Frack To The Future? Geothermal Energy Pitched As Datacenter Savior

An independent research body claims that geothermal power generation could provide an answer to the growing energy requirements of datacenters.

But there's a catch. It focuses on techniques that employ hydraulic fracturing, or fracking, to avoid being restricted to areas with naturally available geothermal energy, and depends on operators being prepared to pay a "green premium."

The Rhodium Group says in a report that electricity generated from geothermal energy could "economically meet" up to 64 percent of the expected growth in datacenter loads coming by the early 2030s.

It points out that electricity use by the world's bit barns has grown rapidly – from a relatively small base – at a rate of 20-25 percent annually so far this decade. This means that the amount of electricity consumed by datacenters in the US has increased from around 2 percent in 2020 to around 4.5 percent in 2024.

Future projections for the growth of US bit barn energy requirements through 2030 range from a relatively modest 5 percent annually to upward of 35 percent, it claims.

There are a number of possible solutions to meet the potentially significant surge in power demand from datacenters, each with associated advantages and challenges. The Rhodium Group puts forward geothermal energy because of its renewable nature, low or zero greenhouse gas emissions, and high availability.

Specifically, the report highlights enhanced geothermal systems (EGS), "a type of next-generation geothermal, in which hydraulic fracturing and horizontal drilling techniques are used to create fractures through which fluid can be injected to be warmed by the Earth's heated rock formations."

In other words, fracking, but to extract heat rather than oil or gas deposits.

This technique is favored because it does not require a "naturally permeable hydrothermal reservoir" as conventional geothermal systems do, and is able to "tap into heat across broader swathes of the globe."

However fracking itself is controversial and has met with stiff opposition in many places, particularly in the UK where fracking to extract oil and gas was halted in 2019 because of earthquakes that were blamed on the process.

Even in the US, where fracking is widely used, 53 percent of Americans oppose expanding hydraulic fracturing for oil and gas, according to a recent Pew Research Center survey.

The Rhodium Group makes a couple of assumptions. The first is that most of the future growth in bit barn electricity demand will come from AI training and inference at hyperscale facilities. Its second is that geothermal installations are subject to the same delays in interconnecting to the grid that bedevil other energy projects.

Because of the latter, it advocates bypassing the grid and plugging directly into datacenter campuses, claiming that geothermal is uniquely well-positioned for such "behind-the-meter" applications, citing its clean energy profile and minimal surface infrastructure footprint.

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The report estimates that the total electricity load for data facilities will hit 80 GW by 2030, representing 22 percent annual growth over 2022 levels, and that roughly 27 GW of this comes from hyperscalers.

It claims that geothermal energy will be able to meet all of the anticipated demand growth from datacenters in 13 of the 15 largest US markets – where most global datacenters are concentrated – and at least 15 percent of demand in 20 out of 28 markets nationwide.

"Much of the opportunity we find is in the West, but geothermal can provide power for some or all growth, even in growth markets in the central and eastern US including the Washington, DC/Northern Virginia cluster, Chicago, Columbus, OH, and Memphis," the report states.

Among major growth markets, only Atlanta and New York City don't show "meaningful promise" for behind-the-meter geothermal, it claims.

There is, however, another caveat. The report says the extent to which geothermal can meet the expanded energy demand depends on assumptions about green premiums that operators are willing to pay for clean energy.

The baseline scenario assumes operators will pay a 20 percent premium over the regional retail electricity rate. Without this, the economics "no longer make sense" in several key markets, it admits, including Phoenix and the Washington DC/Northern Virginia region, leading to 38-55 percent lower geothermal deployment.

And it gets worse. The report states that "continued federal support for deployment of these technologies will also be critical," as geothermal facilities qualify for tax credits that play an important role in making early projects viable.

"If Congress or the Treasury were to restrict access to these credits, or repeal them altogether, early projects may struggle to secure financing and price output competitively," it says. Recent events suggest that tax credits for green energy projects may be repealed, if they haven't been already. ®