Global Geothermal Power: Policies, Funding, Wells, Strengths, Opportunities and Barriers Geothermal is moving into a broader investment cycle. In 2026, the story is no longer limited to volcanic power plants in a few classic markets; it now includes enhanced geothermal systems, closed-loop designs, district heating, superhot rock, lithium from brines and industrial heat. Across the United States, Canada, Germany, the United Kingdom, Australia, New Zealand, Japan, Iceland, France and Italy, the sector is being shaped by a simple question: who is de-risking the first wells, and who is ready to finance the next ones? United States: the next-generation testbed The United States has the broadest geothermal innovation ecosystem in this group, with a mature conventional base in the West and a fast-growing next-generation pipeline. The main policy signal in 2026 is the Department of Energy’s US$171.5 million funding opportunity for next-generation geothermal field-scale tests, exploration...
NGP: A Siemens Energy Spin-Out
The most innovative player in advanced geothermal energy you’ve never heard of.
By: Robert Buluma
When carbon dioxide is viewed not as a problem but as the key to unlocking 24/7 renewable energy, the traditional boundaries of geothermal power expand dramatically. That is the foundational bet of Factor2 Energy, a deep-tech spin-out from Siemens Energy, whose intellectual property approach is known as NextGen Geothermal Power (NGP). This is not merely an incremental improvement on conventional geothermal, but a fundamental re-engineering of the concept—creating a closed-loop, CO₂-based system that promises cheaper, safer, and vastly more scalable access to the planet’s natural heat.
The Core Innovation: Why CO₂ Beats Water
Conventional geothermal power has been limited for over a century by a simple reality: it needs three things to work simultaneously—heat, water, and natural underground permeability. The world’s best resources are concentrated in tectonically active regions like Iceland, the Philippines, and the western United States, leaving the rest of the globe largely excluded from geothermal’s potential. NGP breaks this paradigm by replacing water with carbon dioxide as the heat-transfer working fluid.
This substitution unlocks powerful thermodynamic advantages. CO₂ has significantly lower viscosity than water, which means it flows more easily through underground formations without requiring high injection pressures. More importantly, CO₂ density is highly sensitive to temperature changes, creating a strong natural thermosiphon effect: as the CO₂ heats up underground, it becomes less dense and rises naturally to the surface without any subsurface pumping. This eliminates the need for downhole pumps—major points of failure and maintenance in conventional plants—and dramatically reduces parasitic energy consumption.
The NGP system operates as a direct-cycle closed loop. Injected CO₂ is heated by the geothermal gradient as it passes through high-permeability reservoirs capped by impermeable rock layers. The heated CO₂ rises, expands through a turbine to generate electricity, and is then condensed and reinjected to repeat the cycle indefinitely. The direct-cycle design reduces the number of required components, lowering both capital expenditures (CAPEX) and ongoing maintenance costs compared to the binary-cycle systems common in lower-temperature conventional geothermal projects.
Perhaps most crucially, because CO₂’s thermophysical properties allow efficient operation at moderate temperatures, NGP does not require exceptional geothermal anomalies to function effectively. This expands potential deployment sites across regions previously considered geothermally marginal, including large portions of central and northern Europe, the eastern United States, and other non-volcanic areas.
The environmental implications are also striking. The closed-loop configuration eliminates the need for hydraulic fracturing, ultra-deep drilling, and extensive horizontal wellbore networks, while minimizing water consumption—all common sources of public opposition and regulatory delays for conventional geothermal and Enhanced Geothermal Systems. Additionally, the system inherently stores significant quantities of CO₂ in the subsurface throughout its operational life, effectively coupling renewable power generation with permanent carbon sequestration.
Validated Technology: From Siemens Incubation to Field Proof
This approach is not theoretical. Siemens Energy first incubated the NextGen Geothermal Power concept in 2019, dedicating several years to development and refinement before launching Factor2 Energy as an independent spin-out in the second quarter of 2025. A critical proof-of-concept field test was conducted in partnership with MOL Group in Hungary, marking a pivotal validation phase for the technology. The testing successfully achieved stable CO₂ circulation, the validation of calculation models, effective system regulation, and, most importantly, verification of the thermosiphon concept—showing that CO₂ could indeed circulate naturally without subsurface pumps.
Having successfully completed this proof-of-concept phase, the company’s immediate priority is to develop a first-of-its-kind demonstration power plant, targeting a scale of approximately 5 MW at Technology Readiness Level 8 (system completed and qualified), with the eventual ambition of building commercial plants exceeding 30 MW once fully scaled. To that end, the company is engaged in a pre-front-end engineering design study for a ~10 MW NGP demonstration plant in the United States, assessing site-specific geology, CO₂ source availability, system design, and economic parameters including levelized cost of electricity.
Strong Financial Backing and Market Positioning
Investors have responded with enthusiasm. In September 2025, Factor2 Energy closed its seed financing round, raising over €5 million ($9.1 million). The round was led by At One Ventures, a deep-tech climate venture capital firm, with participation from Siemens Energy Ventures, High-Tech Gründerfonds, Gründerfonds Ruhr, and Verve Ventures. The funding is being deployed to accelerate technological development and construct the pilot plant that will demonstrate commercial scalability.
This financial confidence reflects NGP’s compelling projected economics. According to company analysis, the technology could potentially double the electricity yield compared to conventional geothermal methods. Furthermore, the approach is particularly attractive to traditional oil and gas companies, as it leverages existing drilling technologies and workforce skills while providing a credible decarbonization pathway for their operations. Factor2 Energy’s business model includes both licensing its intellectual property to project developers and directly developing its own power plants, providing multiple routes to market.
Positioning Within the Advanced Geothermal Revolution
NGP sits at the intersection of two major trends reshaping the energy landscape. First, advanced geothermal technologies have reached an inflection point, with estimates that at least 300 gigawatts of reliable, flexible geothermal power could be deployed on the U.S. grid alone by 2050—up from just 4 GW today. Major initiatives and hundreds of millions of dollars have been committed to support next-generation geothermal field tests. Globally, more than $1.5 billion has been invested in next-generation geothermal companies since 2021.
Second, the emergence of closed-loop and advanced geothermal systems has opened new pathways beyond conventional hydrothermal resources. Where Enhanced Geothermal Systems attempt to create artificial permeability through hydraulic stimulation—bringing risks of induced seismicity that have stalled projects in Switzerland and South Korea—closed-loop approaches like NGP and others decouple power production from natural permeability entirely. One competitor’s achievement of delivering commercial grid power from a closed-loop system marked a historic validation of the broader closed-loop category.
However, NGP differentiates itself from even these advanced peers through its use of CO₂ rather than water as the working fluid. Where other systems use water-based heat transfer, NGP’s CO₂ circulation provides inherent carbon sequestration, eliminates the risk of mineral scaling and corrosion associated with geothermal brines, and capitalizes on CO₂’s superior thermosiphon properties to avoid any subsurface pumping requirements.
Technology Roadmap and Commercial Strategy
The technology’s development roadmap follows clear, phased milestones. Having validated the concept with the Hungary field test, Factor2 Energy aims to commission its demonstration plant at megawatt scale in the near term, followed by commercial deployment of 30+ MW power plants designed to serve industrial customers and, notably, data centers. The data center focus is strategically astute: these facilities require continuous, reliable baseload power, are highly sensitive to carbon emissions, and have deep pockets willing to pay a premium for 24/7 clean energy.
NGP’s target levelized cost of electricity is projected to become competitive with other firm renewable sources, particularly as carbon pricing mechanisms increasingly value both zero-emission generation and permanent geological CO₂ storage. The company’s ability to leverage existing Siemens Energy components and drilling technologies—rather than requiring entirely new supply chains—substantially reduces capital requirements and accelerates time-to-market compared to completely novel energy systems.
Addressing the Challenges
No transformative energy technology is without obstacles, and NGP faces several. The business model requires access to suitable geology with adequate temperature at depth, porous and permeable reservoir formations, and an overlying cap rock to contain the injected CO₂. While less restrictive than conventional geothermal requirements, site selection remains a critical success factor. Additionally, the technology currently depends on a source of captured CO₂—ideally from industrial sources or direct air capture—to charge the system initially. For a system marketed as carbon-negative, ensuring the CO₂ supply chain genuinely delivers net atmospheric removal rather than merely displacing emissions is essential.
From a regulatory perspective, injection of CO₂ into deep geological formations for combined power generation and permanent storage sits at the intersection of subsurface resource rights, carbon sequestration permitting, and power generation licensing—a combination that no single regulatory framework fully addresses at present. Finally, while NGP’s avoidance of hydraulic fracturing reduces induced seismicity risk, any subsurface fluid circulation carries some degree of geological uncertainty that must be carefully managed.
Conclusion: Why This Matters Now
NextGen Geothermal Power merits serious attention because it addresses two of the most intractable problems in energy transition simultaneously: how to generate reliable, dispatchable renewable power outside wind and solar’s intermittency, and how to permanently sequester carbon dioxide at scale. The technology emerges from Siemens Energy’s deep engineering pedigree, has been validated in field conditions, and is backed by sophisticated venture capital at a moment when advanced geothermal is finally achieving commercial liftoff.
For investors and energy planners, NGP represents a plausible pathway to geothermal expansion far beyond the traditional Ring of Fire—into the heartlands of Europe, the eastern United States, and other geographies where geothermal has never before been economically viable. For a world struggling to balance decarbonization with growing electricity demand from data centers, industrial electrification, and broader economic growth, technologies that deliver 24/7 carbon-free power while actively removing CO₂ from the atmosphere are not merely interesting; they are essential.
Factor2 Energy and its NextGen Geothermal Power system will not replace wind and solar, nor will it single-handedly solve climate change. But as part of a portfolio of advanced geothermal approaches now reaching commercial readiness, it offers something rare: a genuinely novel solution to an old problem, leveraging the molecule we most need to eliminate—CO₂—to unlock the power beneath our feet.
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