DATA CENTER DEMAND

Geothermal energy, produced by drilling into underground reservoirs of heat, has been used for decades. With low greenhouse gas emissions and high energy efficiency, it's a sustainable energy source for regions with favorable geological conditions.

As AI rapidly advances and the race to scale intensifies, hyperscale data centers are expected to grow significantly. To put things in perspective, global data center capacity today is estimated at 59 GW, with hyperscalers operating about 60% of it. By 2030, that capacity is projected to more than double to 122 GW—skewed even greater by power-intensive hyperscalers and wholesale operators.

Even in the best-case scenario where all known projects are delivered on time, Goldman Sachs estimates the U.S. could still face a data center supply shortfall of over 15 GW by 2030—the equivalent of needing additional power to supply 9.3 million average households annually. 

As a result, the growing challenge is to find the massive power needed to support the data center expansion. Recently, major technology companies, including Meta and Google, have announced project plans to build their hyperscale data facilities powered by independent geothermal energy. Why is geothermal the best alternative solution to explore beyond the traditional grid?

• Grid Infrastructure. Many utilities have not been able to build transmission infrastructure fast enough, extending wait times to access power, especially in data center hubs like Northern Virginia that have attracted clusters of data centers.

• No more latent capacity. Most latent capacity has already been tapped and isn’t sufficient for new data center development. The available pool is limited.

• Climate goals in global markets. Concerns over grid strain and climate targets, especially in the EU, have slowed new data center developments. In Ireland, for example, no new grid connections will be issued in Dublin until 2028, as data centers are projected to consume nearly 27% of the country’s electricity by 2031.

• Costs. Driven by heightened demand and supply chain constraints, data center developers increasingly compete for PPA contracts even in the renewables market, pushing costs up by 10.4% for solar and 14.1% for wind power year-over-year. 

GEOTHERMAL MATH

For decades, utilities have been able to predict load growth across sectors—from residential to industrial—even accounting for EVs, which haven’t yet reached full adoption but still follow predictable patterns. In contrast, the rapid rise and intensive power demands of data centers have made future load growth far less certain, leading to the challenges posed above. However, geothermal energy makes the math work today. 

Traditionally, utilities offer data center campuses with limited initial power allocations, increasing capacity over time as infrastructure expands. As we introduce geothermal energy, the story changes. For example, suppose our fictional tech company, EchoVault plans a 1 GW data center. They secure 300 MW from a utilities grid expansion project set to come online in five years, while also signing a 500 MW geothermal contract exclusively for their facilities, expected within two years.

• Without geothermal energy: No operations by 2027. By 2030, only 300 MW of capacity would be available.

• With geothermal energy: By 2027, EchoVault can operate at 500 MW capacity, ramping up to 800 MW by 2030

The difference is stark. As EGS technology advances and becomes more efficient for natural heating and cooling at the hyperscale level, EchoVault might not even need to find a new source for the final 200 MW. While connecting a data center to the grid is far more complex in practice, this hypothetical illustrates how the numbers play out. And the timelines aren’t far from reality, as shown in the recent contracts signed by Meta and Google.

PERMITTING OPPORTUNITIES 

Traditionally, the U.S. Department of Energy estimates it takes 7–10 years to develop geothermal projects on federal lands, due to requirements from multiple federal and state agencies. However, recent policy measures have the potential to streamline these processes, reducing barriers in four key ways:

• Executive order. Although the Biden Administration’s executive order promoting AI development and clean energy was overturned, the Trump Administration recently issued a new executive order declaring a “National Energy Emergency,” which explicitly recognizes geothermal energy as an appropriate response.

• Categorial Exclusion (CX). If geothermal projects are found to have minimal environmental impact, they may be exempt from the more detailed environmental reviews (EA and EIS), removing significant barriers and delays. According to the DOE, this could lead to a 113% improvement over the Business as Usual (BAU) baseline, enabling up to 12 GW of additional capacity by 2050.

• Bidding process. The Bureau of Land Management (BLM) oversees geothermal leasing on approximately 245 million acres of public land and has approved categorical exclusions (CX) for projects with confirmed geothermal resources. While most bidding is handled by state agencies, the BLM also lists past and upcoming lease opportunities in select states specifically designated for geothermal projects. This means the land is pre-approved and set aside, allowing developers to bypass some of the initial exploration steps that typically extend project timelines.

• State policies. Many states with strong geothermal potential have backed the industry through their own policies. For example, Nevada's Renewable Portfolio Standard (RPS) mandates that a specific percentage of electricity sold by providers must come from renewable sources—including geothermal—by 2030, in addition to data center incentives.

As with many state and federal policies, there’s significant room for improvement—overlapping jurisdictions often result in duplicated efforts, and inconsistencies with NEPA add further complexity. Still, these frameworks lay a strong foundation for unlocking the potential of geothermal energy in powering data centers.

Approved bidding processes are designed to get data center projects off the ground faster. Even on private land, first introduced in 2023, Utah-based Project Red is expected to come online by 2026. Like capital, time is finite—it's time to take control of your project’s future.