In the face of ongoing pushback against wind and solar energy generation project development from both federal and certain state governments, coupled with the need to address continually increasing electricity demand, a turn back to fossil fuels is not the only avenue of interest or viable solution. “Alternative Energy” sources, including nuclear and geothermal, as well as battery storage systems as key components to alternative energy infrastructure, have been offered an increased opportunity to meet the growing demands. This limited series reviews recent and current federal and state initiatives to expand nuclear and geothermal, as well as battery, projects given that barriers to the establishment of other renewable and alternative energy options persist.
Geothermal Energy.
Geothermal is a resource proven to provide firm, flexible, and carbon-free energy with the valuable potential to assist with U.S. grid reliability and resiliency, as well as the promise of affordable power. Geothermal energy can generate electricity and power ground-source heat pumps for heating and cooling serving residential and commercial buildings. Also, geothermal heat pumps (“GHPs”) serve as promising alternatives to traditional temperature regulation technology. Though use of geothermal energy for electricity production is typically geographically limited due to the necessity of supportive geology (i.e., hydrothermal reservoirs from which hot water is pumped, turned to steam, and subsequently used to generate electricity), technological advancements have made the use of geothermal energy more attractive than before, leading to increased geothermal project development.
According to a 2025 U.S. Geothermal Market Report by the National Laboratory of the Rockies, key technological advances include the development of next-generation geothermal technologies such as Enhanced Geothermal Systems (“EGS”) and advanced closed-loop geothermal systems. Importantly, such technological advancements have led to declined costs and construction time for EGS projects, as well as mitigated risks of induced seismicity. From 2020 to 2024, geothermal power capacity has increased from 3.67 GW to 3.97 GW, and heat pumps, including GHPs, have been outselling gas furnaces since 2021. The U.S. Department of Energy (“DOE”) indicates the potential for at least 300 GW of geothermal power on the U.S. grid by 2050.
Federal Initiatives.
On February 25, 2026, the DOE announced a $171.5 million funding opportunity to support research and development efforts for next-generation geothermal field-scale tests for both electricity generation and exploration drilling to support geothermal prospects. Funding goals aim to, among other things, minimize risks for geothermal development approaches and broaden locations. The funding opportunity focuses on further development of EGS and closed-loop geothermal technology systems through field tests and drilling to gather supporting data and information. The current round of applications is open for EGS field tests and drilling for next-generation and hydrothermal resources, with a full application submission deadline of May 14, 2026. On March 30, 2026, the DOE also announced its selection of eight projects for its GRID initiative to receive a total of $9.5 million to use advanced modeling and analysis tools to quantify and demonstrate how geothermal power supports the U.S. grid. Selected projects include various grid modeling locations in the Pacific Northwest, Western U.S., Southwest U.S., and Texas.
Further, announced by the DOE on January 7, 2026, the Geothermal Power Accelerator, a collaboration between the DOE and the National Association of State Energy Officials (“NASEO”), is a 15-state collaboration to rapidly expand geothermal power development on the U.S. grid through partnership with the private sector and by setting statewide geothermal goals and advancing other policies and programs that encourage geothermal expansion and development. Currently, the state energy offices of Arizona, California, Colorado, Hawai'i, Idaho, Louisiana, Montana, Nevada, New Mexico, Oregon, Pennsylvania, Utah, West Virginia, Alaska, and Washington are part of the effort.
State Initiatives.
As of December 2025, according to the 2025 U.S. Geothermal Market Report, 29 states offer incentives for geothermal electricity projects and 17 states and Washington D.C. promote geothermal electricity through tax credits. Additionally, 34 states and Washington D.C. have incentive policies for GHPs. Many states also have geothermal energy policies and regulatory policies for GHPs, including portfolio and efficiency standards, as well as net metering and interconnection standards. Further, several states, including California, Washington, Maryland, and New York, have enacted regulations and established programs addressing a need for Thermal Energy Networks (“TENs”), involving a shared distribution loop connecting decentralized GHPs and servicing multiple buildings.
States are also taking part in advancing important research and development, as well as partnering to establish geothermal projects. For example, on February 4, 2026, Arizona announced a $1 million investment aimed to better understand Arizona’s geothermal resources and identify potential sites for the deployment of next-generation geothermal technologies. In June 2025, New Mexico partnered with XGS Energy and Meta to develop 150 MW of advanced geothermal energy to power a Meta data center. With regard to incentives for geothermal development, Colorado currently offers tax credits, including up to 50% for certain projects, to support projects including for the production of geothermal electricity, installation of a TEN, and conducting a TEN study.
Conclusion.
Similar to nuclear energy, continued expansion of geothermal energy in the United States, both for electricity generation and for residential or commercial heating and cooling, will likely soon intensify with continued research and development initiatives illuminating the benefits of geothermal and supporting the efficient establishment of geothermal projects. Such expansion is another one to keep on the radar.
For more information, please contact R. Keith Gordon, Sean Neal, or Paige Punzalan.
