Unlocking Geothermal Energy's Role in the Clean Energy Transition
Next-generation geothermal might be achievable today.
The Transformative Potential of Geothermal Energy
One major challenge in a future powered entirely by renewable energy is providing stable, clean power at low cost. The intermittent nature of renewables like solar and wind can be mitigated to some extent using batteries, but today’s battery technologies only offer a few hours of storage. They fall short when dealing with large seasonal variations in energy supply and demand.
Currently, the solutions for fluctuations lasting more than a few hours include overbuilding renewable capacity—curtailing excess production during favorable conditions to ensure availability during low-generation periods—or relying on natural gas to bridge the gaps when renewable output drops.
Geothermal energy, although used for decades, plays only a small role in electricity generation, contributing less than 1% in the U.S. However, next-generation geothermal is emerging as a transformative technology. It promises to become a significant and sustainable energy source for centuries.
Geothermal energy offers several compelling advantages. It generates no pollution, uses minimal land, and has an environmental footprint comparable to solar or wind. Unlike wind or solar, geothermal is available 24/7 and can operate flexibly to stabilize the grid, complementing intermittent renewables. Geothermal resources are also abundant and effectively renewable, accessible nearly everywhere if we drill deep enough.
In regions like the U.S., where geothermal resources are accessible at shallower depths, the potential is especially significant. A study by the MIT Future of Geothermal Energy estimates that the U.S. has 2,000 to 20,000 times its annual primary energy consumption in extractable geothermal resources. This doesn't mean that if the current primary energy consumption was powered by geothermal, it would last 2,000 or more years. Rather, since it's renewable, it means that we can expand our annual current primary energy consumption by 2,000 times or more and not bother about energy exploration for centuries. This represents a vast energy reserve capable of meeting centuries of demand.
While conventional geothermal methods tap resources at relatively shallow depths, the next-generation technology involves drilling much deeper—below 3 kilometers—into hotter rock layers. At depths greater than 10 kilometers, geothermal energy becomes accessible almost everywhere in the world.
These deeper reservoirs hold immense potential, but realizing it requires breakthroughs in drilling technology. Current methods and equipment struggle with the extreme pressures and temperatures found at such depths. Developing advanced drilling techniques is the key to unlocking geothermal’s global potential.
By 2050, geothermal capacity in the U.S. could grow to 300 GW, with global capacity reaching 800 GW. For context, that’s about three times the current nuclear generation capacity. At the end of 2023, the U.S. total utility-scale electricity generation capacity stood at 1,200 GW.
This growth would make geothermal a cornerstone of the clean energy transition, providing a stable, reliable, and sustainable solution for a significant portion of our electricity needs.
Why Next-Generation Geothermal Doesn’t Need New Breakthroughs
There are two main types of next-generation geothermal techniques. In both, the process begins by drilling down to where the hot rock is located, which could be at depths of 3 kilometers, 10 kilometers, or even deeper. Once the target depth is reached, there are two options for harnessing the heat.
The first option involves creating fractures in the rock using a method called hydraulic fracturing, or "fracking," similar to how shale oil and gas are extracted today. The second option is to install a piping system at that depth, resembling a radiator but functioning in reverse—it absorbs heat instead of dispersing it.
In both cases, water serves as the working fluid. It is pumped down to the hot, dry rock and allowed to absorb heat either by circulating openly through the cracks created by fracking or within a closed-loop piping system. The heated water or steam then builds up pressure and returns to the surface through a second wellbore, where it is used to generate electricity.
The oil and gas industry already utilizes the fracking method to create fissures in hard rock, circulating high-pressure fluid through these cracks to extract shale oil and gas. This method is strikingly similar to the approach required to access heat from hot rocks in next-generation geothermal. The expertise in subsurface mapping and deep drilling, which oil and gas companies have honed over decades, can be directly applied to geothermal energy development.
The second approach—creating an extensive piping system deep underground—presents a newer challenge. However, it builds on horizontal drilling techniques, another well-established practice in oil and gas extraction.
Why Oil and Gas Companies Are Poised to Lead the Geothermal Revolution
The recent surge in enthusiasm for geothermal energy is logical when viewed through the lens of the U.S.'s advancements in shale resource extraction capabilities over the last two decades. Much of the research and development required to make next-generation geothermal both feasible and cost-effective has already been achieved. Since drilling constitutes the majority of geothermal project costs, deep geothermal resources can now be accessed at a reasonable cost.
Oil and gas companies are particularly well-equipped to drive this technology forward. They already possess the necessary technology, skilled workforce, and financial resources. According to the IEA, 80% of the investment needed for geothermal capacity and expertise overlaps with the core competencies of the oil and gas industry.
The technological advancements and mature supply chain established during the shale boom in the U.S. position oil and gas companies to capitalize on the growing momentum behind next-generation geothermal. The U.S. Department of Energy estimates that $20–25 billion in new investments will be required before 2030 to achieve the "commercial lift-off" of this transformative technology.
This represents a substantial near-term opportunity for oil and gas companies. The shale revolution in the U.S. moved relatively quickly—progressing from proof of economic viability to large-scale commercial operations in around 15 years. With geothermal, we are already beyond the proof-of-viability stage. Several large-scale commercial operations could be achievable within the next five years.
This underscores geothermal’s potential to play a crucial role in achieving net-zero goals. Its ability to complement intermittent renewables and promote grid stability could make a complete transition to clean energy more feasible and less costly.
Several factors are likely to accelerate geothermal adoption. First, there is a strong and growing demand for clean, firm power sources to support intermittent renewables and meet the needs of energy-intensive sectors like data centers and manufacturing hubs. Second, the necessary technology is already available. Third, many users are willing to pay a premium for clean, firm power. Technology companies investing in next-generation energy solutions are signaling confidence in geothermal by committing to premium-priced energy contracts. This creates a favorable financing environment for such projects.
Given the vast potential of geothermal resources and their compatibility with renewables, geothermal energy offers oil and gas companies a new lifeline and a clear long-term business opportunity. It presents an incredible opportunity, not only for its technical merits but also for its alignment with the existing competencies of oil and gas companies.
More importantly, it provides oil and gas producers an opportunity to actively participate in the energy transition toward net-zero emissions rather than being sidelined or disadvantaged by it.
Beyond this, geothermal offers even more. It allows oil and gas companies to maintain and strengthen their competitive moat, rather than watching it erode under net-zero mandates. By continuing to drill and extract subsurface resources—without engaging in fossil fuel extraction or relying on carbon-emitting industries—they can adapt their operations to align with a sustainable future. This transition gives them a chance to realign their businesses and reevaluate their strategies while continuing to focus on what they excel at: resource extraction and drilling.
Managing Public Perception in Oil and Gas Geothermal Projects
Geothermal energy is an exceptional resource in ways we are only beginning to appreciate. Its widespread availability makes it conveniently accessible, and its economic viability has already been proven, offering a highly affordable and cost-effective solution for our energy needs. As a dispatchable energy source, geothermal provides a level of reliability that few other clean energy options can match.
Geothermal energy is effectively renewable because the Earth's interior is an immense store of heat, continuously replenished by the natural decay of radioactive materials. The resource available to us is so vast that it could power human civilization for centuries.
Geothermal also boasts a high power density, meaning its land-use intensity is very low—second only to nuclear energy. In fact, as we develop the ability to dig deeper and access hotter temperatures, geothermal's land-use intensity could become even lower than current estimates.
Additionally, geothermal energy is a clean resource. Its lifecycle greenhouse gas emissions are comparable to solar and wind, reinforcing its status as a sustainable energy source. It also has relatively low critical mineral requirements compared to many other energy technologies.
However, like all energy sources, geothermal has aspects that require careful management to minimize its environmental impact. The two primary concerns are water use (and associated contamination risks) and the risk of induced seismicity.
Geothermal's water use is higher than that of solar and wind but lower than nuclear and biomass energy. In next-generation geothermal systems, water is designed to be cycled through the system rather than consumed. This closed-loop process reuses water and minimizes stress on local water resources. Furthermore, geothermal systems can use treated wastewater, reducing dependence on freshwater availability.
A valid concern with pumping water underground is the potential risk of contaminating underground freshwater aquifers, especially if additives are introduced to the pumped water. This has been a notable issue in oil and gas fracking. However, in next-generation geothermal systems, the risk is significantly lower. Fewer additives are used during the fracking process, and these systems operate at greater depths, separated from groundwater resources by impermeable rock layers. Additionally, the wells are properly sealed with steel and concrete to prevent any interaction with shallow aquifers.
Fracking in the past has been associated with inducing small earthquakes, primarily due to subsurface wastewater disposal, which increases stress and can trigger seismic activity. Geothermal fracking, however, operates differently and poses a reduced risk. In geothermal systems, water is continuously circulated, maintaining stable subsurface stress levels. Moreover, since geothermal systems do not generate large quantities of wastewater that require disposal, the primary cause of seismicity associated with oil and gas fracking is absent in geothermal operations.
That said, some geothermal plants are exploring long-duration energy storage concepts, where large volumes of water are pumped into geothermal wells during periods of excess electricity production. This water is allowed to build pressure and temperature underground and is only released when needed. While innovative, this approach could create variable subsurface pressure conditions, potentially increasing the risk of induced seismicity.
The risk of induced seismicity in geothermal resource extraction is real and requires proper management. This includes thorough risk assessments, detailed subsurface mapping before initiating projects, and open communication with communities that could be affected. Proceeding only with informed consent is crucial. Early and proactive community engagement is essential to address all environmental concerns associated with geothermal resource development.
An added challenge for oil and gas companies entering the geothermal sector is convincing the public that their pursuit of geothermal energy is safe. Oil and gas companies are often perceived as environmentally unfriendly, so when they pivot toward net-zero goals by embracing geothermal, they must carefully manage how their actions are perceived.
While next-generation geothermal energy is less environmentally damaging than many other energy sources, public perception could easily turn negative if the associated risks are not managed transparently. The experience of nuclear energy over the past three decades highlights how public mistrust can tarnish even the safest technologies. To avoid this, geothermal companies must be upfront about the environmental impacts of their processes from the outset, fostering trust by allowing stakeholders to see the facts clearly and openly.