One next-gen energy sector spared from destructive impacts of new US law: 'Would eliminate 10 megawatts'

The Big Beautiful Bill, which the president signed July 4, will significantly disrupt the clean energy sector, including wind and solar power. Geothermal energy and other non-solar and non-wind clean energy sources, however, have been spared in at least some ways, as Canary Media reported. 

According to Inside Climate News, the budget bill draft, released by the Senate Finance Committee in June, outlined Congress' plan to eliminate the residential clean energy tax credit under the Inflation Reduction Act — legislation that allows homeowners to claim 30% off the cost of qualifying clean energy systems on their federal taxes. 

The draft of the Big Beautiful Bill threatened not only the wind and solar industries but also the geothermal industry, a lesser-known sibling of wind and solar that has great potential for consistent, renewable, clean energy. 

Larger-scale geothermal energy generally involves drilling holes to source thermal energy from the Earth's subsurface that heats water and eventually releases steam. This steam is used to power turbines that power generators, creating electricity.

Geothermal energy is considered a cleaner energy source — emitting less heat-trapping pollution than dirty fossil fuels — and also exceeds solar and wind performance, which are intermittently productive. 

Smaller-scale geothermal power often refers to ground-source heat pumps that capitalize on the relatively consistent temperature of the Earth at shallow depths to heat up or cool down buildings.

Following the bill's draft release, geothermal industry leaders — including ground-source heat pump manufacturers — were prompt to urge Congress to reconsider, at least for geothermal efforts. Leaders cited geothermal energy's potential to stabilize the energy grid amid increased energy demands from artificial intelligence while investing in American manufacturing and labor. 

"Every 1,000 homes that install a geothermal heating and cooling system, on average, would eliminate 10 megawatts of winter peak heating load of an air source heat pump," said John Thomas, CEO of WaterFurnace International, per Inside Climate News. 

Whether Congress was swayed more by the investment in American labor or the similarities and overlap between the large-scale geothermal industry and the natural gas and oil industry, which uses similar drilling techniques and equipment (as noted by Canary Media), legislators decided to spare geothermal energy after rescinding support for other renewable energy sources. 

Unlike for large solar and wind projects, which, according to Canary Media, must be operational by the end of 2027 or must begin construction by the summer of 2026 to qualify for the tail end of a tax credit, the Big Beautiful Bill extends the sunset date for geothermal energy, beginning to decrease incentives in 2033 and ending in 2036. 

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From now until 2033, new geothermal projects will qualify for the full investment tax credit (48E) of 30%. In 2034, the tax incentive rate drops to 75%, to 50% in 2035, and to 0% in 2036. 

Meanwhile, the Canary Media article noted that the residential tax credits from the federal government for geothermal heat pumps will end after this year.

Homeowners looking to install solar may want to get started as soon as possible to take advantage of the federal solar tax credit while it's still available through the end of the year. 

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