāne, this could mean warmer homes, greener industries, more resilient infrastructure, and pride in being part of New Zealand’s geothermal renaissance.
For the nation, it is another step toward the vision in From the Ground Up: becoming a global leader in sustainable geothermal development that delivers innovation, resilience, and inclusive growth for future generations.
The heat beneath our feet has powered Māori communities for centuries. With careful science, respectful partnerships, and bold but thoughtful investment, it can help power a prosperous, low-emissions future for all New Zealanders.
What are your thoughts on geothermal development in the Bay of Plenty? Have you visited Whakatāne or experienced local geothermal features? Share in the comments below. For more on New Zealand’s renewable energy transition, subscribe to this blog.
Sources and further reading:
- University of Auckland official announcement (17 March 2026)
- Beehive.govt.nz releases on RIF funding and geothermal strategy
- Ministry of Business, Innovation and Employment – From the Ground Up strategy document
Sources: University of Auckland
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