Is geothermal the new zero-carbon answer to US power needs?

Welcome to Energy Source, coming to you from New York.

Federal Reserve chair Jay Powell said Donald Trump’s tariffs may cause higher inflation and slower growth, complicating the US central bank’s endeavour to tame inflation with tight monetary policy.

Fears over higher inflation and slower growth in the world’s biggest economy have caused oil markets to remain volatile. Goldman Sachs, HSBC and JPMorgan have all trimmed oil price forecasts for this year and next.

As BP and Shell have cut their investment in renewable energy, my colleagues Ian Johnston and Tom Wilson report that TotalEnergies has avoided its rivals’ fate. The French group has consistently increased oil and gas production by 3 per cent each year while investing $4bn annually in its integrated power division, which focuses on producing and supplying electricity through wind farms, solar farms and gas-fired power stations.

My colleague Amanda Chu reported that the US has halted a $5bn offshore wind project that Norway’s Equinor is developing. The Trump administration’s move signals an aggressive new push against clean energy initiatives. But not all renewable energy sources are treated equally.

In today’s Energy Source we take a closer look at geothermal, a renewable energy resource that has been quietly gaining traction as it has garnered support from Big Tech as a promising method to power data centres. Despite the Trump administration’s scepticism surrounding the clean energy industry — particularly wind and solar — they have championed geothermal.

Thanks for reading, Alexandra

Geothermal: the Trump administration’s renewable energy darling

As Donald Trump pursues his “drill, baby, drill” agenda, one renewable energy source may unexpectedly benefit from his pro-fossil fuels stance. 

Geothermal energy, which uses the earth’s heat to create electricity, is quietly gaining popularity in the US as new technological advancements may be able to scale this carbon-free, around-the-clock power source. 

Traditional geothermal plants, which generate electricity by moving fluid along hot rocks, must be located near natural reservoirs of hot water that exist below the earth’s surface. But advances in the technology can utilise techniques from the oil and gas industry to drill wells that can generate energy from man-made reservoirs that can be located anywhere. 

“The same skillsets that are used for oil and gas drilling are what allows for next generation geothermal to move forward,” said Drew Nelson, vice-president of programmes, policy and strategy at Project InnerSpace, a non-profit focused on advancing the geothermal industry.

Next-generation geothermal has already attracted support from big technology companies, including Google, which are seeking clean energy for their data centres. It also has the support of the White House. Energy secretary Chris Wright used to be an investor in geothermal start-up Fervo Energy and named the power source as an area of interest during his confirmation hearing.

While last year may have been nuclear’s time to shine, some analysts believe geothermal energy could steal the spotlight in 2025 as it benefits from support from the Trump administration and Big Tech.

Google has already partnered with Fervo Energy to supply power to its data centres in Nevada. Another geothermal start-up, Sage Geosystems, has agreed to supply Meta with 150MW of capacity to power its data centres starting in 2027.

“The need for power from the AI sector has only increased the interest overall in geothermal,” said Cindy Taff, chief executive of Sage Geosystems, adding that there had been “significant interest” from other hyperscalers in the energy source. 

The International Energy Agency reported that geothermal meets less than 1 per cent of global energy demand but with continued project cost reductions and technological improvements, it estimates that it could meet up to 15 per cent of global electricity demand growth to 2050.

Geothermal also fits with the Trump administration’s mantra of “drill baby drill”, as it can leverage fracking and drilling skills from the oil and gas industry. Wood Mackenzie estimates that if geothermal is to grow from 50GW to over 250GW by 2050, the industry needs to drill 35,000 new wells. 

Despite the excitement, experts warn that the technology still has a long way to go.

The Department of Energy said in a report last year that it expects “commercial lift-off” to be attainable as early as 2030 but only if it “can achieve a set of market conditions around cost, demonstrations, value and community engagement”.

Richard Hood, senior research manager at Wood Mackenzie’s subsurface team, said that many of the next-generation geothermal projects are mostly pilot projects that have yet to be proven at full commercial scale. 

It is also very expensive to drill. Gregory Keoleian, director at the University of Michigan School for Environment and Sustainability, said that in certain areas of the US, hot rock that isn’t close to the surface will force producers to drill deeper — an increasingly expensive endeavour.

Wood Mackenzie estimates geothermal’s current levelised cost of electricity to be between $100/MWh to $200/MWh, which is much higher than its estimate for large-scale nuclear power plants that are estimated to range between $75/MWh to $100/MWh. 

“There’s a big nuclear drive in America that’s running parallel to this geothermal drive, but nuclear is far more established and is seen as cheaper,” Hood said.

Still, as the technology becomes more advanced it is likely to drive down costs. Last year, Fervo Energy announced it had shown a 70 per cent year-over-year reduction in drilling times for its Cape Station project that has translated into costs falling from $9.4mn to $4.8mn per well. 

“We’re already seeing costs come down as more oil and gas expertise is brought into the sector,” Project InnerSpace’s Nelson said. “The technology will be improved as more and more projects get up off the ground.” (Alexandra White)

Job moves

enCore Energy has appointed Nathan Tewalt to its board of directors.

John Donaleski has joined White & Case as a partner in its global project development and finance practice and global energy industry group.

Petronet LNG has named Saurav Mitra as director of finance and chief financial officer.

Kaveh Rouhi has been appointed chief financial officer of SMA Solar.

Power Points

The European Commission is studying legal options that would allow companies to break long-term Russian gas contracts without penalties.

The UK regulator says British households could face different electricity rates depending on their income.

The Malian government has threatened to seize control of Barrick Gold’s assets in the country as tensions between the Canadian mining company and the military junta rise.

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.