Why Geothermal Energy Could Be a Behind-the-Meter Game Changer for Data Center Power Demand

As the data center industry grapples with surging electricity demand driven by the rapid, not to say exponential, expansion of artificial intelligence (AI), cloud computing, and hyperscale facilities, the search for sustainable and reliable energy solutions has never been more urgent.

Facing up to this challenge, a new report from the Rhodium Group highlights the transformative potential of geothermal energy to meet the escalating power needs of data centers while advancing decarbonization and sustainability goals. 

Titled “Geothermal Energy and Data Center Electricity Demand,” the research contends that this innovative approach could not only address the industry’s energy challenges but also reshape its relationship with the grid and renewable energy sources.

Facing the Data Center Industry’s Energy Dilemma

The Rhodium Group report begins on an industry premise that's taken on chapter-and-verse qualities: Data centers are among the most energy-intensive facilities globally, currently consuming an estimated 1.5% to 2% of the world’s electricity, a percentage that's certain to climb. And with the proliferation of AI workloads and the construction of massive hyperscale campuses, this demand is projected to skyrocket.

The report estimates that the U.S. data center industry alone could require an additional 40 gigawatts (GW) of power by 2030—equivalent to the electricity consumption of 30 million homes.

Rhodium Group contends that this surge in demand is straining grid infrastructure and complicating efforts to integrate renewable energy sources. At the same time, data center operators face mounting pressure to reduce their carbon footprints and meet ambitious sustainability targets, such as achieving net-zero emissions.

Against this backdrop, the research contends that geothermal energy is emerging as an increasingly promising clean energy solution that combines reliability, scalability, and environmental benefits.

Geothermal Power: A Big Behind-the-Meter Data Center Opportunity

Rhodium Group underscores the potential of behind-the-meter geothermal power to meet the energy needs of data centers.

By generating electricity on-site or nearby, geothermal data centers could possibly more bypass the grid connection delays that are currently plaguing large-scale power projects that may face challenges procuring alternate sources of renewable energy, including nuclear. The geothermal behind the meter approach stands to not only enhance energy reliability but also reduce transmission losses and improve efficiency.

Currently, the U.S. has approximately 4 GW of geothermal capacity, primarily from conventional hydrothermal systems in California and Nevada. However, the report notes that newer technologies—such as enhanced geothermal systems (EGS) that utilize hydraulic fracturing and horizontal drilling—are expanding the geographic viability of geothermal energy.

These advancements could enable geothermal projects to be developed near data center hubs across the country.

Mapping Geothermal Potential to Data Center Markets

The Rhodium Group identifies significant overlap between regions with high geothermal potential and areas of concentrated data center demand. For example, the Southwest, Texas, and the Midwest U.S. all boast substantial geothermal resources and are home to major data center markets. 

By colocating data centers with geothermal plants, operators could tap into a clean, baseload power source that aligns with their sustainability goals. Operators could reduce transmission losses and enhance energy efficiency.

Meanwhile, the paper points out that one of the most promising aspects of geothermal energy is its scalability. The Rhodium Group estimates that the U.S. has the technical potential to generate up to 5,000 GW of geothermal power—far exceeding the current and projected needs of the data center industry. With the right investments and policy support, Rhodium contends that geothermal could become a cornerstone of the industry’s energy strategy.

The researchers project that 55-64% of the anticipated growth in hyperscale data center capacity could be met with behind-the-meter geothermal power, representing 15-17 GW of new capacity. In 13 of the 15 largest data center markets, geothermal could meet 100% of projected demand growth using advanced cooling technologies. Even in less favorable markets, geothermal could still meet at least 15% of power needs.

Challenges and Opportunities for Geothermal-Driven Data Center Siting Strategies

The Rhodium Group report explores two potential siting strategies for data centers: one that follows historical patterns of clustering near population centers and fiber-optic networks, and another that prioritizes proximity to high-quality geothermal resources. In the latter scenario, geothermal energy could easily meet all projected data center load growth by the early 2030s.

Geothermal heat pumps also offer an additional benefit by providing efficient cooling for data centers, further reducing their overall electric load. This dual application of geothermal energy—for both power generation and cooling—could significantly enhance the sustainability and resilience of data center operations.

However, despite its potential, geothermal energy faces several challenges that must be addressed to achieve widespread adoption. High drilling costs and technical risks associated with EGS development have historically deterred investment. (The report notes that federal funding from initiatives like the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law could help de-risk geothermal projects and accelerate their deployment.)

Another key factor is need for collaboration between and among the data center industry, energy developers, and policymakers. By working together, stakeholders can create a regulatory and financial environment that supports geothermal development while ensuring that data centers have access to the clean energy they need.

Other hurdles include permitting complexities, resource rights disputes, limited subsurface data, and supply chain constraints. The report also highlights the need for continued research and development in geothermal energy.

The Path Forward That Leads Underground

The research emphasizes that realizing the full potential of geothermal energy will require collaboration among data center developers, tech companies, and geothermal energy providers; and, how early movers like Google and Meta are already leading the way, with Google securing a power purchase agreement (PPA) with Fervo Energy for its Nevada data centers and Meta partnering with Sage Geosystems.

The Rhodium Group’s findings paint a compelling picture of a future where geothermal energy plays a central role in powering the data center industry. By leveraging this clean, reliable, and scalable energy source, data centers can not only meet their growing power demands but also contribute to a more sustainable and resilient energy system. 

As the industry continues to evolve, the report illustrates how geothermal energy could emerge as a cornerstone of the data center energy strategy, offering a path to sustainable growth that aligns with both operational needs and environmental goals.

Yet for data center operators, the time to explore geothermal solutions is now—before the technology's window of opportunity closes.

Related Stories

Data Center Frontier has extensively covered the integration of geothermal energy in data center operations. Here's a roundup of some key articles on this topic:

Meta's Investment In Data Center Geothermal Power Is Just the Latest In Clean Energy for Hyperscalers (August 29, 2024): Meta collaborates with Sage Geosystems to deploy the Sage Geopressure Geothermal System (GGS), aiming to deliver up to 150 MW of baseload power for its U.S. data centers by 2027. 

Google, Fervo Turn Up Geothermal Energy System to Support Nevada Data Centers (November 28, 2023): Google, in partnership with Fervo Energy, has operationalized an enhanced geothermal energy system to provide 24x7 clean electricity to its Nevada data centers. 

Google to Tap Geothermal Energy for Nevada Data Center Campus (May 18, 2021): Google announces its plan to utilize geothermal energy, in collaboration with Fervo Energy, to power its Nevada data centers, marking a significant step toward round-the-clock carbon-free energy. 

Wyoming Hyperscale: A Vision of a Cleaner Future for Data Centers (August 18, 2022): Wyoming Hyperscale integrates a geothermal cooling design using a large aquifer beneath its site, employing a closed-loop heat exchange system to efficiently manage data center heat and support an indoor farm. 

The State of Renewable Energy for Data Centers (May 25, 2022): An analysis of renewable energy sources for data centers, including geothermal power, highlighting their potential to reduce the industry's carbon footprint. 

At Data Center Frontier, we talk the industry talk and walk the industry walk. In that spirit, DCF Staff members may occasionally use AI tools to assist with content. Portions of this article were created with help from OpenAI's GPT4 and deepseek.

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