The United States operates 4 gigawatts of installed geothermal capacity against a technical potential that runs into the hundreds of gigawatts, according to a Clean Air Task Force report obtained first by Canary Media — and the policy gap is widening as western states take piecemeal steps rather than coordinated ones. Demand for clean firm power is accelerating alongside data center build-outs and broader electrification, sharpening the case for next-generation systems that can produce baseload electricity from hot rock formations at shallower depths than conventional plants require.

Ann Garth, policy manager for superhot rock geothermal at Clean Air Task Force and lead author of the report, said three financing barriers compound one another: high upfront drilling costs, slow returns on investment, and uncertainty over permitting timelines and resource profitability. "Whereas some investors can stomach any two of the factors," she said, "the three in combination will make financing very difficult."

Why is procurement the biggest lever?

Demand creation through utility procurement remains the most consequential state-level move. California's 2021 Public Utilities Commission order requires investor-owned utilities to add at least 1 GW of "clean firm resources," a category that includes geothermal. The mandate drove Southern California Edison's agreement to buy 320 MW from Fervo Energy's 500-MW Cape Station project in Utah, which is set to come partially online this fall. California operates 2.9 GW of conventional geothermal — the nation's largest fleet.

What other tools are states deploying?

Several states are pairing procurement with subsurface data access and permitting reform:

• Colorado: In June, the legislature passed a bipartisan bill requiring IOUs to solicit proposals for projects greater than 25 MW and awarded $494,000 to Fervo to evaluate geothermal potential in two regions.
• New Mexico: The state's $75 billion sovereign wealth fund, financed by oil and gas royalties, is backing XGS Energy's 150-MW closed-loop system being developed with Meta.
• Washington: A 2024 bipartisan law directs the state's geological survey to compile a public subsurface database and creates grant funding for deep exploratory drilling.
• North Dakota: Has scanned and digitized its historic geological records, providing them free to academics and for a fee to companies.
• Arizona: Earlier this year invested $1 million in its geological survey to merge historical subsurface data with new airborne and laser-based imaging.
• Nevada: Operates a 2008 cooperative agreement between its environmental protection and minerals divisions that clarifies geothermal drilling jurisdiction; the state hosts 892 MW of conventional capacity (second to California) and Fervo's 115-MW enhanced system with Google.
• Texas: A 2023 law clarified that surface landowners, not subsurface mineral rights holders, own the geothermal resource — resolving a bureaucratic snag.

What remains unresolved?

Two structural problems fall outside individual states' reach. Transmission access — the chronic shortage of long-distance lines linking rural heat resources to load centers — requires regional coordination that, according to Clean Air Task Force, has barely begun in the West. State permitting agencies remain unprepared for next-gen systems, producing unpredictable timelines that inflate financing costs. The report also recommends innovation test beds as a risk-reduction tool, citing the federally funded Utah Forge laboratory in Beaver County, Utah, where Fervo built Cape Station next door to collaborate with researchers who have extensively mapped the area's geology.

Dan West, Clean Air Task Force's senior Western regional policy manager, called the state-level efforts "an interesting hodgepodge." But "no state has checked all the boxes and pulled all the policy levers yet," he said.

The next benchmarks to watch are implementation of Washington's 2024 database mandate and the first wave of solicitations triggered by Colorado's June bill — both of which will determine whether next-generation geothermal can attract the infrastructure-scale capital needed to move the country from 4 GW toward triple-digit gigawatts.