In 1960, the first geothermal power station in the entire Western Hemisphere opened in California. Dubbed the Geysers Geothermal Complex, the plant’s neat row of steam vents looked like a giant exposed engine of a muscle car nestled in a valley of the Mayacamas Mountains north of the Bay Area. With time, the facility expanded to tap into more of the region’s abundant underground reservoirs of magma-heated water. Today it’s the largest geothermal electrical plant in the world.
And it’s not just Geysers — geothermal has vast potential to power the state more widely. That potential remains largely untapped, though, with geothermal supplying just over 5% of the Golden State’s electricity mix. But that may soon change.
Today, a new generation of geothermal companies are using drilling technologies pioneered by the nation’s oil and gas frackers to tap into the Earth’s molten heat in far more places than ever before. So far, many of those early projects are opening in neighboring Nevada and Utah, where regulations are friendlier to the nascent industry. But four bills now winding through the California legislature promise to ease permitting challenges and make geothermal a priority for the state’s energy mix.
According to Wilson Ricks, a Princeton University researcher who tracks geothermal technology, geothermal is “probably California’s best-shot at cost-effective total decarbonization.” However, he added, “that won’t happen unless this technology can scale up.”
That’s where the lawmakers come in. The fact that we’re now seeing new legislation dedicated to geothermal is a sign, analysts and industry executives told Latitude Media, of the strides that startups are making — and of the challenges ahead for California’s grid. Electricity demand is growing, right as trouble brews for offshore wind, an industry the state had bet would contribute nearly five gigawatts of power by the middle of the next decade.
“California is looking around, saying, ‘We have enormous geothermal potential,’” said Thomas Hochman, the director of infrastructure policy at the Foundation for American Innovation, a think tank in Washington, D.C., that studies the barriers to increasing energy production. “Yet a lot of geothermal companies are not developing or building in California. It’s the states nearby that have growing geothermal industries.”
Aligning with the federal standards?
The most impactful legislation in the package is also the one that analysts say is least likely to pass.
Called AB-527, the bill would give geothermal wells a categorical exemption from permits under California Environmental Quality Act. The state’s bedrock environmental law is modeled on the National Environmental Policy Act, and requires agencies to assess the environmental impact of infrastructure projects. (NEPA is currently under fire from the Trump administration, which is working to implement the president’s Unleashing American Energy executive order; that order directs agency review of policies that “impose undue burdens” on energy development.)
However, at least in the case of geothermal, CEQA is stricter than NEPA. Last October, regulators at the Bureau of Land Management gave geothermal companies a categorical exclusion from NEPA permits for exploration, meaning that a startup digging repeated wells to identify spots with suitably hot rocks doesn’t need to go through the federal permitting process each time it drills.
Since much of the land in Nevada and Utah is managed by the federal government, the legislation notes that “those states’ favorable regulatory environments” have been central to their appeal for the first commercial-scale next-generation geothermal developments, by companies like Fervo. However, the bill adds, “nearly all of that energy is anticipated to be sold to buyers in California.”
The bill, introduced by Assemblymember Diane Papan (D), would align California’s regulations with the federal standard.
While the legislation passed unanimously in a committee vote late Monday night, some executives speculated the bill may face some opposition late in the process because scrapping any environmental reviews is seen as controversial among the state’s traditional greens.
Permitting control
A pair of bills designed to give counties more control over permitting geothermal plants are more likely to pass.
Imperial County may be California’s least populous, but its abundant subsurface hot-rock reservoirs have long made the county a hotbed for geothermal development. A bill known as AB-531 would qualify geothermal plants for a “judicial streamlining program” that allows local regulators to take the lead on permitting facilities designated as “environmental leadership projects.”
But it’s an opt-in approach. That means a geothermal project in a county with less experience overseeing the industry could still choose to keep the California Energy Commission as the agency in charge of permitting. The bill already passed unanimously through two committee votes.
Current law places the permitting for geothermal projects under 50 megawatts under local control. But a second bill, known as AB-1016, would raise that size to 150 MW across the state. The bill passed last Wednesday in a committee vote with full bipartisan support (barring three abstentions).
Counties such as Imperial County have regulators with enough experience with geothermal projects to move permits along quickly, said Alissa Sanchez, the director of business development at Ormat Technologies, a conventional geothermal company with vast operations in the municipality.
“A lot of these counties have the infrastructure and capability,” Sanchez said. “Larger projects could be handled at a faster pace locally.” While she cautioned it was a rough estimate, she has found that the county-level permits could come through twice as fast as typical state approvals.
Even the California outposts of federal agencies such as the Bureau of Land Management have proven slow. While BLM’s statewide offices in Idaho, Nevada and Utah have regularly held auctions for leases on land for geothermal development, California hasn’t taken bids in seven years.
“California is the only state that hasn’t had an auction in quite some time,” Sanchez said.
Prioritizing the hot rocks
If passed, the fourth bill, known as AB-1016, would make geothermal a higher priority for California.
The legislation would chart a roadmap for geothermal the same way an earlier statute set California’s target for offshore wind. Anchoring turbines in the Pacific always posed logistical challenges, and required state intervention to even consider it. In light of growing skepticism from the federal government and other key stakeholders, however, the plan for nearly five GW of power from offshore turbines by 2035 now looks out of reach. And this has stoked greater demand for an alternative such as geothermal.
“For a long time, geothermal has been a footnote,” said Lucy Darago, the chief commercial officer at XGS, a next-generation geothermal company building its pilot plant in California on land owned by the U.S. military. “Yet in the same period, we’ve seen strategic plans for assets at a comparable scale of maturity and cost structure. I’m talking about offshore wind.”
It’s not a coincidence that offshore wind initially took precedence. Recent breakthroughs in next-generation geothermal technology — namely proving that the drilling techniques native to fracking can actually broaden the geothermal’s geographic potential — only came in the last few years. Unlike the geothermal industry, which is largely led by small startups, offshore wind is dominated by well-established multinational energy companies with vast lobbying teams. Meanwhile, Darago said that XGS just recently hired its first full-time government affairs representative.
But certain lawmakers are beginning to come around to the technology’s potential — and to the state’s role in its ability to scale.
“California is a big deal for geothermal,” said Ricks, from Princeton. The sheer size of California’s market, he added, means “the pathway to next-generation geothermal power becoming a major source of decarbonized electricity and heat worldwide has to run through California.”
Editor’s note: This story was updated on April 29 to clarify that AB527 passed unanimously in a committee vote late Monday night.
