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Most people still think of geothermal energy as something that works in Iceland and nowhere else. Hot springs, geysers, maybe a novelty power plant in California. That perception is about to be demolished. A new generation of companies led by oil and gas veterans is taking the most advanced drilling technology ever developed and pointing it at the largest energy resource on the planet: the heat beneath our feet.
In a recent presentation, Cindy Taff, CEO of Sage Geosystems and a former Shell vice president with over three decades in petroleum engineering, laid out the case with disarming clarity. The oil and gas industry has spent 100 years and trillions of dollars learning how to drill deeper, drill hotter, steer horizontally through rock with pinpoint accuracy, and fracture formations to release trapped resources. That entire technology stack, she argues, can be repurposed almost immediately for geothermal power. The resource it would unlock holds an estimated 50,000 times more energy than all remaining oil and gas reserves on Earth. And unlike oil, it never runs out.
For contrarian investors, this is not a feel-good climate story. It is a massive capital reallocation thesis hiding in plain sight.
The Technology Already Exists
The genius of next-generation geothermal is that it does not require any fundamental scientific breakthrough. The core technologies, horizontal drilling and hydraulic fracturing, were perfected over decades by the oil and gas industry to extract hydrocarbons from formations that were previously unreachable. The shale revolution was built on precisely these capabilities: the ability to turn a drill bit sideways miles underground and navigate it with the precision of hitting a target the size of a pizza at five miles depth, as Taff puts it.
Enhanced Geothermal Systems, or EGS, apply these same techniques to hot, dry rock. The process involves drilling deep wells, creating fracture networks in the rock, and circulating water through those fractures to absorb heat. The heated water is then brought to the surface to drive turbines and generate electricity. There is no combustion, no emissions, and no fuel that needs to be mined, shipped, or burned.
What makes this different from conventional geothermal is geography. Traditional geothermal depends on rare geological conditions where heat, water, and permeable rock all naturally coexist near the surface. Those “unicorn” sites, as Taff describes them, exist in places like Iceland and Northern California but almost nowhere else. EGS eliminates that constraint. Hot rock exists everywhere on Earth if you drill deep enough. The question has always been whether it could be accessed economically. Thanks to a century of oil and gas innovation, the answer is now yes.
Billions Are Already Flowing In
This is not a theoretical future. Capital is pouring into next-generation geothermal at a pace that would have been unthinkable even three years ago. The geothermal sector attracted $1.7 billion in funding in the first quarter of 2025 alone. Fervo Energy, arguably the sector’s frontrunner, has raised approximately $1.5 billion overall and just three days ago closed a $421 million non-recourse project financing deal for its flagship Cape Station project in Utah, with participation from Barclays, J.P. Morgan, HSBC, and Bank of America. Non-recourse debt for a first-of-its-kind facility is practically unheard of, and it signals that the banking sector now considers EGS a bankable infrastructure asset, not a science experiment.
Sage Geosystems, Taff’s company, raised over $97 million in Series B funding in January 2026, co-led by Ormat Technologies and Carbon Direct Capital. Sage’s proprietary “Pressure Geothermal” technology leverages both heat and the natural pressure of the earth, operating the fracture network like a balloon that inflates and deflates to move hot water to the surface without continuous pumping. This approach reduces parasitic energy losses by 25% to 50% compared to other next-generation developers and can be deployed almost anywhere.
The investor list tells the story of where this is heading. Google, Meta, Devon Energy, Breakthrough Energy Ventures, Shell Energy, CalSTRS, Mitsubishi Heavy Industries, and Mitsui have all placed significant bets. When Big Tech, Big Oil, sovereign wealth, and pension funds all converge on the same sector, something structural is happening.
The Data Centre Problem Geothermal Was Born to Solve
The timing of geothermal’s emergence is not accidental. It is being pulled forward by one of the most urgent infrastructure problems in the developed world: how to power the explosive growth of artificial intelligence data centres with clean, reliable electricity.
Data centres require what the industry calls “firm power,” meaning electricity that is available 24 hours a day, 365 days a year, regardless of weather. Wind and solar, for all their progress, cannot provide this on their own. Battery storage helps but remains expensive at the scale and duration required. Nuclear takes a decade or more to build. Natural gas works but produces emissions.
Geothermal is the only renewable energy source that provides firm, baseload power with zero emissions, a small physical footprint, and the ability to scale relatively quickly. Fervo’s Cape Station project in Utah is on track to begin delivering 100 MW to the grid in 2026, with plans to expand to 500 MW and permitting for up to 2 GW. Sage has signed a 150 MW deal with Meta to power data centres, with first generation expected in 2027. An analysis by the Rhodium Group found that by 2030, enhanced geothermal could provide nearly two-thirds of new data centre demand at or below current power costs.
This is the kind of demand signal that creates entire industries. The hyperscalers are not investing in geothermal out of altruism. They are investing because they literally cannot build enough data centres without a new source of firm clean power, and geothermal is the most scalable option available within the required timeframe.
The Earth as a Giant Battery
One of the most underappreciated aspects of next-generation geothermal is its ability to function as energy storage. This is not a metaphor. Sage Geosystems has built what it calls the world’s first geopressured geothermal energy storage facility at a coal plant site in Christine, Texas. The system pumps water underground into fractured rock, building up pressure that can be released on demand to spin turbines and generate electricity when the grid needs it most.
This “earthen battery” concept is transformative because it addresses the fundamental limitation of wind and solar: intermittency. A grid powered by solar panels needs something to keep the lights on after sunset. Lithium-ion batteries can do this for a few hours, but costs escalate rapidly for longer durations. Geothermal storage can discharge for six to ten hours and can scale to 50 MW on a single pad. More importantly, it uses no lithium, no cobalt, and no rare earth minerals. The storage medium is the rock itself.
Taff’s argument that geothermal can make intermittent renewables into baseload power is not hyperbole. If excess solar energy generated during the day can be stored underground as pressure and heat, and then released overnight, you effectively eliminate the need for fossil fuel peaker plants. The coal plant in Christine, Texas where Sage built its storage facility is making the transition from coal to solar precisely because geothermal storage bridges the gap that solar alone cannot fill.
70,000 Wells a Year and the Workforce Ready to Pivot
Perhaps the most compelling element of the geothermal thesis is the workforce argument. The U.S. oil and gas industry currently drills approximately 70,000 wells per year. The geologists, drillers, service companies, engineers, and roughnecks who do this work possess exactly the skills needed for next-generation geothermal. They know how to navigate complex subsurface geology, manage high-pressure systems, operate in extreme temperatures, and execute with the precision that both industries demand.
This is not a retraining problem. It is a redeployment opportunity. As Taff notes, the knowledge transfer is almost immediate because the technologies are fundamentally the same. Fervo has already demonstrated this: the company’s wells went from taking a month to drill to being completed in just 16 days, with drilling times continuing to fall as oil-field techniques are optimised for geothermal conditions.
The U.S. Department of Energy projects that EGS could enable 90 gigawatts of geothermal electricity generation capacity by 2050, potentially supplying 12% of U.S. electricity demand. Other analyses suggest 300 GW or more is achievable. Globally, if the same drilling workforce were redirected from hydrocarbons to heat, Taff argues the technology could deliver nearly 80% of the world’s electricity demand and over 100% of heating needs for all homes and businesses by 2050.
Those numbers may sound ambitious, but they are grounded in a straightforward industrial logic: the infrastructure, expertise, and supply chain already exist. They just need to be pointed in a different direction.
The Investment Thesis Nobody Is Talking About
What makes next-generation geothermal particularly interesting from an investment perspective is how early we are in the cycle. The sector is roughly where shale oil was in 2008, before the technology breakthroughs that turned the U.S. into the world’s largest oil producer. The cost curves are steep and falling. Fervo reports capital expenditures near $6,000 per kilowatt for Cape Station, close to the DOE’s 2030 target of $5,000 per kilowatt. With every well drilled, the learning curve compresses further.
The bipartisan political support is also notable. Geothermal enjoys backing from both sides of the aisle in Washington. The Trump administration has proposed $171.5 million in new DOE funding for next-generation geothermal field tests and exploration drilling. Energy Secretary Chris Wright’s previous company, Liberty Energy, was an early investor in Fervo. The One Big Beautiful Bill Act and executive orders calling for 10 new nuclear reactors also include provisions that benefit geothermal development.
For investors who have followed our analysis of deindustrialisation and the structural shift away from hydrocarbon dependence, geothermal represents the other side of that coin. It is not a bet against oil and gas. It is a bet that the same engineering talent and industrial capability that built the petroleum age will build what comes next. The transition is not decades away. It is happening now, funded by billions in private capital, backed by the world’s largest technology companies, and being built by the same hands that have been drilling wells for a century.
The energy is everywhere beneath our feet. The only question is whether you are paying attention early enough to benefit from it.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Always do your own research and consult a qualified financial adviser before making investment decisions.
