Geothermal developers lay groundwork for industry’s expansion

Geothermal’s status as the darling of renewable energy is heating up.

The emerging baseload energy source retained its clean energy tax credits via President Trump’s so-called One Big Beautiful Bill Act, bringing geothermal growth to an “inflection point.” In the months since, geothermal residential heating company Dandelion Energy and developer Fervo Energy both introduced policies to propel industry expansion.

Residential leasing: Though mostly supportive of geothermal, the OBBBA’s tax credit changes forced residential geothermal companies to pivot a bit. The bill sunsetted the 25D clean energy home improvement tax credit, which can be applied to systems like Dandelion’s, but allowed residential geothermal heating systems to be leased.

“It’s a big loss to not be able to just offer that [25D] tax credit,” Dandelion’s CTO and co-founder, Kathy Hannun, told Tech Brew this summer. “With a lease, we can still give homeowners a mechanism for monetizing that tax credit.”

Ever since the bill’s signing on July 4, the industry has been racing to set up leasing programs, and Dandelion recently announced plans to partner with Upstream Lease to offer leased residential systems. Dan Yates, Dandelion’s CEO, told us that the program is a win-win-win—for builders, home buyers, and Upstream.

After home builders purchase Dandelion’s geothermal heating systems—which are subsidized through the federal tax credit and may be eligible for further discounts from state, local, and utility incentives—they install the system and sell it to Upstream. Then, when builders sell the home to buyers, the cost of the leased system is minimal—Yates said as low as $10 a month—because its up-front cost was discounted.

“It’s a de minimis lease amount” for homeowners, Yates said. “They’re paying 10 bucks a month for the system, and they’re saving $30 a month in avoided energy costs.”

If the Upstream lease sounds a lot like residential solar leasing, that’s because Dandelion modeled the new program after it.

“Rooftop solar really took off when leasing was available, and we see a similar opportunity here,” Yates said. Solar leasing made the residential renewable infrastructure “mainstream”—though the budget bill notably phased out solar tax credits.

And by Dandelion’s calculations, leasing residential geothermal systems is well worth it: Yates said it could unlock a billion-dollar market for the company.

“It’s a big opportunity,” he said.

Industry standards: Meanwhile, geothermal developer Fervo released standards that “ensure that growth happens responsibly.” Its “Geothermal Sustainable Development Pact,” released last week, sets out 37 principles spanning community engagement, labor practices, land and water conservation, seismic risk, and emissions management.

“The geothermal industry is expanding rapidly into next-generation technologies and new hydrothermal resources,” the pact states. “Existing regulations may have inconsistent performance expectations for geothermal developers and operators.”

Written in conjunction with the Sierra Club, the pact’s commitments focus on environmentalism: solely using energy generation technologies with “near zero” carbon emissions to power projects; amending any projects that could harm or kill endangered species and/or ecosystems; protecting drinking water that comes into contact with geothermal systems or equipment; and properly cleaning up after project completion.

Fervo also included commitments about hiring locally for developments, a practice that CEO Tim Latimer said has been integral to the success of the company’s Cape Station project in Utah. In an open letter, Latimer said that the pact “reflects a shared belief that energy growth should never come at the expense of the people or places that make it possible.”

“Many of these commitments go well beyond today’s regulatory requirements,” Latimer wrote. “As geothermal grows, we’ll continue working with partners to raise the bar and ensure these standards remain the benchmark for responsible development.”