Capstone believes House-proposed geothermal reforms are unlikely to become law until Congress reaches a broader permitting reform deal, despite strong bipartisan support. We believe more frequent Bureau of Land Management lease sales, expedited state-level permitting in California, and $7.3 million in Colorado geothermal funding will benefit conventional and enhanced geothermal developers alike.

• We believe Congress’s decision to increase federal funding for geothermal research and development underscores Capitol Hill’s strong bipartisan support for the technology. Nonetheless, bipartisan geothermal reform proposals reviewed by a House Natural Resources Subcommittee are unlikely to become law until Congress reaches a broader permitting reform deal.
• We believe updated Bureau of Land Management (BLM) policies requiring annual geothermal lease sales in states with nominated parcels will benefit geothermal developers and underutilized transmission capacity connected to already-developed leases.
• We believe geothermal developers will benefit from expanded project eligibility for expedited permitting in California and $7.3M in new Colorado grant funding. Proposed reforms to Utah’s mineral rights laws would benefit heat pump and district heating systems, but could lead to legal disputes over the interpretation of prior contracts.
• We believe frequent announcements of successful and oversubscribed fundraising rounds highlight investor interest in geothermal. Recent breakthroughs, such as blind conventional geothermal discoveries and successful ‘superhot’ drilling, will support the trend’s continuation.

Federal Outlook

Congress Increases Funding for Geothermal Office

On January 15th, 2026, Congress approved its fiscal year 2026 Energy and Water appropriations bill, sending the legislation to President Trump’s desk for signing. The package includes $3.1B in funding for programs historically managed by the Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE), representing a 10.4% decrease in overall funding. However, the bill allocated $150M to the Office of Geothermal (formerly the Geothermal Technologies Office), a 20% ($25M) increase in spending compared to 2025 spending levels. Capstone believes this underscores Capitol Hill’s strong bipartisan support for geothermal, even amid lower spending levels for other renewable energy technologies.

Bipartisan Interest in Federal Geothermal Reforms in House Natural Resources Subcommittee

On December 16th, the House Natural Resources Subcommittee on Energy and Mineral Resources reviewed nine legislative proposals intended to accelerate geothermal development. Capstone believes the Subcommittee members’ strong bipartisan support for all nine proposals, as well as support from a bipartisan group of advocacy organizations like Clearpath and the Clean Air Task Force, increases the likelihood that the proposals ultimately become law. Most notably, the proposals would:

• Require the Department of the Interior to hold annual geothermal lease sales annually instead of biennially (H.R. 1687) and to act on geothermal drilling permits and authorization requests within 60 days of completing required environmental reviews (H.R. 301).
• Promote procedural efficiencies by directing the Bureau of Land Management to create a Geothermal Ombudsman position that oversees and optimizes all geothermal-related processes (H.R. 5631).
• Create National Environmental Policy Act exemptions for geothermal exploration projects on federal lands (H.R. 5567), geothermal operations that access minority federally-owned geothermal resources from private surface estates (H.R. 5587), and extend to geothermal activities the oil and gas industry’s NEPA categorical exclusions (H.R. 1077).
• Clarify that royalty rates are facility-specific, meaning new geothermal plants built on already-producing federal leases are eligible for discounted royalty rates during their first ten years of operation (H.R. 5638).

However, because Congress rarely passes single-issue legislation, we believe the geothermal reforms considered by the subcommittee will need to be folded into a larger legislative package to become law.

The most probable legislative vehicle for doing so would be a broad permitting reform package. We believe such a package is unlikely to pass before late 2026, largely due to the Senate’s slow pace in developing permitting reform legislation in the face of President Trump’s attacks on already-permitted offshore wind projects (see: Permitting Negotiations in Congress Paused After Offshore Wind Pause Announcement; Outlook for a Deal Dims Further, December 22, 2025).

Permitting Council Announces Expedited Permitting for Geothermal-Serving Transmission Line

On December 9th, the Federal Permitting Improvement Steering Council announced that the Silver Rock Transmission project—which will connect geothermal generation to Utah’s grid and improve connectivity—will receive expedited permitting through the FAST-41 program. Capstone believes the announcement underscores the administration’s multifaceted support for favored industries, such as geothermal.

The Permitting Council’s decision also highlights an ongoing shift in Republicans’ attitude towards transmission siting and permitting reform. Previously, expedited transmission permitting was a predominantly Democratic issue that faced opposition from Republicans in Congress. Today, largely due to data-center-driven demand, Republicans are increasingly supportive of adopting or implementing measures that enable the United States’ grid to meet data center demand.

Both of Utah’s Republican Senators released statements supporting the Silver Rock Transmission project’s access to the FAST-41 program, with Senator Jon Curtis (R-UT) noting, “Our energy future will be affordable, reliable, and clean” because of the Permitting Council’s decision “ to cut red tape and bring more energy online.”

BLM Directs State Offices to Hold Annual Lease Sales; Held Q4 Sales in Nevada and Idaho

On December 16th, the BLM updated its instruction memorandum directing State Offices to hold competitive lease sales annually rather than biannually if they have pending parcel nominations. Lease sales must include at least 90% of nominated lands under BLM jurisdiction and at least 80% of lands managed by other federal agencies, like the
US Forest Service.

Capstone believes BLM’s updated policy will benefit developers with surplus transmission capacity connected to federal lands, offering an accelerated pathway to nominating, bidding on, and developing adjacent parcels.

The BLM held two geothermal lease sales in the fourth quarter of 2025. The first, held in Idaho on December 16th, generated $1.3 million in winning bids across ~68,000 acres and 17 parcels. The awarded parcels are spread across Idaho’s Blaine, Camas, Cassia, and Owyhee counties. The second, held in Nevada on October 21st, offered 113 parcels covering ~377,000 acres for geothermal leasing and development. The sale netted $9.44 million in bids across 86 parcels.

BLM also announced two geothermal lease sales in 2026. First, a March 2026 sale in New Mexico. Secondly, an October 2026 sale in Idaho.

BLM Highlights Geothermal Energy Wins, Underscoring the Administration’s Support

On September 30th, the Bureau of Land Management (BLM) released a blog detailing its major policy and project wins since President Trump’s inauguration. Regarding geothermal, the blog highlighted over 100,000 acres of new leases across California, Idaho, Oregon, and Utah; implementation and application of expedited, emergency permitting for three projects; and its authorization of 50MW of new projects in Nevada and Utah.

State Outlook

California Governor Signs One Geothermal Permitting Law, Vetoing Another

On October 6th, California’s Governor Newsom signed AB 531 into law, allowing geothermal power plants with nameplate capacities below 50MW to access expedited permitting through the California Energy Commission’s (CEC) Opt-In Certification program. The CEC’s program also provides expedited permitting for related transmission and grid-connecting infrastructure. Capstone believes AB 531 will benefit geothermal companies interested in developing enhanced geothermal system (EGS) pilot or demonstration projects.

Governor Newsom also vetoed another geothermal-friendly bill, AB 257, that would have created a categorical exclusion for geothermal exploratory wells under the California Environmental Act. While the Governor aptly pointed out that environmental reviews of exploration activities rarely delay project development, a categorical exclusion would’ve ensured that the case remains.

Utah Legislature to Revisit Geothermal Ownership, Offering Clarity for Subsurface Resources

Capstone believes a Utah legislative proposal altering the state’s subsurface ownership laws could improve the outlook for geothermal heat pump and district heating systems, but could lead to legal disputes over how to apply the changes to past contracts.

On October 15th, the Utah Senate’s Natural Resources, Agriculture, and Environment Interim Committee held a hearing to discuss Senator Mike McKell’s (R) proposed legislation altering geothermal water rights. Under McKell’s proposal, landowners would own the heat below their property—including for geothermal heat pump systems—separate from the mineral rights estate.

Likewise, freshwater rights would be separate from mineral or geothermal rights. However, McKell’s bill would make clear that geothermal developers own the geothermal fluids related to power production.

Colorado Offers $7.3M to Geothermal Generation, Supportive for Development

On October 16th, Colorado Governor Polis’s (D) administration announced $7.3M in funding awards under the state’s Geothermal Energy Tax Credit Offering (GETCO) program. The credits are fully refundable and are designed to support geothermal power, heating, and cooling innovation in Colorado. This round of awards, the program’s third, is specifically targeted at geothermal power production. Capstone believes the funding represents an opportunity for geothermal developers.

Washington State Considers Geothermal Development at Mount Baker

On October 29th, the State of Washington’s Department of Ecology announced an initiative to identify geothermal development opportunities, including at or near Mount Baker, Mount St. Helens, and the Columbia Basin. Capstone believes the state would be better suited to attract geothermal developers if it enables access to geothermal resources in those areas. Washington presently has no commercial geothermal developments under construction.

At the same time, the US Forest Service (USFS) is in the process of reviewing the Bureau of Land Management’s nomination of USFS Mt. Baker lands for geothermal leasing. It hopes to complete an Environmental Assessment of the matter by March 2026.

Market Developments

Below is a summary of the geothermal market developments tracked by Capstone:

• Utah Geothermal Startup Secures $38M in Oversubscribed Series A. On December 19th, Utah Business published a profile on enhanced, closed-loop geothermal system startup Rodatherm Energy Corporation’s $38M Series A. If their initial demonstration loop is successful, with construction set to finish in late 2026, the company will look to finance a larger 100MW facility.
• Fervo Raises $462M in Oversubscribed Series E for Cape Station Plant. On December 10th, Fervo announced a $462 million raise that will help fund its 400MW Cape Station project in Utah. Once complete, the project will be the largest enhanced geothermal system in the world.
• Zankar Drills Conventional Geothermal Resource at Overlooked ‘Pumpernickel’ Nevada Site. On November 17th, the Las Vegas Sun reported that Zanskar successfully drilled a conventional geothermal well at its Pumpernickel site in Humboldt County, Nevada. The firm believes its success validates its thesis that conventional geothermal resources are more prevalent than previously believed.
• SLB and Ormat Technologies Announce Partnership to Accelerate Enhanced Geothermal Systems Development. On October 27th, the two companies announced an agreement to fast-track the development of integrated geothermal assets, such as enhanced geothermal systems (EGS).
• Mazama Energy Taps 629 °F (331 °C) Rock for Enhanced Geothermal System with Hydraulic Fracturing. On October 28th, Mazama Energy announced success at its Newberry facility in Oregon, claiming it has tapped the hottest rock of any enhanced geothermal energy system to date at 629 °F (331°C). The company will move forward with a 15MW pilot project in 2026 and hopesto scale to a 200MW facility thereafter.
• Fervo CEO Expects DOE Funding for Geothermal. On November 26th, Latitude Media shared Fervo CEO Tim Latimer’s belief that the Department of Energy will offer funding or financing support for geothermal generation—particularly enhanced geothermal—through its Energy Dominance Financing Office (formerly, the Loan Programs Office).

What’s Next

Capstone will monitor 2026 legislative developments on Capitol Hill and in state legislative sessions across the country, including a potential House Natural Resources Committee vote on the nine geothermal proposals reviewed in December and a Utah Senate vote on Senator McKell’s mineral rights legislation.

Read more from Capstone’s energy team:

EU to Tighten Biosolutions Rules: Projected Risks and Opportunities
Europe’s Hard Choice: The Continent’s Climate and Competitiveness Dilemma
The EU Moves Toward A Russian Gas Ban