KenGen Risks Losing Olkaria Wells Over 18-Year Licence Blunder Kenya Electricity Generating Company (KenGen) faces a serious legal and operational risk at Olkaria after an error in the coordinates of its geothermal licence left part of the company’s wells, steam infrastructure and other assets outside its legally recognised area. The licensing mistake, made nearly two decades ago, remains unresolved despite the Ministry of Energy and Petroleum acknowledging the problem in 2017. The dispute has raised questions about the security of KenGen’s investments, the government’s management of geothermal resources and the potential consequences for Kenya’s electricity supply. Olkaria is the country’s most important geothermal centre and accounts for the overwhelming majority of Kenya’s installed geothermal generation capacity. Licence Error Exposes Strategic Assets The problem dates back to September 19, 2008, when the Ministry of Energy and Petroleum issued KenGen a licence covering ...
California Invests in Geothermal Exploratory Wells, Unlocking Next‑Generation Geothermal Growth, Clean Firm Power, and Investment Opportunities in California Geothermal Funding
California’s Big Bet on Next,Generation Geothermal, Why New State Funding Could Unlock Clean, Firm Power
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California just took an important step toward scaling next,generation geothermal energy. In the 2026 budget, Governor Gavin Newsom and the state legislature included targeted funds for geothermal exploratory wells and early,stage in,field programs, a move Clean Air Task Force (CATF) says is essential to overcoming the subsurface uncertainty that has slowed project deployment. This funding mirrors recommendations from CATF’s recent report, “Build Here: How Targeted State Investment in Geothermal Can Fill California’s Clean Firm Gap,” and could accelerate geothermal’s role as a reliable complement to wind, solar, and storage.
Below I unpack why the new funding matters, how it addresses the industry’s biggest barriers, what the potential economic and grid benefits are, and where private capital, developers, and policymakers should focus next to turn this promise into projects.
What California committed and why it matters
The 2026 state budget includes dedicated funding for:
- Exploratory geothermal drilling, providing cost,share for high,risk, early exploratory wells;
- Characterization and mapping programs, to collect subsurface data across prospective basins; and
- Early development support that helps projects reach the stage where private investment is willing to follow.
This kind of targeted, in,field support is important because developing geothermal, especially next,generation approaches like superhot rock or enhanced geothermal systems (EGS), carries heavy upfront subsurface risk. A single unsuccessful exploratory well can sink a project. By reducing that risk, the state catalyzes private capital and accelerates deployment across California’s vast but undercharacterized geothermal resource base.
The core barrier: limited subsurface knowledge
Despite California’s enormous theoretical geothermal potential and a workforce experienced in drilling and field operations, the state’s practical geothermal development has been held back by limited mapping and characterization of subsurface resources. The result:
- Investors perceive exploration as too risky and capital stays on the sidelines;
- Developers hesitate to deploy projects at scale; and
- A slow pace of new firm capacity entering the grid.
CATF’s analysis emphasizes that strategic public investment in early,stage exploration creates the data necessary to reduce perceived risk, enabling private developers and financiers to scale projects quickly. In plain terms: funding exploratory wells and mapping is like creating a property title for the subsurface, once the value is proven, markets respond.
Why next,generation geothermal is strategically valuable for California’s grid
Next,generation geothermal technologies, including EGS and superhot rock systems, promise firm, 24,7 carbon,free power that can operate with high capacity factors and long operational lives. That makes geothermal uniquely suitable to:
- Provide baseload and dispatchable firm capacity complementary to intermittent wind and solar;
- Reduce reliance on fossil fuel peaker plants and long,duration storage for reliability;
- Lower overall system costs by displacing expensive alternatives in high,penetration renewables scenarios.
CATF highlights that deploying geothermal at scale could reduce the cost of meeting California’s climate targets by providing consistently available clean energy and reducing the need for oversized storage or gas capacity that would otherwise be required for reliability.
How targeted state investment catalyzes private capital
Public support for early exploration does not replace private investment, it unlocks it. Key mechanisms include:
- Cost,share drilling programs that lower the barrier to proof,of,concept wells;
- Publicly funded mapping and subsurface datasets that reduce due,diligence time and expense for developers; and
- Early development grants or technical assistance that move projects from discovery to bankable status.
When a state provides credible, high,quality geological and drilling data, project economics become clearer. That de,risked profile attracts institutional investors, corporate offtakers, and project financiers who need predictable performance and risk assessment to commit large sums.
Economic and workforce benefits for California
Beyond grid reliability and lower energy costs, the state investment brings broader benefits:
- Job creation in drilling, engineering, and geothermal operations, leveraging California’s existing energy and drilling workforce;
- Local economic activity in rural regions where many geothermal resources lie, helping equity and regional development goals; and
- Long,term tax base growth from operating power plants and associated supply chains.
Because geothermal plants have long lifetimes and stable operations, they offer durable economic benefits to host communities compared with one,off projects.
Technical and environmental considerations
Next,generation geothermal development raises technical and environmental questions that must be managed:
- Induced seismicity risk: Enhanced systems that stimulate rock require robust monitoring and traffic,light protocols to manage seismic events and community impacts.
- Water use and chemistry: Drilling and reservoir management must minimize freshwater consumption and handle geothermal fluids safely to avoid contamination.
- Surface footprint: Exploration and plant siting should be designed to limit ecological disturbance and respect land use and cultural resources.
State funding programs should therefore include requirements for strong environmental safeguards, monitoring, transparency, and community engagement to build public trust and long,term social license.
How California’s funding aligns with CATF recommendations
CATF’s “Build Here” report argues that targeted in,field programs, focused on characterization, mapping, and early development support, are the fastest path to catalyzing private geothermal investment. The budget’s allocations match this approach by prioritizing exploratory wells and data generation. That alignment matters because it means:
- Public dollars fund the riskiest steps, not long after commercial viability is already established;
- Data generated by the program will be useful statewide, lowering costs for multiple future projects; and
- The state can accelerate lessons learned, best practices, and permitting improvements for geothermal deployment.
This is a pragmatic model: spend modest public funds upstream to reduce obstacles that have kept large private capital out of the market.
What should stakeholders do next?
To convert this funding into large,scale deployment, coordinated action is required across public and private actors:
- State agencies: Streamline permitting pathways, standardize data sharing, and set clear, consistent regulatory frameworks for induced seismicity and environmental protections.
- Developers: Advance project portfolios that can quickly use exploratory datasets to move toward bankable resource studies and power purchase agreements.
- Investors and offtakers: Signal demand through long,term offtake commitments and provide flexible financing tools tailored to geothermal’s development cycle.
- Communities and local governments: Engage early, ensure local benefits, and collaborate on monitoring and mitigation plans.
- Researchers and tool providers: Improve reservoir modeling, digital twins, and AI,driven exploration methods to further reduce risk and costs.
Potential challenges and risks to watch
The funding is an essential first step but not a panacea. Key risks include:
- Insufficient scale: Limited funding may only support a handful of wells, not the sustained exploration needed statewide.
- Political shifts: Future budget cycles could remove or reduce support if short,term pressures or political priorities change.
- Implementation delays: Slow permitting or poorly designed program rules could blunt the impact of funds.
- Private sector response: If the private sector doesn’t move quickly to commit follow,on capital, exploratory successes may not convert into operating projects.
Policymakers should design funding programs with predictable multi,year horizons and performance metrics to avoid these pitfalls.
A strategic opportunity for investors and clean,energy portfolios
For investors focused on decarbonization and reliable returns, California’s move signals a maturing policy environment for geothermal. Early opportunities include:
- Project developers building portfolios in undercharacterized basins where state data reduces exploration costs;
- Service companies providing drilling, reservoir stimulation, and seismic monitoring technologies;
- Financial products tailored to geothermal’s risk profile, such as layered risk,sharing, loss reserves, or blended public–private funds; and
- Corporate buyers exploring long,duration firm clean energy procurement to hedge intermittency and meet climate goals.
Investors who act early can secure attractive positions in a technology that offers long operational lives and stable generation economics.
Conclusion: A catalytic step toward clean, firm power
California’s budget decision to fund geothermal exploratory wells and in,field programs represents a pragmatic, high,leverage approach to unlocking a domestic source of firm, carbon,free power. When coupled with strong regulatory design, environmental safeguards, and coordinated private sector response, it could accelerate geothermal from niche contributor to a critical pillar of California’s clean energy future. CATF’s endorsement and alignment with its “Build Here” recommendations underscore that carefully targeted public investment can turn geology into bankable projects, and, ultimately, into affordable, reliable electricity for millions.
Sources : CATF
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