As Colorado’s leaders look for options beyond wind and solar, the state’s next “hot” energy source could be geothermal power, which can heat and cool buildings as fluid circulates through underground pipes, absorbing heat in the winter and releasing it in the summer.

Geothermal energy is widely used across the globe. In absolute terms, the U.S. is among its biggest producers, though per capita, other countries, such as Iceland the Philippines, use more.

Only 0.4% of America’s electricity is generated by geothermal energy.

Geothermal energy is not new in Colorado. Pagosa Springs’ geothermal heating network has been around for roughly half a century, and it’s not the only one. Hot springs pools, such as the Glenwood Hot Springs Resort, are among more than 30 developed hot springs resorts dispersed in 93 geothermal areas and 157 geothermal sites statewide, according to the Colorado Geological Survey. In another part of the state, a university uses it to heat classrooms and a swimming pool. 

And now policymakers are seriously considering this source, as the state races to reach its “decarbonization” goals and utilities are under a mandate to deliver. 

Lawmakers have sent a bill to the governor that they hope would help increase geothermal energy projects across the state. Sponsors said the bill would also protect taxpayers and the operators of storage sites tied to the energy source.

The heat from the earth’s core

At its core, geothermal energy harnesses the natural heat produced within the Earth. Among its advantages are its low cost and ability to operate year-round at high capacity.  

While geothermal energy can cost around $70 per megawatt hour, twice the cost of solar energy, it’s cheaper in the long run because it can be generated 24/7. That’s cheaper than coal, gas and nuclear, experts said.  

Given the limitations of solar and wind energy, that matters to utilities looking for more reliable and cheaper energy sources.

Geothermal has been a success story in both urban and rural settings. It already provides a significant share of electricity demand in Iceland, El Salvador, New Zealand, Kenya and the Philippines, and meets more than 90% of the heating demand in Iceland, no small feat where the average summer temperatures rarely exceed 60 degrees and winters seldom break 32 degrees.

Geothermal pumps are used for home heating and cooling.

The growing geothermal market is drawing interest from utility companies looking for more stable energy sources.

In February, Colorado Springs Utilities asked the state for more options for meeting clean energy goals.

Current regulations call for an 80% reduction in greenhouse gas emissions from power by 2030 and for all the state’s power to come from renewable sources by 2050.

The utility company said it could not achieve this with solar and wind alone; hence, it is pushing for policymakers to help look for alternatives.

“We will look at everything,” Steve Berry, senior public affairs specialist for Colorado Springs Utilities, said, referring to the company’s goal of an integrated resource plan, which means geothermal, nuclear, and hydrogen.

Berry, however, told Colorado Politics that a more comprehensive look at those alternative sources wouldn’t happen until next year.

“We know we can’t meet (the statewide goals) with pricing of (existing) renewable resources,” he said, which is both an issue of the cost of the resource itself, as well as transmission expenses.

Reliability is also an issue, he added.

Hot springs operators raise worries

Not everyone is a fan.

When the House Energy & Environment Committee reviewed House Bill 1165 in February and the Senate Transportation & Energy Committee in March, it caused a rare split within the environmental community, pitting the Sierra Club against Conservation Colorado.

It also initially raised objections from some of Colorado’s most popular hot springs spas, which rely on geothermal energy to heat the water and feared that tapping the energy source would affect their operations.

The 58-page bill sets up an enterprise to fund long-term stewardship of geologic storage facilities once a carbon capture site has successfully closed. Operators of geothermal energy facilities would pay a fee based on carbon dioxide injections.

The bill also regulates geothermal operations under the state engineer’s oversight, who also oversees water wells. Previously, the oversight was shared between the state engineer for shallow geothermal wells and the Colorado Energy and Carbon Management Commission for deeper geothermal wells.

Rep. Matt Soper, R-Delta, one of the sponsors, highlighted the geothermal activities at Colorado Mesa University during the February hearing. He said geothermal wells are below the campus’s grassy fields, which helps stabilize the buildings’ temperatures. Geothermal heats the campus’s swimming pool, which has saved the university more than $1.5 million a year in energy costs and $16 million since 2008. The system also saves the university water, estimated at 10 million gallons per year.

Soper said he is emphatic about protecting the state’s hot springs.

“I cannot overstate this enough. We must protect our hot springs resources in Colorado,” he said.

Hot springs owners said some issues date back to 2023, when the legislature adopted a a bill that critics said removed language around material injury to hot springs. 

When someone wants to poke a hole next to geothermal hot springs and withdraw from that aquifer at a high rate, “we need to know that hot springs will be protected.” He said the current law burdens the spa owner, instead of the power plant.

He said a heightened standard for water rights is needed that cannot be curtailed or “fixed” by tools currently used by the Division of Water Resources, since geothermal water rights are irreplaceable.

A ‘delicate situation’

Kevin Flohr, CEO of Glenwood Hot Springs, said the water arrives on the property at 122 degrees and is referred to as the world’s largest hot springs. The source is mostly water from the Flattops area, which comes a great distance, and would be subject to natural or manmade disturbance.

Another well feeds Iron Mountain Hot Springs, a mile away. These are sensitive areas impacted by wildfires, heavy rains, flash floods, and excessive runoff.

Steve Beckley, owner of Iron Mountain, said the bill lacks protection for hot springs.

“This is a delicate situation,” Beckley said, adding operators must be protected from any development.

“If our water dries up, all of Glenwood Springs and many tourist attractions will end,” he added.

Others raised worries around seismic activity tied to carbon capture, civil liability issues and costs.

Thomas Warren, a partner at Mount Princeton Hot Springs, said Chaffee County has become ground zero for the much larger geothermal power plant, which he called “pump and dump systems.”

Just west of Mount Princeton is the state’s first proposed electricity-generating geothermal facility, located along Chalk Creek, south and east of the hot springs. 

“We’re not against renewable energy, but we’re against anything that would destroy an economic anchor in central Colorado,” Warren said, pointing out that the hot springs come with water rights dating back to 1870 and the spa is one of the largest generators of property taxes for Chaffee County.

Attorney Sarah Klahn, whose law firm also represents Mount Princeton, told the committee that the resort has spent a lot of money developing a geothermal model and it believes nearby geothermal activity will impact it.

“This is a real threat for Mount Princeton,” Klahn said, adding that threat also applies to other hot springs throughout the state.

Warren told the committee that the language removed from the 2023 bill — a definition of “material injury to geothermal hot springs” — needs to be restored.

The operators also sought amendments to require the state engineer to hold off on approving a geothermal permit unless it can be proven that the hot springs would not be damaged. A third amendment would require the power plant to provide proof.

The environmental divide

Environmental groups opposed HB 1165, even after amendments that brought some into a supportive position. They pointed to issues dealing with carbon sequestration, the process of removing carbon dioxide, a greenhouse gas, from the air and converting it to solid or liquid form.

Geothermal systems can pump carbon underground into storage facilities, known as carbon capture.

The Sierra Club’s Ramesh Bhatt told the House committee that the first commercial underground storage facility, in Decatur, Illinois, is leaking and that the Environmental Protection Agency forced it to stop that carbon injection.

He also said the bill lacks a definition of site closure and what would be required for the operator to avoid liability. The storage fee is also a concern, he said, and since the state is projecting costs for years down the road, there should be an actuarial analyst on the five-member enterprise board envisioned in the bill.

The Sierra Club is generally opposed to carbon capture and sequestration, insisting it is not a viable option for dealing with climate change, Bhatt said. He said the bill should be amended to ensure the state is protected.

The bill also drew objections from 350 Colorado and GreenLatinos.

While Conservation Colorado was initially opposed, it now supports the measure after the House adopted amendments.

Conservation Colorado’s Brien Webster told the Senate committee in March that its most significant issue dealt with the long-term financial responsibility associated with carbon storage.

“The bill now includes mechanisms to ensure that adequate resources will be available to manage potential long-term liabilities, including the responsible plugging, abandoning, reclaiming, and remediating of storage facilities, even in scenarios where initial financial assurances prove insufficient.”

He said this would mitigate the state’s future financial risks and prevent taxpayers from bearing unforeseen costs associated with these projects.

Dan Sanders, CEO of Front Range Energy, said his company will likely be the first storage operator in Colorado. He spoke in favor of the state taking on the liability and long-term stewardship of geologic storage facilities, which he called a key aspect of the measure. That provision in the bill requires operators to meet rigorous closure requirements and for that transfer to take place once the facility closes.

Sanders explained that a storage facility generally operates for 12 years with 20 years of post-operation monitoring, and the operator must carry liability insurance for that entire time.

His facility, which he said is small, could extract 1.5 million metric tons of sequestered carbon over 12 years at a cost of about $40 per ton.

The Environmental Defense Fund’s Katie Schneer told the committee in February that the group seeks an amendment to the enterprise board that includes increasing the fees, ensuring sufficient funding for long-term stewardship of storage sites, and addressing potential orphan sites.

Chris Neidl of the Direct Air Capture Coalition said HB 1165 is a model other states can follow.

“Direct air capture will be most critically needed to balance emissions from those industrial sectors that are most difficult or impossible to decarbonize in the timeframe for climate actions fully,” he told the committee.

That’s important for Colorado, which has hard-to-abate emissions three times the national average, he said. 

But direct air capture only works if there is a place to store the carbon it removes permanently, Neidl said. Properly sized and regulated sequestration, he said, citing a Colorado State University study, is one of the safest tools to meet climate goals.

Sponsors: Bill sets stage for future development

When the bill reached the Senate floor earlier this month, it had won support from most organizations that sought amendments, even from some of its initial opposition, notably Conservation Colorado.

Co-sponsor Sen. Cleave Simpson, R-Alamosa, who said he has a passion for geothermal energy, told the Senate on April 3 that the bill will protect the doctrine of prior appropriations, the state’s signature law around water rights, and hot springs.

“This sets the stage and groundwork for future development, both of commercial-scale geothermal operations and carbon sequestration,” Simpson said.

If this legislation did not happen, the state would have no control and would leave regulation to the federal government, said co-sponsor Sen. Cathy Kipp, D-Fort Collins.

The bill passed largely along party lines in the House; in the Senate, it drew more more bipartisan support, at 28-6, with five Republicans voting in favor.

Last week, the House adopted the Senate amendments, and the bill is going to Gov. Jared Polis. Given its strong support from the state’s Energy and Carbon Management Commission, the governor is expected to sign it.