Geothermal technology – deriving energy from the naturally occurring heat beneath the Earth’s crust – is nothing new in the United States. In fact, the United States, with 60 plants with a nameplate capacity of about 3800 MW, leads the world in geothermal power production. However, traditional geothermal technologies have yet to reach the full potential of this energy resource. Several technical advancements have entered the field with the potential to help geothermal play a significant role in achieving U.S. decarbonization goals: enhanced geothermal systems; closed loop systems; mineral extraction; and load following. The U.S. Department of Energy’s Loan Programs Office (LPO) is prepared to help drive the industry’s commercial deployment of innovative geothermal technologies to leverage their climate benefits.
LPO finances next-generation U.S. energy infrastructure, serving as a bridge to bankability for breakthrough projects and technologies and de-risking them at early stages of investment so they can be developed at commercial scale.
Why Advanced Geothermal?
Established geothermal projects could play a vital role in meeting the Biden Administration’s goal of establishing a 100% clean energy economy by 2050, but those plants are only operating at around 60% of installed capacity. According to DOE’s GeoVision report, improving techniques, tools, and methodologies at currently operating geothermal plants can restore the plants to design capacity and utilizing innovative designs in new plants can help the United States fully utilize this abundant source of energy. Advancements in geothermal could also be applied to industrial uses that are difficult to decarbonize, such as clean hydrogen production, greenhouses, concrete, lumber drying, and heat pumps.
Despite the clear benefits and the vast available resources, however, commercialization of advanced geothermal technologies has faced challenges. Existing power purchase agreements (PPAs) disadvantage geothermal projects’ access to the commercial debt markets as geothermal tends to be undervalued as a long-term resource by offtakers, and financing geothermal projects is often seen by banks as too risky because of uncertainties around resource viability.
LPO can help to provide financing for innovative geothermal projects to create the necessary operating history, either from establishing new geothermal plants using new or existing wells or by updating the current portfolio of geothermal plants in the United States, hopefully leading to an acceleration in commercial deployment and private debt for the geothermal industry.
How LPO Can Help
DOE’s GeoVision report estimates that geothermal electricity generation has the potential to increase by 26-fold in the United States by 2050, but only if the technology can overcome the market’s barriers to entry. Geothermal projects could be eligible to receive LPO support for the deployment of innovative technologies in utility-scale power generation that meet programmatic requirements, thereby de-risking future geothermal energy projects and modeling for private lenders how to structure deals with unique PPA structures and resource risk. With a full Technical and Project Management team on staff, backed by the scientists and engineers across DOE and the national labs, LPO is uniquely positioned to understand the application of innovative energy technologies in commercial projects.
LPO’s Title 17 Innovative Energy Loan Guarantee Program (Title 17) may be able to provide access to debt capital to support the domestic deployment of advanced geothermal projects that meet programmatic requirements, specifically through the open Renewable Energy Projects and Efficient Energy Projects (REEE) solicitation.
To learn more about how LPO could help to support your U.S. geothermal project or to engage with LPO staff for a pre-application consultation, please email LPO@hq.doe.gov. Please provide a brief description of the project, estimated costs and timeline, and location. During the consultation, LPO will work with the applicant to determine whether its geothermal technology project is eligible for a loan guarantee.
Geothermal energy has a vital role to play in helping to achieve our nation’s climate goals. Let LPO partner with you to make your innovative project a reality.
Contributors: Thomas Pollog and Kennedy Nickerson
This post is part of a blog series highlighting some of the technology sectors eligible for support from the U.S. Department of Energy Loan Programs Office. Learn more about LPO and its loan eligibility requirements at energy.gov/lpo.