According to the U.S. Department of Energy’s 2019 GeoVision, the right alignment of technology innovation, market and policy incentives, as well as consumer adoption and awareness, could lead to the development of over 60 gigawatts of electricity generation in the U.S from geothermal resources by 2050, as well as the installation of 20 million geothermal heat pumps, and 17,500 geothermal district heating systems.

“The major challenge that geothermal has traditionally had is the fact that the ITC [Investment Tax Credit] and the PTC [Production Tax Credit] have been renewed in fits and starts over the decades that they’ve been available,” Sean Porse, the data, modeling, and analysis program lead at the U.S. Department of Energy, said. “As a consequence, long lead times for geothermal projects, which require 3-to-5 years, or even longer, require a level of certainty that unfortunately, a one-to-two-year availability window for an ITC or PTC does not provide… The good news is that I think the landscape is changing in a positive way. And that all started with the enactment of the Inflation Reduction Act (IRA).”  

As part of Governor Polis’ Chair Initiative, The Heat Beneath Our Feet, WGA hosted a webinar to discuss strategies moving forward to incentivize geothermal development. This included how states can best leverage the new, “technology neutral” tax credits in the Inflation Reduction Act with their own geothermal programs to provide developers with more long-term certainty as to available incentives.

“When we look at instances from the wind and solar industry, we are at the same place [with geothermal energy] as we were at 10-to-15 years ago,” Bryce Carter, the program manager for emerging markets and geothermal at the Colorado Energy Office, told webinar attendees. “The question is how can states leverage the IRA to take advantage of those incentives and scale the industry.”

Colorado, for one, recently proposed legislation to create a $35 million tax credit for geothermal electricity generation projects, which includes a 30% investment tax credit up to $1 million per year, which can jump to 50% if the project demonstrates technology advancements or significant production capabilities. In addition, there will be a production tax credit of $0.003.

Carter also spoke about Colorado’s consideration of a clean firm standard for renewable energy projects, similar to the standards that the California Public Utilities Commission passed last summer, which require utilities of a certain size to incorporate more reliable sources of renewable energy into their portfolio. Doing so, Carter said, will ensure that utilities can sustainably generate the base load power that more traditional sources of renewable energy, like solar and wind, cannot.

While Landon Stevens, the senior program director for the electricity sector at Clear Path Energy, said that the proposed tax credits in Colorado are exactly what developers need to leverage federal funding and jumpstart new projects, he also noted that permitting delays must be addressed if the private sector is to take full advantage.

“It doesn’t matter how much money you have if you can’t get the permit,” he said. “Getting a categorical exclusion for geothermal would move the needle. It could happen administratively or legislatively and there have been bills in the past that have aimed to do this, but they didn’t get off the ground. A categorical exclusion could be what the industry needs to get geothermal off the ground on public lands, which would be of benefit to the West.”

Learn more by watching the webinar below. You can also watch all of the previous six episodes of The Heat Beneath Our Feet webinar series, here. Topics include: geothermal electricity generation, Enhanced Geothermal Systems, geothermal heat exchange systems, geothermal mapping and permitting, geothermal grid integration, and geothermal energy storage.