For over a century, geothermal energy has been a quiet workhorse in the U.S. energy mix, providing steady, low-carbon power immune to weather disruptions. Yet, despite its potential, it remained a niche player due to technological limitations. That’s changing. Advances in horizontal drilling, borrowed from the oil and gas sector, are unlocking deep geothermal resources once considered out of reach. This shift is transforming geothermal from an afterthought into a critical piece of the decarbonizing economy’s infrastructure.
The game-changer is the adaptation of hydraulic fracturing and directional drilling technologies. These innovations are driving a shift from conventional geothermal, which relies on rare natural reservoirs, to next-generation systems that can engineer artificial reservoirs over 10,000 feet deep. These systems tap into widespread hot rock exceeding 200°C (392°F), making geothermal a viable source of zero-carbon baseload power. This is particularly valuable for a grid increasingly reliant on intermittent renewables.
Globally, geothermal has been slow to scale, with just 382 MW added in 2024. However, momentum is building. The U.S. leads the world with 3.7 GW of installed capacity, accounting for 23% of global output, and more than 2 GW of next-gen projects are currently in development. The Department of Energy’s (DOE) 2023 Liftoff program has moved next-gen geothermal into the demonstration phase, with early pilots showing strong potential for cost-effective, zero-carbon baseload power. The DOE has set ambitious goals: 5 GW of capacity by 2030, 90 GW by 2050, and a 90% reduction in the cost of next-gen geothermal by 2035 through its Enhanced Geothermal Shot initiative.
Historically, geothermal faced steep costs due to the expense and complexity of drilling deep, high-temperature wells. But horizontal drilling is reshaping the cost curve. Fervo Energy recently drilled a 15,000-foot geothermal well in just 16 days, 79% faster than the DOE’s baseline for ultradeep geothermal. These advances are driving down the levelized cost of electricity (LCOE) for geothermal. Fervo’s latest wells come in under $5 million each, compared to $13 million just a few years ago. At scale, that brings LCOE into the $70/MWh range, competitive with nuclear, gas with carbon capture and storage (CCS), and many long-duration storage solutions.
Moreover, horizontal drilling improves the repeatability of geothermal wells. Each new well generates valuable subsurface data that can be used to optimize subsequent wells, creating a learning loop that drives further cost reductions and faster development cycles. Commercial pilots from companies such as Fervo, Eavor, GreenFire, and Sage Geosystems are already proving the model. Fervo, for example, has announced plans to deliver 400 MW of contracted power by 2028, scaling rapidly from a current pilot capacity of 14 MW.
To move from tens of megawatts to gigawatts of capacity by 2030, the industry must drill hundreds, if not thousands, of horizontal wells. This will require a massive uptick in drilling activity, workforce training, and supply chain coordination. Infrastructure investors and utilities are starting to pay attention, with several major U.S. utilities signing long-term power purchase agreements (PPAs) with geothermal developers. Tech companies like Meta and Google are also investing, willing to pay a premium to meet surging data center demand and advance their decarbonization goals.
Beyond baseload electricity, geothermal’s applications are expanding. High-temperature geothermal brine can be used for industrial heating, desalination, and district energy systems. It can also support critical mineral extraction, particularly lithium, offering new revenue streams for project developers. These capabilities make geothermal uniquely versatile among clean energy technologies. New offtake models, such as flexible PPAs and hybrid grid contracts, are helping to de-risk investment and accelerate commercialization.
However, two key technical areas still need innovation: exploration and resource characterization, and thermal management and reservoir stability. Geothermal developers need better tools to identify viable hot rock zones and optimal well placements. Improved simulation software, real-time monitoring, and machine learning models can help reduce drilling risk and lower project costs. Additionally, advanced well completions that ensure even flow and heat distribution will be essential to maintain long-term performance.
The demand for clean firm power is growing. According to multiple grid models, the U.S. will need between 700 GW and 900 GW of clean firm capacity by 2050 to fully decarbonize the