A new report from the Rhodium Group claims that advanced geothermal energy could power nearly all new data centres by 2030.
A Stable, Renewable Solution
With the exponential rise in artificial intelligence (AI) and cloud computing driving unprecedented demand for electricity, the energy consumption of data centres is a growing concern. However, the report suggests that tapping into the Earth’s heat could provide a stable, renewable solution to this looming energy crisis.
The Data Centre Energy Problem
Data centres are essentially the backbone of the digital economy, hosting everything from cloud storage to AI model training. However, their hunger for power (and water) is becoming a pressing issue. For example, according to the Rhodium Group, electricity demand from data centres in the US has surged from 2 per cent of total consumption in 2020 to around 4.5 per cent in 2024. Projections indicate this could rise to as much as 12 per cent by 2028.
Much of this surge comes from the rapid expansion of AI, with models such as ChatGPT, Google Gemini, and Microsoft Copilot requiring massive computational power. The grid is struggling to keep pace, with utilities and regulators facing growing challenges in ensuring reliable, low-carbon electricity supply.
What Is Geothermal Energy?
Geothermal energy harnesses heat stored beneath the Earth’s surface, converting it into electricity or direct heating. Traditionally, geothermal power plants were limited to areas where hot water or steam naturally rises close to the surface, such as Iceland or parts of the western US.
However, advancements in enhanced geothermal systems (EGS), which use deep drilling and hydraulic fracturing techniques to unlock heat from otherwise inaccessible rock formations, are now changing the game. For example, according to the US Department of Energy, EGS could unlock up to 90 gigawatts (GW) of geothermal capacity in the US alone, providing a vast, untapped source of clean energy.
Why Geothermal Could Meet Data Centre Demand
The Rhodium Group’s report estimates that under current trends, geothermal could provide up to 64 per cent of new data centre electricity demand by 2030. If data centre developers strategically site their facilities in areas with the best geothermal resources, this figure could rise to 100 per cent!
In practical terms, this means geothermal could quadruple its current installed capacity in the US, from 4GW today to approximately 16GW by the end of the decade. Crucially, the cost of geothermal energy is expected to be competitive with existing power sources, ranging from $50 to $75 per megawatt-hour (MWh) (on par with current grid electricity prices for data centres).
Real-World Examples of Geothermal in Action
A number of innovative startups are already proving the feasibility of geothermal-powered data centres. These include:
– Fervo Energy, founded by former oil and gas engineers, has been pioneering horizontal drilling techniques to boost geothermal output. The company secured over $200 million in investment in 2024 and has significantly reduced drilling costs.
– Bedrock Energy is focusing on space-constrained urban environments. Their deep-drilling approach enables office buildings and data centres to tap into geothermal heat with a small footprint.
– Quaise Energy has developed a breakthrough technology that uses high-powered microwaves to vaporise rock, allowing them to drill as deep as 12.4 miles (20km). At these depths, temperatures exceed 1,000°F, providing an almost limitless source of heat.
– Sage Geosystems is taking a different approach, using geothermal wells to store energy. Water is injected under pressure and later released to generate electricity, similar to an underground hydroelectric dam.
The Benefits of Geothermal for Data Centres
Geothermal energy offers a host of advantages for data centre operators, most notably:
– 24/7 reliability. Unlike wind or solar, geothermal provides continuous, baseload power with 90 per cent+ capacity factors.
– A low carbon footprint. Geothermal plants emit little to no greenhouse gases, aligning with tech companies’ aggressive net-zero targets.
– Grid independence. By using behind-the-metre geothermal installations, data centres can bypass lengthy grid connection delays, reducing wait times for power.
– Cost stability. Unlike natural gas, which is subject to price volatility, geothermal energy provides long-term price certainty.
The Challenges of Scaling Geothermal
However, while the potential is pretty clear, there are some significant hurdles to overcome before geothermal can power the next wave of data centres. These include:
– High upfront costs. Deep drilling and well stimulation require significant capital investment. However, costs are falling as technology advances.
– Permitting delays. In the US, for example, securing permits for geothermal projects can take up to 10 years! Streamlining regulatory approvals is crucial to accelerating deployment.
– Geographic constraints. While EGS expands geothermal’s reach, the best sites are still concentrated in the western US, meaning some data centres may have to relocate or use hybrid energy strategies.
– Infrastructure readiness. Drilling rigs, turbines, and skilled labour all need to scale rapidly to meet growing demand. Leveraging expertise from the oil and gas sector could help bridge this gap.
What Does This Mean For Your Organisation?
Geothermal energy could be a real and practical way to address the growing electricity demands of data centres while aligning with sustainability goals. The technology is proven, its reliability is unmatched among renewables, and its potential is vast. However, realising this potential requires significant investment, regulatory reform, and strategic siting of new facilities.
For data centre operators, integrating geothermal could reduce dependence on fossil fuels and offer long-term cost stability. For policymakers, streamlining permitting processes and incentivising geothermal development will be key to unlocking its full potential. Meanwhile, investors and energy companies have a chance to shape a growing market by developing innovative drilling and power generation techniques.
For UK businesses, the need for cleaner, more stable energy sources is just as pressing in this country, where data centre energy demand is rising rapidly. While the UK lacks the geothermal resources of the US, investment in energy innovation, including geothermal heating and advanced drilling techniques, could provide valuable lessons and opportunities. Also, British companies specialising in energy technology, infrastructure, and financing may find growing international demand for their expertise.
The question, therefore, is no longer whether geothermal can support the data centre boom, but how quickly the industry can scale to meet demand. With the right mix of investment, policy support, and technological innovation, the heat beneath our feet could soon be powering the digital world in ways previously unimaginable.