“Financial Benefits of Geothermal Power”

By Jim Broughton, Geothermal Advocates

Executive Summary

Data centers are rapidly transforming America’s energy landscape, driving explosive demand for new power. Fueled by AI, cloud computing, and digital infrastructure, U.S. data center electricity use surged to 176 TWh in 2023 and is projected to hit 325–580 TWh by 2028—potentially 12% of total U.S. consumption.1 Utilities like AEP, spanning Texas to Michigan, forecast 24 GW of new load by 2030, with more than half tied to data centers2.

Yet amid this buildout, geothermal energy stands out—offering clean, firm, dispatchable power that meets the reliability demands of hyperscale computing. Thanks to breakthroughs in Enhanced Geothermal Systems (EGS), geothermal is now viable nationwide—from western hotspots to emerging regions like Pennsylvania, Indiana, Ohio, Colorado, and Texas3. The evaluations of renewable energy in collocated power plants and data centers favors geothermal, which requires smaller footprints and shorter permitting timelines than wind, solar, or fuel cells. Geothermal power is more cost effective.

Geothermal delivers stable, 24/7 power for baseload and peak demand. It reduces grid congestion, boosts resilience, and accelerates decarbonization. EGS projects offer 3 to 4-year payback, 26 to 38% return on investment, and 22 to 33% internal rate of return. Geothermal is not a future option—it is a now opportunity for clean, dependable, financially compelling power.

What Is EGS?

EGS has already been deployed across the western U.S., with exploration expanding eastward. Unlike traditional geothermal, which taps shallow aquifers, EGS accesses heat from rock formations 2–3 miles deep. Drilling to the resource uses proven oil and gas techniques. Water is injected to fracture hot rock, creating a reservoir. Circulated water absorbs heat and returns to the surface, where Organic Rankine Cycle (ORC) systems convert it to electricity. The circulated water is then injected back into the well bores to complete a cycle of renewed energy.

Natural Gas vs. Geothermal

Natural gas power generation remains the default for utility-owned power plants serving data centers. For example, Entergy committed up to 2.2 GW of new gas-fired capacity to support Meta’s $10B data center in Louisiana5.

But fossil reliance brings long-term risks—price volatility, carbon exposure, and high O&M costs13 14. Geothermal avoids NOx and CO₂ emissions and uses minimal water. O&M costs are lower because EGS/ORC is a significantly simpler mechanical system operating at low temperature and pressure.

Known Geothermal Resources that Can Produce Power Using EGS

Studies show geothermal could meet 70% of data center growth by 20351. In Pennsylvania, it could meet 100% of electricity and heating needs within a decade⁶. This map shows the extent of geothermal availability for EGS across the U.S.

THIS MAP IS NOT UP TO DATE. ADDITIONAL KNOWN GEOTHERMAL RESOURCES ARE NOT SHOWN IN SOME STATES.

U.S. Map of geothermal resources suitable for EGS production. Download: Geothermal Resource Data, Tools, and Maps | Geospatial Data Science | NREL

National Renewable Energy Laboratory (NREL). Geothermal Resources of the United States—Identified Hydrothermal Sites and Favorability of Deep Enhanced Geothermal Systems. February 22, 2018.

Tax Treatment: A Financial Edge

The One Big Beautiful Bill (OBBB), passed July 2025, preserved key incentives for geothermal projects over 1 MW:
• 6% base ITC and up to 30% ITC on all CAPEX8 when paying prevailing wage rates. 10% bonus for made in America procurement practices and other restrictions and bonuses.
• 1-year bonus depreciation9
• Accelerated permitting (≤18 months) [President Trump’s Executive Order 14318, titled Accelerating Federal Permitting of Data Center Infrastructure]

Financials: A Geothermal Advantage

Geothermal ITC and depreciation shield early cash flow and reduce effective CAPEX. Developers can recover 40–50% of capital costs in year one. Combined Cycle Gas Turbine (CCGT) plants also qualify for bonus depreciation but they do not qualify for ITC:

· Placed in service before Jan 20, 2025: Eligible for 40% bonus depreciation.

· Placed in service on or after Jan 20, 2025: Eligible for 100% bonus depreciation9.

In addition to strong financial results, geothermal power offers shorter design, procure, construct and startup timelines—from 4 months to as much as 54 months—depending primarily on gas-fired turbine’s long lead time. (These estimates by the author are based upon general information in industry articles too numerous to cite.)

A Production Tax Credit (PTC) of $27.50 per MW is available for geothermal power production for every kWh sold by the producer10. This significant credit is available for 10 years from placed-in-service date. It has qualifying criteria including construction and in-service dates, labor pay standards, projects >1 MW, and more. The PTC incentives are not considered in the table below although geothermal power production will certainly qualify for some or all of this tax benefit. For a 500 MW plant operating 24/7, this benefit could be as much as $550K per year for 10 years.

Financial Metrics for: Geothermal power, CCGT without carbon capture system (CCS) and CCGT with carbon capture system

Minus sign (-) in column 5 “Notes” means subtract.

Strategic Summary

It is time for geothermal to take center stage. EGS delivers a rare alignment of environmental and financial strength. This is not speculative—it is already underway. With data center demand for clean power, federal incentives, private investment, proven drilling techniques, and reliable generation technologies, geothermal is poised to become a cornerstone of America’s baseload and peak power strategy. It is projected to supply 10–12% of U.S. electricity by 20501.

Forward-looking utilities and data centers are leaning-in to the geothermal opportunity—starting now. While CCGT still plays a flexible role, its fuel use, emissions, and regulatory exposure make geothermal increasingly compelling. When stakeholders assess year 1 and lifecycle values—not just upfront cost—EGS emerges as a firm, clean, and economically potent solution for modern energy systems.

Inflationary trends in power plant materials and labor costs since 2023. The added costs are considered in the financials presented in this paper.

o Materials cost for power generation and power substations has risen 12 to 13%. This inflation is the same for the surface portion of a geothermal power plant, up 12 - 13%.

o Labor costs for constructing power plants has risen 15 - 18% because of the specialized labor forces like pipe fitters, welders, structural erection and more. It is safe to say this inflation has been experienced by all power plants built with different technologies including EGS.

o EGS plant costs have dropped since 2023 based upon estimated total costs published by DOE and NREL that range from $3,000 to $4,000 per kW. These data are the basis for most geothermal power plant cost estimates including EGS drilling costs.

o Design, procurement and construction schedules have been shortened due to modular construction resulting in cost savings.

o EGS drilling costs represent 45 - 50% of the total project costs. Drilling costs have dropped 70% in the last year. This means the cost for EGS plants is down 35 - 40% since 2023. During this time other technologies have experienced cost increases. In spite of costs increases for materials and labor, EGS outperforms other technologies regarding cost.

o EGS drilling costs represent 45 - 50% of the total project costs. Drilling costs have dropped 70% in the last year. This means the cost for EGS plants is down 35 - 40% since 2023. During this time fossil-fuel technologies have experienced cost increases. In spite of costs increases for materials and labor, EGS performs very well compared to other technologies regarding cost.

o The U.S. power capacity is about 24 - 25% from renewables. Commercial large-scale solar plant costs are down 22 - 28% since 2023. And, wind power prices have dropped, too, from about 5 - 9%. Congratulations!

New References:
- Turner & Townsend, ROIMI Q1 2025: Cost Inflation and Price Trends, April 2025. https://lnkd.in/d95n35ne
- PeopleReady Skilled Trades, Construction and Skilled Labor Report Q1 2025, May 2025. https://lnkd.in/dU-uidatFootnotes (Note: articles about costs are dated. Most data is 2023 reported in 2024, at least one to two years old. Since that time, materials and labor costs have escalated significantly.)

1. Shehabi, Arman, Sarah J. Smith, Alex Hubbard, Alex Newkirk, Nuoa Lei, Md Abu Bakar Siddik, Billie Holecek, Jonathan Koomey, Eric Masanet, and Dale Sartor. 2024 United States Data Center Energy Usage Report. Lawrence Berkeley National Laboratory, December 2024. https://climate.mit.edu/sites/default/files/2025-02/lbnl-2024-united-states-data-center-energy-usage-report.pdf.

2.Power Engineering. “AEP Projects 24 GW of New Load by 2030, Mostly from Data Centers.” power-eng.com.

3.Utility Dive. “Data Centers Drive Utility Expansion.” utilitydive.com.

4.Canary Media. “Was 2024 a Breakout Year for Next-Generation Geothermal Energy?” canarymedia.com.

5.Utility Dive. “Entergy’s $10 Billion Commitment to Meta Data Center.” finance.yahoo.com.

6.U.S. Energy Information Administration. “Annual Energy Outlook 2025.” eia.gov.

7.PSU Center for Energy Law and Policy. “The Future of Geothermal Energy in Pennsylvania.” celp.psu.edu.

8. Internal Revenue Service. Publication 6045 (Rev. 2-2025): Tax-Exempt Entities and the Investment Tax Credit (§ 48 and § 48E). Washington, DC: Department of the Treasury, 2025. https://www.irs.gov/pub/irs-access/p6045_accessible.pdf.

9. Internal Revenue Service. “Additional First Year Depreciation Deduction (Bonus) – FAQ.” IRS.gov. Last modified July 2025. https://www.irs.gov/newsroom/additional-first-year-depreciation-deduction-bonus-faq.

10. Kirkland & Ellis LLP. “One Big Beautiful Bill Act Brings Big Changes to Green Energy Tax Credits.” Kirkland.com. Published August 6, 2025. https://www.kirkland.com/publications/kirkland-alert/2025/08/one-big-beautiful-bill-act-brings-big-changes-to-green-energy-tax-credits

11. Fervo Energy. Fervo Energy’s Record-Breaking Production Results Showcase Rapid Scale Up of Enhanced Geothermal. September 10, 2024. https://fervoenergy.com/fervo-energys-record-breaking-production-results-showcase-rapid-scale-up-of-enhanced-geothermal

12. Singh, Ankush, et al. Designing the Record-Breaking Enhanced Geothermal System at Project Cape. ResFrac Corporation and Fervo Energy. URTeC Conference, June 2025. https://www.resfrac.com/wp-content/uploads/2025/06/Singh-2025-Fervo-Project-Cape.pdf

13. U.S. Department of Energy. Pathways to Commercial Liftoff: Next-Generation Geothermal Power. Washington, D.C.: U.S. Department of Energy, July 2025. https://www.energy.gov/sites/default/files/2025-07/LIFTOFF_DOE_Next-Generation-Geothermal%20Power.pdf

14. U.S. Energy Information Administration (EIA). Capital Cost and Performance Characteristics for Utility-Scale Electric Power Generating Technologies. January 2024. https://www.eia.gov/analysis/studies/powerplants/capitalcost/pdf/capital_cost_AEO2025.pdf

15. Gas Turbine World. “Gas Turbine Costs $/kW.” January 2024. https://gasturbineworld.com/gas-turbine-costs-kw/