Texas Gives New Meaning to “Drill, Baby, Drill”

Texas Gives New Meaning to “Drill, Baby, Drill”

From oil wells to deep heat, Texas is redefining what it means to power the state — and building the legal foundation for a geothermal future.

Texas knows the subsurface better than anyone. The same ingenuity, infrastructure, and regulatory experience that powered its oil and gas dominance are now being turned toward a new frontier — the constant, abundant energy beneath our feet. Geothermal has always been there, but policy clarity and coordinated action are what transform potential into production.

Over the past several legislative sessions, Texas has made decisive progress on that front. Lawmakers have passed measures that establish clear ownership of geothermal resources, unify oversight under the Railroad Commission of Texas, and recognize geothermal as a dispatchable, grid-reliable energy source. Together, these moves lay the foundation for a thriving geothermal industry — one built on Texas expertise and Texas pragmatism.

This wave of legislative action signals a turning point. Geothermal is no longer confined to the realm of R&D or remote pilot projects; it’s emerging as a serious component of the state’s long-term energy strategy. The legal groundwork is being set for private investment, permitting efficiency, and market recognition — the essential ingredients for scaling any new energy industry.

The momentum is real, but it’s also early. The next phase of progress will require continued alignment between policymakers, regulators, and industry to turn the framework into functioning markets. As the session dust settles, one thing is clear: Texas is not waiting for permission to lead. It’s already building the playbook for how geothermal can move from promise to power — at commercial scale.

Major Legislative Achievements

Texas’s recent geothermal momentum didn’t appear out of thin air. It was built on years of technical work and policy advocacy — including The Future of Geothermal in Texas, a landmark 2023 report by five Texas universities, the University Lands Office, and the International Energy Agency that helped establish the industry’s bona fides before that year’s legislative session. The report underscored geothermal’s scale, technical promise, and potential if legal and regulatory barriers were addressed — and lawmakers listened.

1. Senate Bill 785 (2023): Defining ownership of geothermal rights

One of the foundational barriers for geothermal development has been uncertainty over who owns subsurface heat or “geothermal energy” when land rights are divided. S.B. 785 resolved that question. Under Texas law, geothermal energy and associated subsurface resources are now defined as real property owned by the surface owner, unless otherwise conveyed.

This clarification removes a major legal ambiguity that has long deterred exploration and financing. By aligning geothermal rights with surface ownership — rather than mineral rights — the law gives developers and landowners clear footing for leases, contracts, and capital deployment. S.B. 785 is now the legal cornerstone of geothermal development in Texas — providing the certainty that every project, lease, and investment depends on.

2. Senate Bill 786 (2023): Shifting geothermal oversight to the Railroad Commission

Before 2023, Texas’s regulatory landscape for geothermal was fragmented. Closed-loop geothermal systems were managed under the Texas Commission on Environmental Quality’s underground injection rules — a framework built for wastewater disposal, not energy production.

With S.B. 786, jurisdiction over all geothermal wells — including closed-loop systems — now resides with the Texas Railroad Commission (RRC). This change consolidates oversight under a single agency with deep subsurface expertise and an established framework for drilling, permitting, and environmental protection.

By bringing geothermal under the RRC’s purview, Texas effectively treats geothermal with the same institutional competence it applies to oil and gas — signaling that this is a serious, scalable component of the state’s energy future.

3. Senate Bill 1762 (2025): Ensuring geothermal qualifies under the Texas Energy Fund

A major obstacle for geothermal development has been eligibility under state incentive and financing programs. Before 2025, geothermal often existed in a gray area — not clearly categorized as generation or storage, and therefore ineligible for key funding streams.

S.B. 1762 resolved this by explicitly including geothermal as dispatchable generation under the Texas Energy Fund (TEF) — the state’s flagship program for supporting grid reliability.

This reclassification matters. It allows geothermal projects to compete directly for TEF financing alongside other firm resources like natural gas, while acknowledging its ability to deliver round-the-clock, zero-fuel power. It’s a critical recognition of geothermal’s true value to the grid — reliability.

4. H.B. 3240 / S.B. 2671 (2025): Proposing a Texas Geothermal Energy Production Policy Council

In 2025, the Legislature introduced companion bills — H.B. 3240 and S.B. 2671 — to create a Texas Geothermal Energy Production Policy Council, a statewide body charged with coordinating policy, research, and incentives across agencies.

The proposed council would have convened regulators, researchers, and industry stakeholders to assess the state’s geothermal potential and recommend tax and permitting reforms. While the measure did not pass this session, its introduction marks a meaningful shift: geothermal is being considered not as a niche opportunity, but as a strategic energy sector deserving dedicated institutional support.

Even without passage, the proposal elevated geothermal on the policy agenda — paving the way for future versions that could formalize coordination across state and industry partners.

5. H.B. 3778 (2025): Clarifying geothermal’s classification as dispatchable generation

Also in 2025, H.B. 3778 advanced through Senate committee hearings to reinforce geothermal’s legal classification as dispatchable generation. While overlapping with S.B. 1762, this measure serves to align definitions across different sections of state law.

That consistency ensures geothermal projects are treated predictably under reliability programs, transmission planning, and incentive eligibility. It also eliminates lingering uncertainty for developers and utilities considering geothermal as part of their resource mix.

Though not yet enacted, the bill demonstrates bipartisan recognition of geothermal’s role in delivering firm, dependable energy for Texas’s growing demand.

Why These Milestones Matter

These legislative achievements do more than clear up legal language. They create the foundation for a new energy industry.

• Legal clarity makes projects bankable, giving investors the confidence to finance exploration and development.

• Regulatory consolidation streamlines oversight and leverages the Railroad Commission’s decades of subsurface experience.

• Recognition as dispatchable power gives geothermal access to the same funding and incentive programs that have fueled other grid-reliable resources.

• Institutional momentum ensures that geothermal remains part of the long-term policy conversation, even between legislative sessions.

Together, these steps move geothermal from concept to capability — setting the stage for large-scale deployment across Texas.

Texas: From Energy Legacy to Energy Leadership

In just a few years, Texas has laid the groundwork for a new kind of energy leadership — one that draws on its deep subsurface knowledge and applies it to a limitless, reliable resource.

The legal and policy shifts now underway aren’t symbolic; they’re the scaffolding of a geothermal market built on firm energy, technical excellence, and pragmatic lawmaking. If Texas continues at this pace, it won’t just participate in the geothermal decade — it will help define it.