A new technoeconomic analysis has demonstrated that geothermal energy has strong potential to supply power and cooling to hyperscale data centers at competitive costs.
Titled From Core to Code: Powering the AI Revolution with Geothermal Energy, the study reveals that geothermal systems can match the cost of natural gas and even outperform nuclear energy in affordability—provided current tax incentives remain in place.
The study, conducted by Project InnerSpace in collaboration with Future Ventures, evaluated the feasibility of a 1 GW geothermal project dedicated to data centers. It found that geothermal’s ability to deliver continuous baseload power and direct cooling—without relying on the electric grid—makes it particularly well-suited for AI-focused data centers. At present, a first-of-its-kind geothermal development located in a high-resource region in the U.S. could supply energy and cooling at US$88 per MWh under existing tax credit frameworks. Further advancements in technology, standardized modular design, and consistent investments could reduce this cost to between US$50 and US$60 per MWh by 2035.
The U.S. boasts an estimated 3,400 GW of geothermal potential accessible with current drilling technologies. Much of the existing oil and gas workforce—approximately 80%—possesses transferable skills, positioning the sector for rapid growth. The study stresses that policy incentives, particularly streamlined permitting processes and investment tax credits, will be essential for catalyzing early-stage projects and achieving market scale.
An initial US$11 billion tax credit for a 1 GW geothermal plant could lead to a 61% cost reduction by 2035. Furthermore, data centers could save an additional US$3.2 billion over 30 years by utilizing geothermal energy for direct cooling—an operation that typically consumes 30% to 40% of total energy use.
"Data centers are critical infrastructure that will underpin global competition for AI supremacy so we must find reliable, affordable energy sources to power them. Geothermal energy holds great promise for powering the data center growth boom if we create the policy environment to encourage it," said Mehdi Yusifov, Director of Data Centers and AI at Project InnerSpace and co-author of the study.
"The geothermal industry has the know-how, the supply chain, the work force and the vision. It is ready to scale and primed to meet the baseload power needs of data centers. With the right investments, this vision will become reality with innovations that allow us to drill deeper to unlock the Earth's abundant heat," said Nico Enriquez, a Principal at Future Ventures and co-author of the study.
The report also highlights GeoMap, Project InnerSpace’s global subsurface mapping platform, which now includes a dedicated data center module. This tool enables technology companies to assess optimal sites for geothermal-powered facilities, further accelerating the integration of geothermal into digital infrastructure planning.