Cracking Geothermal Growth

BP was the first oil major Jamie Beard tried to bring into geothermal. The company hired a geothermal manager, built a division, invested in start-ups and took lease positions. Then it divested completely. Jamie, founder of the non-profit Project InnerSpace, told the story at the geothermal Ripple while making the case that the oil and gas industry must build geothermal anyway.

Scale is the reason. There are about 100 geothermal start-ups worldwide, Jamie said, and they cannot deliver terawatts within two decades. Oil and gas can. The two industries share about 80% of their skills, workforce and technology. Six years ago the majors would not discuss geothermal. Now, Jamie said, their question is "when do we get in, not if we get in". At least three majors have quietly built internal geothermal divisions and large lease positions in the US, under entities that cannot be traced to them.

What changed, one of the hosts said, is the price. Hyperscaler demand has pushed up what geothermal power can earn until it competes with natural gas, and oil companies, which are not philanthropists, now see a business case.

Seven-year queues for surface plant

Demand also exposed the next bottleneck. About two years ago an AI infrastructure company with double-digit gigawatt needs asked Project InnerSpace how big and how fast geothermal could grow if oil and gas engaged. Eighteen months of modelling pointed to surface equipment and turbines, the part of the plant that makes electricity or heat. Within a few years, Jamie said, developers will face waiting lists of seven or eight years.

A founder whose company makes drill bits doubted geothermal suits data centres at all. A data centre wants power tomorrow, and a gas turbine can be ordered tomorrow. Jamie said that option has gone. The AI company came to Project InnerSpace because it faced an eight-year wait for gas turbines. It did not care about geothermal. It wanted power.

David Babson, who leads energy, climate and nature at XPRIZE, is designing the foundation's first geothermal prize with Jamie to meet that gap. A team whose modular surface equipment meets a set of specifications would win, alongside smaller awards, a large advance market commitment to buy and deploy it. The prize is part of GeoForce, a financing structure first designed with that AI company. David recalled that the first XPRIZE, the Ansari prize for a privately built reusable rocket, offered $10m and drew more than $100m in team spending, but the private space industry took 15 to 20 years to follow. Climate cannot wait that long, hence awards paired with guaranteed demand.

When the majors leave

The founder's bigger doubt was about oil and gas itself. Their company relies on oil and gas partners for rigs, the bottleneck in their view, and at scale those partners would rather work for oil and gas. Oil companies could have drilled for geothermal for 150 years and did not, the founder said. Their margins are higher in oil, and the current push is greenwashing that will end when the subsidies do. They did not reject partnership. They wanted independence, with a second supplier outside oil and gas, because "for a startup, a wave is deadly".

A corporate venture investor from an industrial group with oil and gas interests took the charge personally. The group can drill, build power plants and make casing, has backed geothermal technologies and plans to become a producer once the technologies are ready. The 150-year charge was unfair, they said, because geothermal depends on the resource. Good sites are limited, as in Italy, where capacity is exploited to the last degree, and the rest needs technology to go ultra-deep or reach super-hot rock.

Exits have happened before, a participant said, citing Chevron in Indonesia and Shell in the Netherlands. The hosts' answer was scale. Hydrothermal regions such as Italy and Iceland are too small for the majors. The shale boom's drilling and reservoir techniques make geothermal possible in far more places, and that scale brought internal champions forward at the majors. BP's were among them. Jamie still called the industry a necessary piece if geothermal is to reach terawatts fast.

Europe has a different problem. The industry goes where permitted work is, Jamie said, so Europe's constraint is social licence, not skills. After a fraught coalition effort in the UK, Jamie did not expect gigawatt-scale developments in Europe within ten or even 20 years, and asked founders to prove that wrong.

An investor framed the dependence as the innovator's dilemma. A CFO choosing between a new bet and the business that reliably meets the hurdle rate tends to pick the second, so betting only on the majors has a poor track record. The same investor saw dry-hole risk as the core problem, which in next-generation geothermal means drilling to where heat was expected, finding it cooler and having to go deeper at higher cost. An oil producer can raise prices to recover such costs. In regulated electricity markets the upside is fixed. A behind-the-meter buyer such as a hyperscaler, by contrast, will pay whatever the drilling cost.

That, Jamie said, is how GeoForce works, and it may carry geothermal until it can compete on the grid. David said the majors make business decisions, and demand and technology now point towards them staying. The founder who makes drill bits had simpler advice. Get a second supplier.

This Ripple was hosted by David Babson (XPRIZE Foundation) and Jamie Beard (Project InnerSpace) at The Drop 2026 on 16 September.