2025 U.S. Geothermal Market Report: Industry Up 8%, $1.5B in Private Investment

The geothermal energy industry is growing faster than at any point in the past decade, according to a major new report from the National Laboratory of the Rockies (NLR) and the U.S. Department of Energy.

The 2025 U.S. Geothermal Market Report, published in early 2026, provides the most comprehensive update to the state of geothermal energy in four years. It documents growth across every segment of the industry — from power generation to residential heat pumps to grid-scale storage — and signals that the next decade could look radically different from the last.

For anyone in the geothermal space — homeowners considering a heat pump, contractors building a business, or investors watching the sector — this report is required reading. Here are the findings that matter most.

Report Overview

The 2025 report is funded by DOE's Office of Geothermal Technologies and authored by NLR researchers including lead author Dayo Akindipe. It builds on the 2021 U.S. Geothermal Power Production and District Heating Market Report and significantly expands scope to cover heating and cooling applications, enhanced geothermal systems (EGS), energy storage, and critical mineral extraction from geothermal brines.

The scope expansion alone is telling. In 2021, a geothermal market report focused primarily on hydrothermal power plants in the Western U.S. In 2025, the report covers the full spectrum — from utility-scale power in California and Nevada to ground-source heat pumps in Ohio farmhouses to next-generation EGS drilling anywhere in the country. The industry has broadened considerably.

Capacity Growth: 8% in Four Years

The headline number: U.S. geothermal installed nameplate capacity reached 3,969 megawatts-electric (MWe) as of 2024. That's up from 3,673 MWe in 2020 — an 8% increase in four years.

Context matters here. From 2015 to 2019, geothermal capacity grew approximately 1%. The shift to 8% growth in the following four-year period represents a fundamental acceleration. The industry that spent decades flat-lining appears to have found its footing.

Most of the conventional geothermal capacity remains concentrated in the Western U.S., particularly California (The Geysers complex in Sonoma/Lake counties alone accounts for roughly 725 MWe) and Nevada. But the growth story is no longer exclusively about hydrothermal resources in tectonically active zones. Enhanced geothermal systems are beginning to change the geographic equation.

26 New Power Purchase Agreements

Since the 2021 report, 26 new geothermal power purchase agreements (PPAs) have been signed, representing more than 1,000 MWe of new capacity currently under development. For comparison, only nine PPAs were signed between 2015 and 2019.

The breakdown of those 26 PPAs is significant:

• 15 conventional (hydrothermal) systems — tapping naturally occurring geothermal resources
• 11 next-generation (EGS) systems — engineered geothermal that can be developed almost anywhere

The fact that 42% of new PPAs are for EGS projects — a technology that was largely theoretical a decade ago — signals how rapidly the sector is maturing.

Data Centers Drive Demand

Several of the new geothermal PPAs are specifically for power supply to AI-driven data centers. The report doesn't name the companies involved (PPAs are often confidential), but the trend is unmistakable and has been widely covered in industry media: hyperscale tech companies are actively pursuing geothermal contracts.

The reason is straightforward. Large language models and AI inference workloads require 24/7, always-on power — something solar and wind cannot provide without substantial battery storage. Geothermal power, by contrast, runs at 90%+ capacity factors regardless of weather, time of day, or season. For a data center that needs reliable baseload power with a clean energy label, geothermal is an almost uniquely attractive solution.

This data center demand signal is consequential for the broader geothermal ecosystem. Large-scale commercial PPAs provide the capital certainty that funds drilling innovation, drives down costs, and trains more skilled workers — all of which benefit the residential and light commercial geothermal market over time.

We've covered the commercial side of this in our article on Enhanced Geothermal Systems: The Commercial Milestone That Changes Everything. The market report data puts official numbers behind what we've been tracking.

EGS: The Cost Curve Is Breaking

Enhanced geothermal systems (EGS) are engineered reservoirs created by injecting water into hot dry rock and fracturing it to create permeability. Unlike conventional geothermal, which requires naturally occurring hydrothermal conditions, EGS can theoretically be developed anywhere with sufficient subsurface heat — which is most of the continental United States at sufficient depth.

The 2025 report documents a critical development at DOE's Utah FORGE demonstration site: drilling time was reduced from 310 hours in 2020 to 110 hours in 2023 — a 65% reduction. Since drilling represents the largest single cost component of any geothermal project, this is not a minor optimization. It's a structural cost shift.

The implications for project economics are significant:

• The levelized cost of energy (LCOE) for EGS is declining and is projected to approach the cost of a 2024 conventional hydrothermal flash plant within the next decade
• Conventional hydrothermal LCOE currently sits at $63–$74/MWh (flash plants) and $90–$110/MWh (binary plants) — competitive with many other clean energy sources
• A 500-megawatt commercial EGS project at the Cape Station development in Utah — a joint project involving Fervo Energy — represents the first large-scale commercial EGS plant in history

For the residential geothermal market, EGS advances are a tailwind rather than a direct factor. But faster drilling technology, better subsurface characterization tools, and a growing pool of trained drilling personnel all trickle down to ground-source heat pump loop installations over time.

$1.5 Billion in Private Capital

Since 2021, more than $1.5 billion in private capital has been invested in next-generation geothermal companies. Of that:

• $473 million is debt financing — a critical milestone, because debt financing signals that investors consider the technology de-risked enough to lend against it. Equity investment in startups is a bet on a technology. Debt financing is a bet that the technology will reliably generate revenue. These are very different confidence levels.
• Next-gen EGS companies now account for 53% of the new geothermal PPAs — a majority position that would have seemed impossible five years ago

The private investment figure places geothermal on a trajectory similar to where offshore wind was roughly eight years ago — a technology with strong fundamentals, growing policy support, and capital beginning to flow in earnest. The offshore wind industry subsequently grew substantially. The analogy isn't perfect, but the pattern is instructive.

Geothermal Heat Pumps and Thermal Networks

The 2025 report is the first major NLR/DOE geothermal market report to include substantial coverage of geothermal heat pumps (GHPs) — the ground-source heat pump systems used in homes and commercial buildings for heating and cooling. Previous reports focused primarily on power generation.

Key findings in the heating and cooling segment:

• GHP installations have increased across multiple U.S. regions and sectors, including residential and commercial buildings
• Eight states have enacted regulations and announced programs specifically addressing thermal energy networks within utility service territories
• Thermal energy networks — shared ground loops serving housing complexes, campuses, or entire neighborhoods — are gaining meaningful interest as a district heating and cooling infrastructure model

The thermal energy network finding is worth dwelling on. Several U.S. cities and utility companies are exploring the concept of community geothermal loops — essentially a shared underground heat exchanger that multiple buildings connect to, the same way buildings share a water main or gas line. States like New York, Massachusetts, and Minnesota are actively piloting these systems.

This model has the potential to dramatically reduce the per-unit cost of geothermal access by spreading the drilling and loop installation cost across dozens or hundreds of connections. It's a different economic model from individual home installations — but it represents a plausible path to geothermal becoming standard infrastructure in dense areas rather than a premium option for individual homeowners.

For more on how residential geothermal heat pumps work, see our complete guide to geothermal heat pump technology.

Emerging Applications: Lithium and Oil & Gas Coproduction

The report discusses two emerging applications that didn't appear in the 2021 edition:

Lithium from Geothermal Brines

Geothermal reservoirs often contain lithium-rich brines — a byproduct of the geological conditions that create high subsurface temperatures. Companies are now developing direct lithium extraction (DLE) technology to recover lithium from geothermal production brines, creating a potential revenue stream that didn't exist before.

The Salton Sea Known Geothermal Resource Area in California's Imperial Valley is frequently cited as the most promising site — it sits atop both substantial geothermal heat and enormous lithium concentrations. If economically viable lithium extraction is proven, it would fundamentally change the economics of geothermal power in that region, potentially subsidizing electricity production and making geothermal cost-competitive against almost any other source.

Geothermal Coproduction in Oil and Gas Reservoirs

Petroleum wells produce enormous quantities of hot brine as a byproduct of oil and gas extraction. Much of this "produced water" is hot enough to generate electricity via binary power cycle if the infrastructure is in place. Geothermal coproduction from existing oil and gas infrastructure represents a path to producing clean electricity from wells that are already drilled — with no new surface disturbance required.

This is particularly relevant in states like Texas, North Dakota, and Wyoming where existing petroleum infrastructure is substantial and electricity demand is growing. It also creates a potential economic bridge for oil and gas operators transitioning their businesses toward lower-carbon operations.

What This Means for Homeowners

The 2025 market report is primarily about utility-scale power and industry investment trends. What does any of this mean for a homeowner in Indiana considering a geothermal heat pump?

Several things:

The installer ecosystem will grow. Growing investment in geothermal infrastructure across all sectors attracts more trained personnel, more equipment manufacturers, and more financing options. A healthier industry overall supports a more robust residential installer network — which today remains one of the primary barriers to geothermal adoption in many markets.

Equipment costs will likely decline over time. Technology cost reductions in drilling and subsurface characterization eventually reach the residential sector. Loop installation is already less expensive than it was ten years ago, and continued innovation in drilling efficiency will continue to reduce costs.

Geothermal is increasingly credible as a mainstream technology. When tech companies sign 20-year power purchase agreements for geothermal, when banks provide hundreds of millions in debt financing, and when the DOE publishes comprehensive market reports tracking the sector — geothermal is no longer a niche product. That legitimacy matters for homeowners, for lenders offering green mortgages, and for contractors building businesses around the technology.

Thermal energy networks could change the access model. If community geothermal loops become standard infrastructure in dense neighborhoods and housing developments — similar to how community solar has expanded solar access — geothermal could become available to renters, condo owners, and those without the capital for a full residential installation.

For now, the most relevant question for most homeowners remains: What's the payback period in my state, with my current heating fuel? See our 28-state geothermal payback period comparison for state-by-state data.

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