A sustainability officer's guide to geothermal energy advances

This guide provides sustainability officers and ESG professionals with essential knowledge about revolutionary geothermal energy advancements. While most companies won't develop geothermal projects directly, understanding these technologies is crucial for energy procurement decisions, investment opportunities and strategic partnerships with emerging clean energy providers.

The geothermal renaissance – from niche to mainstream

For decades, geothermal energy supplied less than 1% of global energy demand, confined to regions with natural hot springs and volcanic activity. Today, technological breakthroughs are transforming geothermal from a niche renewable source into a potentially game-changing clean energy solution.

Recent analysis by the International Energy Agency suggests geothermal energy could meet up to 15% of global electricity demand growth by 2050 – representing deployment of as much as 800 gigawatts worldwide. This transformation is driven by drilling and engineering advances that expand geothermal's geographic potential from roughly 4% of suitable locations to nearly anywhere with sufficient underground heat.

Understanding the three generations of geothermal technology

Conventional geothermal (first generation)

Traditional geothermal relies on underground reservoirs of hot water or steam, requiring specific geological conditions: high temperatures, permeable rock and existing water sources. There are three main methods of conversion:

• Dry steam plants – extract steam directly from underground

• Flash steam plants – bring high-pressure water to the surface where it turns to steam

• Binary cycle plants – transfer heat to secondary fluids with lower boiling points

This method is geographically limited to tectonically active areas.

Enhanced geothermal systems (second generation)

Enhanced geothermal systems (EGS) create artificial reservoirs by drilling deep wells and using hydraulic fracturing to increase rock permeability. EGS methods include:

• Drilling into hot, dry rock

• Fracturing rock to create circulation pathways

• Injecting cool water to be heated and returned as steam

Recent breakthroughs show the viability of EGS, with projects achieving drilling speeds of 300 feet per hour and completing 3-mile-deep wells in just 16 days. Technologies adapted from oil and gas have reduced costs for horizontal wells by up to 26%.

Superhot rock geothermal (third generation)

This new frontier targets formations exceeding 400°C, where water enters a supercritical state. These systems can generate 5–10 times more power than conventional geothermal wells, potentially powering entire countries from fewer sites.

Technology revolution – adapting oil and gas innovations

The geothermal shift is leveraging oil and gas technologies. Up to 80% of geothermal investment uses transferable skills and infrastructure, such as:

Advanced drilling techniques

• Directional drilling to access large areas from one location

• Multi-well pad development to reduce surface impact

• Polycrystalline diamond drill bits for harder, hotter rock

Reservoir engineering

• Hydraulic fracturing for efficient circulation

• Real-time monitoring for optimisation

• Precision fluid management for maximum heat extraction

Closed-loop systems – minimising environmental impact

New closed-loop systems circulate fluid in sealed pipes, avoiding interaction with rock or groundwater. Their advantages include:

• Reduced seismic risk

• Applicability across more locations

• Environmental protection

Though behind EGS in development, closed-loop systems are proving viable for electricity generation and heating.

Current commercial developments

Several projects show next-gen geothermal’s commercial promise:

• The Utah FORGE project achieved successful water circulation at 1.5 miles depth

• Commercial ventures plan to reach 100 MW by 2026 and expand to 500 MW by 2028

• Tech companies are signing power agreements for data centres needing 24/7 reliable power

Economic outlook and investment trends

Since 2021, private investment in advanced geothermal has exceeded $700 million. Costs could fall by 80% by 2035, reaching ~$50/MWh – competitive with solar and wind plus storage.

Government support includes:

• The Enhanced Geothermal Shot Initiative targeting 90% cost reduction

• $30 million for superhot rock development under ARPA-E

• Demonstration project funding under the Bipartisan Infrastructure Law

Strategic implications for sustainability officers

Energy procurement opportunities

Geothermal offers:

• Baseload reliability – 24/7 power supply

• Grid stability – flexibility for renewable integration

• Long-term contracts – typical terms of 20–30 years

Investment and partnership considerations

• Direct investment – viable for companies with large energy needs

• Strategic partnerships – access to innovation and early capacity

• Supply chain opportunities – especially for drilling and materials sectors

Regulatory and ESG reporting

Understanding geothermal enables sustainability officers to:

• Evaluate providers offering geothermal PPAs

• Assess investment in clean energy portfolios

• Report credibly on renewable strategy and energy transition

• Plan long-term procurement of reliable clean energy

Challenges and risk assessment

Technical risks

• High-temperature system requirements

• Potential for induced seismicity

• Uncertainty in subsurface conditions

Regulatory hurdles

• Long permitting timelines (up to 20 years)

• Environmental assessments

• Community acceptance challenges

Market constraints

• Price pressure from solar, wind and storage

• Limited commercial track record

• Need for stable policy frameworks

Future outlook and strategic planning

Technology development

Advancements in drilling, AI integration and hybrid energy systems will expand geothermal’s reach and feasibility.

Market expansion

With falling costs, EGS could meet 20% of US electricity needs by 2050. Similar potential exists globally with strong policy support.

Integration with corporate sustainability

Geothermal aligns with ESG and climate goals by delivering:

• Scope 2 emissions reduction

• Energy security from domestic sources

• Investment opportunities in emerging clean tech

• Leadership through innovation adoption

Conclusion – strategic positioning for the underground energy revolution

Geothermal energy is becoming one of the most promising clean technologies of the next decade. While most companies won’t develop geothermal projects directly, understanding the technologies is essential for shaping procurement, investment and partnership decisions.

As enhanced geothermal and superhot rock systems mature, they offer tools to meet aggressive climate goals without sacrificing reliability or cost efficiency.

Sustainability professionals who stay informed on these developments will be well positioned to act – whether through long-term power agreements, strategic investments or value chain engagement. The underground energy revolution is underway.