This incentive will advance innovative geothermal energy technology in Colorado, creating jobs and moving us closer to achieving 100% clean electricity by 2040
Statewide - Monday, Apr. 1, 2024 - The Colorado Energy Office (CEO) opened its first competitive application cycle for the state’s Geothermal Electricity Tax Credit Offering (GETCO) today. Following Governor Polis’ Heat Beneath Our Feet initiative as chair of the Western Governors Association to explore opportunities to deploy geothermal technology in the region, Colorado is continuing its global leadership in geothermal development by launching one of the nation’s first state tax incentives for geothermal electricity investment and production. Geothermal energy has seen significant developments in the past several years, offering the potential to unlock reliable, affordable, and clean energy across Colorado.
“Geothermal energy means lower costs on Coloradans’ energy bills and cleaner air. By breaking down barriers to this clean renewable energy resource, Colorado can move even closer to our goal of 100% renewable energy while saving people money on energy, improving reliability, and protecting our air quality,” said Governor Jared Polis.
Colorado is rapidly transitioning to clean energy for electricity generation, which is a leading source of greenhouse gas pollution in the state. Colorado utilities are currently on track to reduce emissions from the power sector more than 80% by 2030 through a mix of clean energy sources, including wind, solar, and battery storage. A recent CEO-commissioned study found that the lowest cost pathway to achieve 100% clean electricity in Colorado by 2040 will rely on geothermal, alongside wind, solar, storage, and clean hydrogen.
“While wind and solar energy can meet the majority of our electricity needs, geothermal energy is essential for delivering reliable and affordable clean electricity, regardless of the weather,” said CEO Executive Director Will Toor. “This incentive encourages geothermal electricity development across Colorado, advancing innovative technologies that will create jobs in just transition communities and help achieve a 100% clean energy economy here and around the world.”
GETCO was established in HB23-1272 “Tax Policy That Advances Decarbonization”, which was sponsored by Senators Lisa Cutter and Steve Fenberg and Representatives Mike Weissman and Junie Joseph and signed by Governor Polis following the 2023 legislative session.
This tax credit is part of Colorado’s larger strategy to develop geothermal technology in the state, which also includes the heat pump tax credit and a $12 million investment through the Geothermal Energy Grant Program.
Eligible utilities, private businesses, local governments, and public-private partnerships can apply for two different types of tax incentives through this program: an investment tax credit (ITC) for exploring and developing geothermal electricity resources and a production tax credit (PTC) for producing geothermal electricity.
The ITC can cover up to 30%-50% of eligible costs for selected projects, not to exceed $5 million per project. A total of $35 million is available in ITCs through 2032. The PTC provides a $0.003 credit for every kilowatt hour of geothermal electricity produced, up to $1 million per entity per year through 2032. More information about eligible projects for both the ITC and PTC is available on the GETCO webpage.
In awarding tax credits, CEO will prioritize projects based on workforce development potential; community resilience benefits, especially in rural or isolated communities; and proximity to disproportionately impacted and just transition communities and an ozone nonattainment area.
The first application cycle is open until June 30, 2024, at 5:00 PM MT. Application materials and information about how to apply are available on the GETCO webpage. Applicants must apply through the online grant portal. Going forward, CEO will open applications twice annually in April and October until 2032, or until all tax credit funding is awarded.
CEO will host informational webinars for GETCO on Tuesday, April 2 at 3:00 PM MT and Thursday, April 4 at 11:00 AM MT, as well as regular office hours on the second and fourth Tuesday of each month during the application cycle (April, May, and June). Registration links for office hours are available on the GETCO webpage.
Sign-up for CEO’s Geothermal Newsletter for ongoing updates about GETCO and other geothermal opportunities in Colorado.