When the phrase “renewable energy” is brought up in conversation, one rarely imagines the geothermal industry: a market centered on highly innovative machinery that harnesses power from underground geothermal reservoirs, generating usable energy from the heat of our Earth. By 2026, this once sci-fi description of renewable technology has become an emerging hotspot of unprecedented growth, having increased fourfold since 2018. Will the pace of growth continue and what are the practical implications and opportunities?
It is only intuitive that halfway through 2026, the pace is no different than recent trends in project advancement, further establishing a case that geothermal energy is the next big cash magnet for investors and Big Tech. Additional evidence also supports a more welcoming hypothesis: this is fantastic news for the environment.
Geothermal technology initially faced a lethal roadblock: geography. For geothermal energy to function optimally, hot water reservoirs must be present; these are naturally formed and exceptionally rare. Luckily, since 2018, the ubiquity of enhanced geothermal systems (EGS), a system that creates artificial reservoirs with drilling around deeply underground hot rocks, has increased drastically. And, the cherry on top: geothermal energy uses the same technology as oil and coal infrastructure, but is used renewably and emits significantly fewer emissions. Thus, hypothetically, if all technology currently used to drill for fossil fuels were used for geothermal, the energy yield would scale in magnitude while being substantially more sustainable for long-term use.
Undeniably, several capital markets have noticed geothermal on their fiscal grids for these reasons. For example, Fervo Energy, a Houston-based EGS company backed by Big Tech (e.g., Google), completed a historic Initial Public Offering (IPO), with its stock opening 35 percent higher on May 13, 2026, valuing it at over $10 billion. Similarly, Ormat Technologies announced a co-partnership valued at $7.5 billion, one of several emerging geothermal enterprises.
The demand is crystal clear: data centers that house artificial intelligence require exorbitant amounts of energy, thereby driving investment in geothermal technology as the AI bubble continues to grow. The energy-based externalities from projected data center construction (including emissions and pollutants) may be incredibly impactful for the local environment and could incur high economic costs, incentivizing investors to look elsewhere for power that runs 24/7 while remaining carbon-free. Intuitively, countries are racing to develop geothermal energy for this purpose, with Washington critically clearing the runway.
Indeed, geothermal energy is one of the very few contemporary congressional topics that, as of March 2026, has bipartisan support. In February, the U.S. Department of Energy announced $171.5 million for geothermal testing and site construction to accelerate EGS development. Not only that, but in January, the federal government launched a 15-state Geothermal Power Accelerator, with several notably environmentalist state governments, such as the Government of California, participating in this quasi-national project.
The federal government has amended several laws in recent months to further galvanize geothermal investment. In April, the U.S. House of Representatives passed the HEAT Act, exempting small-scale projects from the National Environmental Policy Act (NEPA) review. Furthermore, the Bureau of Land Management (BLM) has established Environmental Assessments (EAs), which are brief scientific reports on the projected environmental effects of the given geothermal project. If the BLM believes that the EA will not significantly alter the surrounding environment, the project is exempt from an Environmental Impact Statement (a lengthy investigation of the geothermal reactor), allowing a green light for leasing to appear significantly more quickly.
Lastly, geothermal is receiving tax credits in Colorado, where one of the leading developers of geothermal technology is based, creating precedent for geothermal tax credits in other states. Through 2033, geothermal projects will receive tax exemptions along with $15 million to establish the technology to power Colorado schools. Under this investment, the Colorado Energy Plan (CEP) receives fuel to enable zero-emission technology, the CEP’s central commitment. Elsewhere, California is also leading the charge, hosting the world’s largest geothermal field, The Geysers, which spans three counties and demonstrates a unified effort to harness geothermal energy. This reservoir is projected to power over 25,000 homes annually as of 2026 estimates.
Of course, this emerging industry still faces significant hurdles to cross. Development costs could increase, reform could not be cleared in the Senate, and projects may face skepticism. However, the signs so far point to geothermal being a viable leader in the renewable energy surge, underscoring the urgency from many to monetize and support geothermal investment in 2026. To conserve the momentum powering the geothermal industry, it is only logical that Congress continue to support this emerging sector. To move forward, it seems, is to move underground.
Written by Will McNairy, Public Policy Intern
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.