The US Federal Reserve announced on Wednesday its decision to cut the benchmark interest rate by 25 basis points, from 4.50% to 4.25%, in a move that was broadly in line with market expectations.

The massive surge in energy demand from data centers is driving an “all options on the table” approach to energy security. The AI boom is pushing investments toward alternative energy sources that were previously overlooked and underfunded, including geothermal energy. While this carbon-free source currently makes up just 0.4% of the US energy mix, many experts believe it is poised for a breakout, supported by bipartisan backing, advancements in geothermal technologies, and rapidly shifting dynamics in energy markets.

Cindy Taff, CEO of geothermal company Sage Geosystems, told The Hill earlier this year: “This will be the decade of geothermal energy.” She added that investments are rising sharply, with a favorable political environment supporting strong R&D in the sector. Although geothermal remains “10 to 15 years behind” wind and solar, Taff and other industry insiders are optimistic about its emerging commercial potential.

The US Department of Energy projects that next-generation “enhanced” geothermal systems could provide about 90 gigawatts of clean energy by 2050 — enough to power more than 65 million homes. Still, the sector faces major hurdles, primarily high upfront and operational costs that constrain expansion.

A 2019 DOE report titled GeoVision: Harnessing the Heat Beneath Our Feet noted: “Growth as a national geothermal solution requires overcoming major technical and non-technical barriers to reduce costs and lower risks. Subsurface exploration remains the biggest obstacle due to its high costs, complexity, and risks.”

But the investment landscape has shifted dramatically since 2019, especially with the tech sector stepping in to support geothermal development in response to soaring data center demand. Big players like Meta and Alphabet (Google and Facebook’s parent) have partnered with geothermal startups. Breakthroughs in deep drilling to reach high underground temperatures have also accelerated in recent years, with startups borrowing tools and techniques from hydraulic fracturing and even nuclear fusion research. These companies are also innovating to address challenges like high water consumption, at a time when capital is flowing into the sector.

In Utah, one next-generation geothermal startup believes it has found a way around some of these costs. Rodatherm Energy Corp., which recently raised $38 million in Series A funding, announced plans for a pilot project using a closed-loop geothermal system that relies on refrigerants instead of water. According to Bloomberg: “Building a sealed, closed system that uses refrigerants similar to those in heat pumps instead of water to generate electricity would allow the company to cut costs and improve financial viability.” The components normally corroded by water would not need frequent replacement, while conserving water is critical in Utah, the project site.

Bloomberg added that Rodatherm is one of many geothermal firms benefitting from the “AI-driven energy boom.” Enhancing geothermal’s potential is seen as a possible game-changer for both the AI sector and US energy security, since geothermal can provide near-unlimited clean power without the variability tied to wind and solar.

A recent report by the independent New York–based Rhodium Group noted: “Geothermal energy could economically meet up to 64% of expected demand growth by the early 2030s, provided core assumptions about the sector and the political and economic environment hold.”

The report concluded: “Policymakers, tech companies, and geothermal developers must move quickly to achieve the speed and scale needed to seize this opportunity. Geothermal energy could be a key solution to meeting the rising electricity needs of data centers.”

Borrowing costs began to ease for some Canadians on Wednesday after the Bank of Canada announced its first interest rate cut since March, lowering its overnight policy rate by 25 basis points, from 2.75% to 2.5%.

Commercial lenders, such as private banks, base their own lending rates on the central bank’s benchmark rate.

The Bank of Canada pointed to a “weaker economy” amid the ongoing trade war, noting that the latest GDP reports and a rise in the unemployment rate to over 7% last month meant that “a rate cut was appropriate.”

At the same time, the bank said inflation has remained relatively stable, with consumer and business price growth staying within the 1% to 3% annual target range.

The bank’s statement said: “With a weaker economy and reduced inflation risks, the policy committee judged that lowering the interest rate was appropriate to achieve a better balance of risks.”

It added: “The disruptive effects of trade shifts will continue to add costs even as they weigh negatively on economic activity. The governing council is proceeding cautiously, paying close attention to risks and uncertainty. The bank remains focused on ensuring Canadians’ confidence in price stability during this period of global turbulence.”

The Bank of Canada had kept its benchmark rate unchanged for the past three meetings, with Governor Tiff Macklem repeatedly stressing that “uncertainty” in the economic outlook required a more cautious monetary stance — particularly in light of the trade war and tariff policies.

Copper prices fell to a one-week low on Wednesday as traders cut positions ahead of the U.S. Federal Reserve’s interest rate decision, while demand from China, the world’s top metals consumer, remained weak following copper’s recent rally.

Benchmark three-month copper on the London Metal Exchange (LME) dropped 1.6% to $9,963 per metric ton in official open-outcry trading, though it held above its 21-day moving average, which offered support around $9,910. The metal, widely used in energy and construction, had touched $10,192.50 on Monday, its highest level in 15 months.

Alastair Munro, senior base metals strategist at Marex, said: “China has been on the sell side of copper this week. But in reality there has been no systematic demand, coupled with countertrend bearish signals, which has led to underperformance across the metals complex.”

Official data released Wednesday showed that China’s copper output rose 15% year-on-year in August.

Neil Welsh, head of metals at Britannia Global Markets, noted that traders are looking for more clarity from the Fed not only on the widely expected rate cut, but also on the future policy path. He added: “With the dollar already down about 10% since the start of the year and weak labor market data, traders are searching for signals that tonight’s cut could be the first in a series of reductions.”

Other LME metals

Aluminum fell 1.3% to $2,683 a ton in official trading, after hitting a six-month high of $2,720 on Tuesday. The cash-to-three-month spread widened to $16 a ton on Tuesday, its highest since March, highlighting tightness in the LME system during the current settlement week as short holders were forced to cover or roll positions. The tom-next spread — the cost of buying aluminum tomorrow and selling it the day after — slipped to zero on Wednesday from $13 a ton a day earlier.

According to LME data, a single party held more than 40% of outstanding September long positions, against several shorts.

Among other metals:

Zinc dropped 1.3% to $2,952.

Lead declined 0.6% to $1,998.5.

Tin fell 1.5% to $34,365.

Nickel lost 1.2% to $15,250.