Geothermal energy: The heat (and pressure) is on

For decades, geothermal energy has occupied a compelling yet narrow place in the clean energy landscape. It offers what the grid increasingly needs— firm, renewable, low-carbon power—yet has remained constrained by limited siting flexibility, high upfront resource risk, and persistent concerns around induced seismicity. 

Enhanced geothermal systems (EGS) change that equation. Instead of searching for ideal subsurface conditions, EGS engineers them directly. In doing so, EGS rewrites the rules of where geothermal energy can be deployed and how far it can scale, with the potential to transform this historically niche resource into a widely deployable form of clean, firm power.

One such solution, Sage Geosystems, uses a pressure-managed EGS approach to extract geothermal energy from engineered subsurface reservoirs, while explicitly addressing the seismicity risks that have constrained earlier projects. 

How EGS scales geothermal energy

Conventional geothermal power relies on a narrow set of subsurface conditions: sufficiently high temperatures, naturally occurring fluid, and enough permeability to circulate fluid through hot rock. In practice, those conditions coexist in only a few places—nearly all US commercial geothermal power generation is concentrated in California, Nevada, and a handful of sites across Utah and Hawaii.

EGS reduces this constraint by engineering permeability and fluid access rather than relying on their natural presence. While fluid access and permeability are harder to find, heat is not: the Earth’s natural geothermal gradient ensures that hot rock exists almost everywhere at sufficient depth. 

By reducing the number of variables that must be discovered rather than designed, EGS expands siting flexibility and lowers the resource risk that has historically constrained geothermal development. The Department of Energy (DOE) estimates this approach could unlock more than 5,500 GW annually of US resource potential, which, when converted to electric power, is roughly comparable to the total installed power capacity of the US today.

One remaining challenge has been induced seismicity. When you inject pressurized water into rock and create fractures, you are adding lubrication to geological systems that have been static for millions of years. If those fractures propagate into existing fault zones, the faults can slip, producing earthquakes. Projects in Basel, Switzerland (2006) and Pohang, South Korea (2017) triggered magnitude 3.4 and 5.4 events, respectively, both leading to project cancellations and regulatory backlash that set the industry back years.

Sage's approach to EGS is designed to address this risk directly. Rather than relying on high-pressure hydraulic stimulation, Sage uses a gravity-assisted fracturing approach that helps avoid the high overpressures that can drive fault slip. Further, its approach biases fracture growth downward and away from shallow, critically stressed fault systems. By understanding causes and conditions, Sage aims to work with the subsurface, not against it. 

This is not a minor technical detail. It is the difference between a technology that can scale with community acceptance and one that faces opposition at every site. For a hyperscaler evaluating geothermal offtake agreements, seismicity risk translates directly into permitting risk, timeline risk, and reputational risk. 

The clean, firm power gap driving EGS adoption

To understand why this matters, start with the problem hyperscalers are trying to solve. Solar and wind have scaled dramatically, but they face a structural limitation: they do not generate power when the sun is not shining or the wind is not blowing. Batteries help bridge short gaps, but current technology cannot economically cover multi-day periods of low renewable output. Nuclear provides firm generation, but faces permitting timelines that extend well past 2030.

This creates what might be called the 'clean, firm power gap'—the difference between what hyperscalers need (24/7, low-carbon, scalable to gigawatts) and what current markets can supply. A single large AI training cluster can consume more than 100 MW continuously. Meta, Google, and Microsoft are planning data center campuses that will require gigawatts of capacity. The gap between demand and available clean, firm power supply is widening, not narrowing.

Geothermal energy aligns closely with this need. Unlike solar or wind, geothermal power plants run continuously, with capacity factors that routinely exceed 90%. And unlike nuclear, geothermal projects can, in principle, be permitted and built on shorter timelines. The challenge has never been performance, rather availability: with the emergence of EGS, geothermal power is expanding where firm, clean power can realistically be built, arriving at a moment when the grid’s need for dependable, low-carbon supply has never been greater.

Sage raises $97 million to deploy geothermal at Ormat site

Sage Geosystems announced $97 million in Series B financing co-led by Ormat Technologies, the world's largest geothermal operator, and Carbon Direct Capital. Ormat will host Sage's first commercial facility at an existing Ormat plant.

The investment signals that EGS has become investable to the industry built to scale it. For Ormat, the logic is clear: conventional geothermal is constrained by resource availability. EGS expands the addressable market, but requires the subsurface capabilities that conventional operators don't typically possess but Sage does.

Why the partnership structure works

EGS isn't simply harder geothermal—it's a different engineering problem. Conventional operators locate naturally permeable reservoirs. EGS requires creating permeability in crystalline rock and managing induced seismicity risks that don't exist in hydrothermal systems. Sage has solved the seismicity problem that ended projects in Basel and Pohang. Ormat brings everything else: turbines, plant operations, grid expertise, and six decades of operational knowledge.

Building at an existing Ormat site provides another advantage: established subsurface characterization, proven geological stability, and grid infrastructure already in place. For a first commercial deployment, this de-risks demonstration in ways greenfield sites cannot.

Both companies move faster together because the technical capabilities required to make EGS work don't naturally exist within a single organization.

What hyperscaler demand means for the power sector

Meta's 150 MW power purchase agreement with Sage—announced in August 2024, with delivery planned for sites east of the Rocky Mountains—adds another dimension to this story. Hyperscalers have concluded that waiting for clean, firm power technologies to mature before signing contracts means those technologies may not be available when needed. So they are becoming anchor customers, providing the revenue certainty that enables projects to secure financing.

For geothermal power specifically, this demand signal is transformative. Contracted offtake from creditworthy counterparties changes project economics fundamentally. It lowers the cost of capital, enables debt financing, and de-risks the investment case for additional capacity. The hyperscaler model has already accelerated deployment in solar, wind, and battery storage. Its application to geothermal power may prove similarly catalytic.

The final constraint

EGS is not a silver bullet, but it is beginning to look like a credible answer to a growing-problem: how to deliver clean, firm power at scale, in more places, and on timelines that match accelerating demand. Advances in subsurface engineering are reducing the resource and seismicity risks that once confined geothermal to a narrow footprint, while partnerships with incumbent operators are showing how those advances can be integrated into existing energy infrastructure. 

At the same time, hyperscalers are reshaping the market by signaling demand early, underwriting first deployments, and pulling technologies forward rather than waiting for them to mature on their own. That combination of technical progress, industrial adoption, and committed buyers is what turns promising concepts into deployable systems. 

Whether EGS ultimately fulfills its potential will depend on repeatable and continued performance under real-world conditions. But the recent alignment of science, incumbents, and demand suggests EGS is moving beyond possibility and into a phase where the final constraint is no longer what the Earth can provide, but what the energy system is prepared to build.