Shape the Future of Geothermal in 2026—Policy, Trends and Opportunities

This is a pivotal year for geothermal energy. With major policy shifts, growing incentives and breakthrough technologies on the horizon, now is the time to act.

Here’s what’s driving opportunity this year:

1. Colorado Policy and Incentives

Colorado is advancing geothermal development through House Bill 25-1165, which streamlines permitting and clarifies oversight. While the Geothermal Energy Grant Program has closed, the Geothermal Electricity Tax Credit Offering (GETCO) remains a key incentive for developers.

Recent Funding Highlights:

• $7.3 million for geothermal heating and cooling projects
• $14.4 million for installations in schools, municipal buildings and community projects

These programs open doors for developers to expand beyond power generation into heating and cooling networks.

Key Deadlines for GETCO Applications:

• June 30, 2026: First cycle deadline
• Dec. 31, 2026: Second cycle deadline

Project Requirements:

• Must start on or after Jan. 1, 2024
• Completion generally required by Jan. 1, 2033, to remain eligible
   

2. Colorado Energy Plan

The Polis administration is actively working with stakeholders on the next Colorado Energy Plan, with legislation expected to be introduced this session. While details are still under discussion, the plan seeks to continue the state’s commitment to achieving 100% zero-emission electricity. There is great opportunity for geothermal energy to play a vital role in moving Colorado towards that goal.

3. National Policy

Federal Incentives:

• Commercial Geothermal & Investment Tax Credit (IRC §48):
  Geothermal systems remain eligible for federal tax credits under Section 48.
  Under the One Big Beautiful Bill Act (OBBA, P.L. 119-21), credits transition to technology-neutral incentives with base and bonus rates. Geothermal retains eligibility through at least 2033/2034.

Recent Federal Policy Changes:

• BLM Lease Guidance (IM2026-004):
  New rules mandate annual competitive geothermal lease sales and faster access to leasing, with limited public participation unless an EIS is required.

Proposed Legislation:

• H.R. 5576 — Enhancing Geothermal Production on Federal Lands Act:
  Introduced in 2025 to streamline exploration and add categorical exclusions for smaller test projects. Just before the December break, the House Subcommittee on Energy and Mineral Resources held a legislative hearing on H.R. 5576 and the following geothermal-related bills:
  • H.R. 301 (Rep. Maloy), “Geothermal Energy Opportunity Act” or the “GEO Act”
  • H.R. 398 (Rep. Ocasio-Cortez), “Geothermal Cost-Recovery Authority Act of 2025”
  • H.R. 1077 (Rep. Lee), “Streamlining Thermal Energy through Advanced Mechanisms Act” or the “STEAM Act”
  • H.R. 1687 (Rep. Fulcher), “Committing Leases for Energy Access Now Act” or the “CLEAN Act”
  • H.R. 5576 (Rep Fulcher), “Enhancing Geothermal Production on Federal Lands Act”
  • H.R. 5587 (Rep. Kim), “Harnessing Energy At Thermal Sources Act” or the “HEATS Act”
  • H.R. 5617 (Rep. Ansari), “Geothermal Gold Book Development Act”
  • H.R. 5631 (Rep. Hurd), “Geothermal Ombudsman for National Deployment and Optimal Reviews Act”
  • H.R. 5638 (Rep. Kennedy of UT), “Geothermal Royalty Reform Act”
     

4. Market Momentum

13-State Geothermal Alliance: On Dec. 19, 2025, the National Association of State Energy Officials launched a new accelerator program to rapidly expand geothermal power development. Led by state energy offices in Arizona, California, Colorado, Hawaii, Idaho, Louisiana, Montana, Nevada, New Mexico, Oregon, Pennsylvania, Utah and West Virginia, the alliance will:

• Establish statewide geothermal power goals
• Advance policies and programs to reduce project costs
• Address regulatory barriers
• Speed deployment of reliable, firm, flexible power to the grid

Bipartisan Support:

• California Gov. Gavin Newsom (D): Geothermal is a key tool to “confront the climate crisis.”
• Idaho Gov. Brad Little (R): Geothermal “strengthens communities, supports economic growth, and keeps our grid resilient.”
   

What This Means for You

• Engage now: Policy frameworks are evolving—your voice matters in shaping regulations.
• Leverage incentives: Colorado’s tax credits and grants can accelerate your projects.
• Stay ahead: Market momentum and tech breakthroughs are creating new opportunities—don’t wait to explore them.

Let’s make 2026 a year of action and progress. Reach out today to discuss how these developments can impact your strategy or to collaborate on emerging trends.

This document is intended to provide you with general information regarding geothermal policy and market trends. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.