California Backs Geothermal Energy to Secure Grid Reliability and Local Investment

California is taking decisive steps to harness its vast in-state geothermal potential as part of a broader strategy to ensure long-term grid stability, meet aggressive climate targets, and retain economic value within state borders. Assembly Bill 526, introduced by Assembly Member Papan and recently amended in April 2025, lays the groundwork for a coordinated, strategic push toward scalable geothermal development through 2045.

Bill 526 received unanimous support in the California Assembly's Utilities and Energy Committee, passing with an 18-0 vote on April 2, 2025. ​

Why Geothermal Now?

The state’s need for clean, firm power has never been more urgent. In recent years, California extended the operational lifespan of the Diablo Canyon nuclear plant and several natural gas plants to shore up reliability during peak demand. Recognizing this dependency, the California Public Utilities Commission (CPUC) issued Decision 21-06-035, mandating significant geothermal procurement from load-serving entities through 2026.

Meanwhile, the U.S. Department of Energy’s 2024 "Pathways to Commercial Liftoff" report emphasized geothermal's critical role in decarbonization. According to the study, aggressively scaling next-generation geothermal technologies could reduce Western grid decarbonization costs by up to 25% compared to strategies relying solely on solar and storage.

Keeping Economic Benefits in California

Despite the state’s robust geothermal resources, much of the energy currently procured to meet mandates is being sourced from projects in Nevada and Utah. This out-of-state dependency risks exporting not only ratepayer dollars but also investment, technical expertise, and clean energy jobs.

AB 526 aims to reverse that trend by developing a strategic plan that ensures geothermal investments translate into California-based projects. The bill seeks to build local supply chains, preserve and grow skilled labor, and direct revenues from leases and royalties into the state economy.

Key Provisions in AB 526

The bill mandates the California Energy Commission (CEC), in collaboration with state and federal agencies, to deliver a comprehensive strategic plan for new in-state geothermal energy by June 30, 2027. Key elements include:

• Geothermal Siting and Leasing Goals: Establishes targets for 2035 and 2045 and identifies priority development zones with the lowest potential for environmental conflict.
• Transmission Prioritization: Requires the CPUC and CAISO to treat new in-state geothermal as a "long lead-time" resource to streamline interconnection and infrastructure planning.
• Permitting Roadmap: Directs the CEC to develop a clear, coordinated permitting process in sync with CEQA and NEPA timelines, aiming to reduce delays for geothermal projects.
• Royalty and Rate Structure Assessment: Evaluates how geothermal rentals and royalties can be structured to support climate goals while staying competitive with federal and interstate benchmarks.
• Workforce Development: Emphasizes the need for apprenticeships, advanced safety training, and skilled construction labor to support a growing geothermal sector.
• Tribal and Environmental Protections: Requires an assessment of known impacts to Native American and Indigenous communities and local ecosystems, and strategies to address them.

Business Implications

For developers, utilities, and technology providers, AB 526 provides a much-needed roadmap to de-risk geothermal investments in California. By aligning regulatory, permitting, and transmission processes with market signals, the legislation reduces uncertainty and promotes long-term investment in clean firm power.

Utilities benefit from greater clarity on resource planning, while communities stand to gain from job creation and economic revitalization linked to geothermal development. Importantly, the legislation does not mandate procurement or technology carve-outs—instead, it facilitates informed, market-driven decisions within a structured planning framework.