If the growth patterns of data centers follow historical clustering trends, geothermal could economically meet up to 64% of expected demand growth by the early 2030s under baseline assumptions developed by the Rhodium Group, the research firm recently said.
“If data centers locate in areas with the best geothermal resource, geothermal has the potential to meet all projected data center demand growth at prices 31-45% lower than in a clustered approach,” Rhodium Group said in a March 11 note.
“Policymakers, technology companies, and geothermal developers need to act quickly to achieve the speed and scale required to meet this opportunity, and we outline policy changes like improvements to permitting processes that would be necessary to do so. Geothermal could be a key solution to meeting the growing electricity needs of data centers,” it said.
The note was written by Rhodium Group’s Ben King, Wilson Ricks, Nathan Pastorek and John Larsen.
Geothermal Energy’s Potential
Currently, there is around 4 gigawatts (GW) of geothermal nameplate capacity on the US power grid.
“This capacity is all in western states and is highly concentrated in California and Nevada. Effectively all operating geothermal plants in the US today are based on conventional hydrothermal technology, in which wells are drilled to produce hot water or steam from naturally permeable reservoirs up to a few kilometers underground,” Rhodium Group said.
Conventional hydrothermal power generation technologies are well-demonstrated and commercially available but limited by the prevalence of suitable geological conditions, it noted.
“By contrast, next-generation geothermal technologies can be economically deployed in a much wider swath of the country because they are not reliant on these natural subsurface conditions. While surface facilities are often similar to those used at conventional geothermal power plants, next-generation technologies utilize advanced drilling and reservoir engineering techniques to enable extraction of geothermal heat from rock formations that do not naturally host hydrothermal reservoirs.”
Rhodium Group analysts focused on the use of enhanced geothermal systems (EGS), one type of next-generation geothermal, in which hydraulic fracturing and horizontal drilling techniques are used to create fractures through which fluid can be injected to be warmed by the Earth’s heated rock formations.
Because EGS does not require a naturally permeable hydrothermal reservoir like conventional geothermal, it is able to tap into heat across broader swaths of the globe, they noted.
The report quantifies the amount of behind-the-meter EGS electricity generating capacity that could be used to meet growing electricity demand from hyperscale data centers. “Though this represents only a portion of data center demand and one geothermal solution to meeting this demand, we believe this approach demonstrates geothermal’s potential for a couple of reasons.”
Across the scenarios the analysts consider, “we find that behind-the-meter geothermal could meet a large share of demand when co-located with new hyperscale data centers. The extent to which this is the case varies depending on the siting strategy used for building data centers as well as attributes of the geothermal installations,” which are detailed in the note.
The analysis notes the “sizable and lucrative demand-side pull for geothermal developers: the levels we’ve discussed represent a 2-7-times increase in the amount of installed geothermal power generating capacity beyond what’s on the grid today in less than 10 years. Moreover, access to electricity is already constraining the growth of data centers in some regions of the US today, and that constraint will only grow—especially if data centers expand at the fastest expected rates.”
This is an issue “that needs to start to be addressed today. As such, taking advantage of this opportunity requires the geothermal industry to dramatically increase both the speed at which it can build new facilities as well as the scale at which these new facilities are built.”
Changes to policy at all levels of government can help enable this growth, with the note’s authors listing and detailing the following areas:
- Streamline permitting
- Clarify resource rights and behind-the-meter regulations
- Improved data
- Scale up supply chains
- Invest in further innovation
- Maintain federal incentives
