IRA fate will affect U.S. renewable energy projects
Companies have invested in renewable energy projects, from solar to geothermal. The Trump administration's focus on oil and gas may slow renewable energy research and advancement.
Big tech companies, including Meta, Microsoft and Google, have invested in renewable energy projects such as geothermal to power U.S. data centers. President Donald Trump's actions, including an executive order freezing clean energy incentives, may hamper further advancement.
The Inflation Reduction Act (IRA), signed into law by President Joe Biden, incentivized companies to invest in renewable energy projects outside of traditional oil and gas. Trump issued an order in January revoking implementation of the IRA's energy and infrastructure provisions. Tim Latimer, CEO and co-founder of geothermal energy company Fervo Energy, said IRA tax credits help reduce overhead costs for geothermal projects.
Google contracted with Fervo in 2021 to build a geothermal project in Nevada. The project became operational in 2023 and provides electricity to the local grid, powering Google's data centers. Meanwhile, Meta signed a deal in Aug. 2024 with Sage Geosystems to "significantly expand the use of geothermal power in the U.S.," and Microsoft created its Thermal Energy Center in 2021 on the Microsoft campus in Redmond, Wash. Big tech companies are building more data centers to support high-powered AI models, which require substantial energy to operate.
At a time when investment and interest in geothermal energy is rising, Latimer said federal and state support through permitting reform and tax credits will be vital for advancing such renewable energy projects in the U.S.
"For the next couple projects we do, we're going to be in this position where continuity around these tax credits and streamlining permitting so we can shorten our project construction timelines to help with the investment return are going to be absolutely critical to being successful," he said during an online panel discussion hosted by the Atlantic Council, a nonpartisan thinktank.
Geothermal energy's potential and future challenges
While companies have invested in clean energy sources like wind and solar, the technologies provide intermittent electricity because their energy generation is based on wind and sun availability. Geothermal energy has emerged as a contender for providing full-time clean energy, with little to no carbon emissions. Geothermal resources, or hot water reserves below the Earth's surface, are accessed through drilling to generate geothermal energy.
Latimer said advancements in drilling technologies in the oil and gas industry have translated to advancements in geothermal energy access, making it a reality for more states in the U.S.
Former Assistant Secretary of the Air Force for Energy, Installations and the Environment Ravi Chaudhary, a panelist, said geothermal energy is a "natural methodology by which we can build redundancy." He said he believes geothermal energy is an area the federal government should continue researching to make the U.S. a competitor in alternative forms of energy. U.S. Secretary of Energy Chris Wright in his first secretarial order claimed that the U.S. Dept. of Energy would prioritize reliable energy technologies, including geothermal.
"We're going to have a dip here as we go through some of these sweeping cuts that are going to affect our research institutions profoundly," Chaudhary said. "In the end, we have to look to find ways to leverage the capabilities that are going to make us more competitive."
Colorado is exploring geothermal energy, said Colorado Governor Jared Polis, who spoke before the Atlantic Council panel discussion. The state is on track to reach its goal of 80% renewable energy use by 2030 and Polis said geothermal energy has a "tremendous opportunity" to be a price-competitive and reliable option in the renewable energy space.
He added that investments from large tech firms like Google, Meta and Microsoft play a role in building out renewable energy capacity for local electric grids as they invest in geothermal energy projects to power their data centers.
"Companies like Google have their own internal initiatives around carbon-free goals, renewable goals, that further will help us take into account that demand," Polis said. "We're working on that side of legislation largely involving fair tax treatment to try to encourage large users in our state when it helps our overall grid."
He said he hopes that work on geothermal energy goals under Biden's administration will carry over to the Trump administration. Colorado already implements a geothermal-specific tax credit, he said.
"It's about American self-sufficiency as well," he said. "It's about how we can build out a strong American energy sector that meets the fast-growing needs of not only data centers but also electric cars. That's another huge area of growth in Colorado."
When assessing the "geopolitics of the modern energy system" and where clean energy technologies like wind, solar and electric vehicle batteries are being built, Latimer said most U.S. policy is focused on playing catch-up. Indeed, a large portion of technologies like solar panels and lithium batteries are manufactured in China.
"Those are areas where we took our eye off the ball and we lost the lead," he said.
Latimer said the U.S. still has the opportunity to lead in harnessing geothermal energy due to its skilled drilling workforce.
Many challenges remain before geothermal energy can become a widely available resource, including high initial capital, a lack of transmission capability from geothermal power plants to existing electric grids, and a workforce that might be drawn to higher-paying jobs in sectors like AI and data science.
For Google, further investment in geothermal energy hinges on energy transmission and being able to connect to the electric grid, said Brian George, U.S. federal lead for global energy market policy and development at Google.
"We need to turn our attention to things like transmission and make that a bipartisan issue that gets bipartisan support," George said during the panel discussion.
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
