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Geothermal is entering a new phase of industrial growth, with drilling activity, capital investment, and project development accelerating across next-generation systems. In the western US alone, 14 next-generation geothermal developers are advancing projects, and our internal research at Hephae Energy Technology suggests about 30 drilling rigs may be active by the first quarter of 2028 (Fig. 1).
This represents a clear and emerging serviceable market for high-temperature directional drilling technologies. Globally, the opportunity is even more significant.
By 2040, the total demand for high-temperature drilling is projected to reach approximately 5,500 rigs, with 4,900 rigs supporting next-generation geothermal development and the remainder serving high-temperature gas applications. Our modeling, shown in Fig. 2, is based on the International Energy Agency’s (IEA) next-generation geothermal power forecast in 2025.
This trajectory signals a shift in subsurface energy development, as geothermal transitions from niche deployment to a scalable, global industry.
At the same time, investment is accelerating. More recent analysis by the IEA indicates that financing for next-generation geothermal reached approximately $2.2 billion in 2025, representing an 80% year-over-year increase and a substantial rise from just $22 million in 2018.
This rapid growth reflects increasing confidence in geothermal’s role as a source of clean, firm power capable of supporting electrification, data centers, and energy-intensive industries. This momentum is not driven by resource discovery, but rather by technology. The heat beneath our feet has always been there. The challenge has been access.
From Resource Abundance to Global Energy Systems
Geothermal energy has long been recognized as one of the most reliable and resilient sources of renewable, firm power. Yet it still contributes only a small fraction of global electricity supply due to limited access to subsurface heat.
Conventional geothermal systems rely on naturally occurring hydrothermal reservoirs, where heat, permeability, and fluid coincide near the surface. These resources are geographically constrained, largely confined to tectonically active regions such as Iceland, Indonesia, and parts of the western US, which limits broader deployment. Scaling geothermal globally requires a next-generation approach.
Next-Generation Geothermal: Expanding the Addressable Resource
Next-generation geothermal technologies, primarily, though not exclusively, enhanced geothermal systems and advanced geothermal systems are fundamentally changing the industry. By applying directional drilling techniques and thereby engineering reservoirs, these systems enable access to heat in regions previously considered impractical. These next-generation systems leverage decades of proven drilling expertise from the oil and gas industry and extend it into new thermal regimes.
The implication is profound: geothermal is no longer constrained by geography, making it a globally deployable energy solution. However, this development introduces a new challenge: unlocking heat at scale requires drilling directional wells deeper and hotter than ever before.
The Temperature Barrier: Limiting Economic Growth
Scaling next-generation geothermal is directly tied to accessing higher-temperature reservoirs, where increased energy output, improved efficiency, and lower levelized cost of energy (LCOE) drive stronger economics. However, directional drilling technology has remained constrained near a 200°C threshold, with most commercial tools rated between 150 and 175°C.
This temperature limitation has forced operators to rely on mitigation strategies, such as cooling techniques, to protect equipment. While effective to a certain extent, these approaches introduce significant inefficiencies, including increased nonproductive time (NPT), higher operational complexity, and elevated project costs.
Insulated drillpipe offers an additional mitigation pathway, but brings substantial cost implications and does not solve the significant NPT resulting from having to stage tools into hot holes. In essence, the industry has been managing the problem rather than solving it. By directly addressing the root challenge of high-temperature electronics, operators can eliminate costly cooling cycles and save upward of $1 million per well.
High-Temperature Electronics: The Critical Enabler
At the core of this shift is the need for high-temperature downhole electronics and sensors. The challenge is not simply mechanical or electronic, rather one of thermal management, where bridging this performance gap requires a step change in our ability to manage the generation and dissipation of heat in downhole equipment. Downhole systems rely on real-time sensing, telemetry, and control, all of which degrade rapidly at elevated temperatures. The impact of temperature on reliability is exponential.
Based on Arrhenius principles, every 10°C increase in operating temperature can reduce electronics lifespan by approximately 50%. Conversely, every 10°C increase in temperature rating of the tool doubles the expected lifespan.
This relationship has direct operational consequences. Traditional measurement-while-drilling (MWD) systems are not rated to the extreme temperature and stress conditions associated with geothermal, forcing costly delays and equipment replacements, due to tool failures that can add millions to project budgets.
Bold Ideation: From Mission Impossible to Engineering Reality
What was once viewed as “mission impossible” is now approaching reality thanks to purpose-built engineering that merges aerospace innovation with proven oil and gas expertise to operate in extreme environments. Designing electronics capable of operating reliably at high temperatures requires addressing several fundamental thermal challenges.
First, electronic assemblies must be protected from extreme external temperatures encountered in deep geothermal wells. Second, internally generated heat must be removed efficiently to prevent localized overheating. Finally, rejected heat must be transferred to regions where it will not damage surrounding components or degrade system performance.
The rectangular circuit boards generally used in traditional downhole electronics dissipate heat relatively slowly. One approach to addressing this limitation is circular stacked circuit architecture, which can accelerate radial heat transfer.
By surrounding these circular boards with thermally conductive materials, a continuous pathway for heat transfer can be created along the tool body, a “thermal superhighway" that facilitates axial heat transport away from sensitive components. Such advancements can reduce thermal gradients, supporting improved reliability and sustained operation in high‑temperature environments.
Engineering for Extreme Conditions
Temperature is only one of several challenges facing drilling systems in geothermal environments. Hard crystalline formations introduce severe shock and vibration, placing additional stress on sensitive electronics and mechanical assemblies.
To validate performance, systems must be subjected to highly accelerated life testing, including sustained operation at temperatures exceeding 230°C, vibration levels up to 30 G root mean square, and shock events exceeding 1,000 G. These combined stress conditions simulate the extreme environments encountered in deep geothermal wells.
Superhot Rock: The Pathway to Gigawatt-Scale Energy
The next frontier in geothermal development lies in superhot rock systems, using next-generation technologies where reservoir temperatures exceed 374°C. At these conditions, water enters a supercritical state, dramatically increasing its energy-carrying capacity.
According to Clean Air Task Force (CATF), “Just 1% of the world’s superhot rock geothermal potential could generate 63 [TW] of clean firm power, eight times more energy than the rest of the world’s electricity combined.” I believe this represents a step change in scale.
CATF further notes that, “When next-generation geothermal systems are pushed to superhot rock conditions, they could significantly boost power potential and reduce costs, with each well producing five to ten times more power than today’s conventional geothermal projects.”
The implications for global deployment are significant. Fewer wells, higher output, and lower costs enable geothermal to compete directly with other large-scale energy sources.
Advancing toward 300°C circulating temperatures and ultimately enabling access to superhot rock reservoirs above 374°C, requires integrating multiple step changes in design, materials, and system architecture to withstand extreme conditions.
From Oil and Gas Analogue to Geothermal Scale
The evolution of next-generation geothermal closely mirrors the early stages of unconventional oil and gas development.
In both cases, the resource was known, but inaccessible at scale without technological innovation. Directional drilling, real-time measurement, and advanced completion techniques unlocked unconventional hydrocarbons. Today, those same technologies, adapted for higher temperatures with increased resistance to shock and vibration, are enabling geothermal growth.
The oil and gas industry provides a strong analog for next-generation geothermal, particularly in terms of drilling complexity, well architecture, and operational requirements.
The key difference is temperature, and bridging this gap will ultimately determine the pace of geothermal scalability. The important similarity to point out here is the pace at which the industry will be able to scale because of technology development and innovations in drilling practices.
Scaling Geothermal for Everyone, Everywhere
Geothermal energy has the potential to become a cornerstone of the global energy system by providing renewable, firm, and reliable power at scale. To achieve this vision, the industry must move beyond the constraints of conventional hydrothermal systems. Next-generation geothermal technologies are expanding the addressable resource and enabling access to heat across a much broader geographic footprint.
At the same time, high-temperature directional drilling technologies are unlocking the ability to operate in deeper and hotter environments where the economics are most compelling. Together, these advances represent a convergence of opportunity, where a globally abundant resource, rapidly growing demand, and a clear technology pathway to scale come together. High‑temperature electronics for directional drilling systems are the critical enablers bridging this gap.
By reducing NPT, improving reliability, and lowering the LCOE, they transform geothermal from a regional solution into a global one. Scaling geothermal everywhere is no longer a distant ambition. I believe it is an engineering challenge already being solved.
John Clegg, SPE, is the chief technology officer for Hephae Energy Technology, a company founded to develop sensing, control, and communications solutions for drilling high-temperature wells. Over a 40-year career, he has worked in engineering and operations roles with upstream technologies including drill bits, drilling motors, rotary steerable tools, MWD, and logging while drilling. He holds an MSc degree in engineering science and a diploma in global business, both from Oxford University in England. As an active SPE member, Clegg has served on program committees and technical section boards, and helped found the SPE Geothermal Technical Section (GTTS). He has twice served as an SPE Distinguished Lecturer, on wellbore placement in 2020 to 2021 and on high-temperature drilling solutions in 2025 to 2026.