Texas lawmakers propose opening $5bn energy fund for geothermal
View of Downtown Austin, Texas from Pfluger Pedestrian Bridge (source: Jouaienttoi, CC BY-SA 4.0, via Wikimedia Commons)
Alexander Richter
25 Apr 2025
Texas legislators consider allowing geothermal projects to access the $5 billion Texas Energy Fund, aiming to support dispatchable, clean power alternatives.
The Legislature of the State of Texas in the U.S. is reported to advancing proposals that could open the state’s $5 billion Texas Energy Fund (TEF) to geothermal energy projects, signaling growing recognition of the technology’s potential to deliver clean, dispatchable power to the grid.
The legislation – authored by Republican state Rep. AJ Louderback and passed unanimously out of a Texas House committee – would formally recognize geothermal as a dispatchable energy source, making it eligible to compete for low-interest loans under the TEF. The bill now moves to the full House for a vote.
Originally created in 2023 to incentivize the construction of new natural gas plants, the TEF has struggled to meet its goals. At least seven applicants have withdrawn from the program this year, citing issues sourcing gas turbines in time to meet the fund’s project deadlines. As a result, none of the intended 10 GW of new power capacity have materialized so far.
A path forward for geothermal
Geothermal advocates see this as a critical opportunity to reposition the TEF as a technology-neutral mechanism for dispatchable power – one that can support emerging geothermal developers in Texas who are leveraging oil and gas expertise and infrastructure to tap the state’s subsurface heat.
“Opening the TEF to geothermal offers a lifeline to projects that can provide 24/7 low-carbon energy using skills and resources Texas already has,” said a geothermal industry advocate close to the discussions.
A second proposal under consideration would allow geothermal projects in the 10 to 100 MW range – smaller than typical gas plants but ideal for current geothermal systems – to qualify for TEF financing.
Political and energy landscape in transition
These geothermal-friendly proposals stand in contrast to other energy-related bills advancing through the Texas Senate, many of which aim to restrict wind and solar development or mandate that renewable energy be backed by fossil fuel power. One such bill, H.B. 3356, would require solar developers to purchase fossil fuel-based backup power, a move critics argue would cost ratepayers billions while exacerbating grid instability.
At the same time, lawmakers are weighing a separate $2 billion proposal to support nuclear energy, although no nuclear projects in Texas are currently close to being shovel-ready.
Why Texas is poised for geothermal growth
While Texas lacks the shallow, high-temperature geothermal resources found in states like Nevada or California, it boasts deep, hot rock formations and a vast workforce skilled in subsurface mapping, drilling, and reservoir engineering—all critical to modern geothermal development.
Recent geothermal resource maps by Project InnerSpace have identified extensive heat resources beneath the state, reinforcing its potential as a future geothermal hub.
Even U.S. federal energy leadership has expressed support for geothermal. Energy Secretary Chris Wright and President Trump have both highlighted next-generation geothermal as a strategic clean energy opportunity, including in recent Earth Day messaging.
For the Geothermal Sector
The move to open the TEF to geothermal could mark a turning point for geothermal development in Texas, offering funding, validation, and visibility for an emerging industry segment. It may also serve as a blueprint for other U.S. states with existing fossil fuel infrastructure looking to diversify into clean, dispatchable power.
Source: The Hill
