Nearly 23 GW of new data center computing capacity, equivalent to roughly a 30% increase on today's global installed base, is forecast to come online over the next 3 years, creating urgency to speed up projects that commercialize enhanced geothermal systems (EGS), a renewable power source that leverages oil- and gas-drilling technologies originally developed for the shale patch.
Bloomberg New Energy Finance (BNEF) reported this near-term growth assessment after surveying data center projects currently under construction, concluding that the top constraints to data center development are access to energy and land.
That constraint includes the geothermal energy beneath the land.
EGS Poised To Unlock New Geothermal Growth
In a recent webinar, Rystad Energy’s lead US geothermal analyst Shruti Raghuram said that after years of limited progress, North America is now on the verge of rapid growth in geothermal capacity, driven largely by the advancement of EGS and the adoption of new drilling technologies, including advanced PDC drill bits originally developed for the shale industry (Fig. 1).
EGS projects create their own geothermal resource by drilling into hot rock and injecting cold water at high pressure to create fractures. The water heats up and flows back through a production well as steam or hot water to power turbines for electricity generation. In contrast, traditional geothermal development requires a naturally occurring hydrothermal reservoir.
Commercial EGS Projects Move Beyond Pilot Stage
While EGS development to date largely has been limited to startups and government-funded pilot projects, Raghuram highlighted two US companies, Fervo Energy and Sage Geosystems, that are poised to launch commercial EGS projects in the western US, backed by data center hyperscalers Google and Meta.
- Fervo Energy aims to deliver first power in 2026 from its greenfield Cape Station project in Beaver County, Utah, ramping up to about 100 MW of operating capacity by early 2027. The project is expected to scale to 500 MW by 2028 to fulfill power‑purchase agreements (PPA) with Southern California Edison, Shell Energy, Clean Power Alliance, and related aggregators, according to Fervo and its partners.
- Google separately funded Fervo’s “Project Red” EGS pilot under a 2021 agreement that now supplies 3.5 MW to the grid serving Google’s Nevada data centers. In 2023–2024, NV Energy joined as a partner on a separate 115-MW EGS project in Nevada that will deliver 24/7 power to Google under NV Energy’s Clean Transition Tariff.
- Sage Geosystems, which has a brownfield focus, targets commissioning its first commercial EGS‑style “pressure geothermal” plant around 2027 at an existing Ormat Technologies facility in Utah or Nevada. Ormat will provide plant infrastructure and grid access to help prove and scale Sage’s technology, while Meta will offtake up to 150 MW under a PPA announced in 2024.
EGS Represents a Paradigm Shift in Geothermal Power
EGS projects are a potential game changer, with the potential to add 530 GW of new geothermal capacity in the US, Raghuram said. By comparison, past US Geological Survey estimates ranked US conventional hydrothermal potential at only 7 to 9 GW.
“Fervo alone has already announced projects worth more than 600 MW,” she said, starting with the 500-MW Cape Station project. For context, total US geothermal electric-power installed capacity from all sources was nearly 4 GW in 2024, according to the US Department of Energy's (DOE) 2025 US Geothermal Market Report prepared by the National Laboratory of the Rockies and the public interest group Geothermal Rising.
Cape Station’s EGS project has been designed with the potential to scale to as much as 2 GW, "which would essentially represent 50% of the United States’ current installed capacity,” Raghuram said.
The DOE currently targets about 90 GW of capacity by 2050, (and) while we feel that this capacity might not be entirely realized because of market challenges, it is a strong signal as to where the country is headed in terms of its geothermal growth story,” she said.
The DOE also aims to reduce the levelized cost of electricity (LCOE) for geothermal, particularly EGS, by 90% by 2035, according to Raghuram. This would target LCOE near $45/MWh, making it competitive with other energy sources.
US Leads Global Data Center Market Growth
BNEF ranks the US as the world’s largest data center market, with Virginia and Texas emerging as the top domestic hubs. More than 66 GW of planned IT capacity is slated across the two states alone, exceeding national markets such as Saudi Arabia and the UAE.
The US currently operates 29.9 GW of live data center IT capacity and is home to 72% of global capacity under construction. It is also experiencing growth from rising AI demand due to the concentration of AI firms within the country, according to BNEF.
However, this massive data center growth and the strain it places on local power grids, has stirrred public backlash in both Virginia and Texas. BNEF highlighted the Digital Gateway development in Prince William County, Virginia, where development is stalled pending zoning litigation now before the Virginia Supreme Court.
Though the lawsuit brought by opponents of the project cited zoning, concern over the projected multi-GW energy draw and resulting strain on Dominion Energy’s power grid are central themes of the public debate. Texas is experiencing similar pushback.
Western States May Offer a Path Forward
In contrast, Utah’s governor announced “Operation Gigawatt” in 2024, aiming to double the state’s power-generation capacity over the next 10 years to support data center growth while expanding clean energy sources such as nuclear and geothermal (Fig. 2).
According to the Utah Office of Energy Development (UOED), the initiative focuses on geothermal energy sources, nuclear power from small modular reactors, grid upgrades, and R&D investment.
Currently the third-largest geothermal producer in the US, behind California and Nevada, Utah generates 73 MW from three traditional geothermal plants, accounting for roughly 8% of the state's clean-energy generation, according to the UOED.
Turbine Bottlenecks Strengthen the Case for Geothermal
Raghuram pointed out that turbine companies report delivery lead times of up to 7 years, especially for 400–500-MW turbines preferred by hyperscalers. Rising gas costs add further pressure.
“Geothermal is now almost cheaper than most of these sources that are out there, which is why we are starting to see a rising trend of power-purchase agreements between these geothermal developers and tech companies,” she said (Fig. 3).
Conventional geothermal power already competes with natural gas at approximately $60/MWh, while “EGS is decidedly more expensive now, but with the DOE targeting $45/MWh … the biggest news flash in recent times is the announcement between Google and Fervo energy,” she said.
“Meta and Microsoft have joined Google in signing PPAs at over $100/MWh, comparing it to utility values which range around $60 to $70/MWh, which already shows a high willingness from these tech companies to pay the extra premium, or the 'green premium,'” Raghuram said.
