The energy transition rarely happens in a straight line. Sometimes, those who have spent decades perfecting the art of extracting energy from the subsoil become, almost unexpectedly it, the protagonists of clean energy. That is exactly what is happening with Enhanced Geothermal Systems (EGS): a technology that promises to revolutionise the global energy mix and that finds in the oil sector an indispensable ally.
But beyond the technological advance, the growth of this sector raises key questions that go far beyond engineering: how is trust structured between developers, investors and public authorities in projects of this complexity? What role do financial guarantees play in making such capital-intensive investments possible?
What is Enhanced Geothermal Systems technology, and why now?
Conventional geothermal energy harnesses heat from volcanic zones or natural aquifers. Enhanced Geothermal Systems, also known as deep or hot rock geothermal energy, goes much further: it extracts thermal energy from deep rocks, typically at depths of between 3 and 10 kilometres, where temperatures exceed 300–400 °C, even in places with no volcanic activity.
The principle is straightforward, though the technical challenge is enormous: deep wells are drilled, the rock is stimulated to create a network of fractures, cold water is injected and heated upon contact with the rock, and recovered as steam to generate electricity. The result: clean, continuous and geographically distributable energy anywhere in the world.
The timing is right for several reasons. The technological maturity achieved in horizontal drilling and hydraulic fracturing — techniques developed precisely by the oil and gas industry — means that EGS project costs are today significantly lower than they were a decade ago. And the climate emergency makes this energy source a first-order strategic priority.
The oil sector: from problem to solution
For years, talking about oil and decarbonisation in the same sentence seemed like a contradiction. Today, the narrative is changing. Oil companies possess something that no actor in the renewables sector has built as quickly: decades of experience in deep drilling, fleets of specialised equipment, engineering expertise and already-amortised supply networks.
The conversion of land-based drilling rigs towards geothermal projects is not merely an exercise in corporate responsibility; it is a rational economic decision. Depleted oil wells can be transformed into geothermal wells. Drilling engineers can redirect their skills. Already established supply chains can serve a new industry.
Companies such as Quaise Energy, Eavor Technologies, or the pilot projects in Iceland and the Netherlands are demonstrating that this transition is not only possible, but profitable in the long term. Some major oil and gas operators have already begun to diversify their portfolios by incorporating EGS projects as part of their ESG strategies.
The decarbonisation potential: numbers that matter
According to estimates from the United States Department of Energy, the technical potential of enhanced geothermal energy in that country could exceed 5,000 GW of installable capacity — more than four times the country’s current total electricity capacity. In Europe, studies point to a potential of hundreds of GW in sedimentary basins and high-temperature zones.
Unlike solar or wind, geothermal energy offers a characteristic that makes it strategically valuable: constant generation, 24 hours a day, 365 days a year, without depending on weather conditions. This makes it a baseload energy source that can perfectly complement variable energy sources.
In terms of CO₂ emissions, geothermal energy emits between 15 and 55 grams per kWh generated, compared to 820 g/kWh for coal or 490 g/kWh for natural gas. If oil sector assets were massively converted towards EGS, the impact on the decarbonisation of the energy sector could be structural and permanent.
The sector’s barriers: risk, investment and trust
None of this is built without overcoming real obstacles. Enhanced geothermal projects are capital-intensive: a single drilling operation can cost between 5 and 20 million euros, and the geological risk — not finding the expected resource — is real. This risk profile has historically held back private financing.
This is where an element often underestimated in technology analyses comes into play: the guarantee structure. For an EGS project to get off the ground, it needs trust: between the developer and the regulatory authority that grants the licences, between the operator and the financier that provides the capital, and between the construction company and the end client that will receive the energy.
Surety bonds and financial guarantees are not an accessory in these projects: they are the backbone that ensures risk is properly ordered, commitments are met, and investment flows. A developer who cannot guarantee fulfilment of their obligations to the public authority will not obtain the necessary licences. An operator without sufficient financial backing will not gain access to supply contracts.
In this type of project — long-duration, highly technically intensive and involving multiple parties — guarantees cease to be a bureaucratic formality and become a strategic tool for making the project viable.
The regulatory framework and the role of public authorities
Deep geothermal energy remains, in many European countries, a technology orphaned from a regulatory standpoint. Existing regulations in Spain, France or Germany do not always specifically contemplate EGS projects, which creates legal uncertainty and extends licensing timelines.
However, the pressure of climate targets and the new energy security context — sharpened after the 2022 gas crisis — are driving regulatory changes in several countries. The European Union is exploring how to integrate geothermal energy into its renewable energy framework and how to reduce administrative barriers for geothermal development projects.
For companies operating in this environment — whether from the reconverted oil sector, specialised engineering firms or infrastructure funds — understanding the guarantee requirements in each jurisdiction is as important as mastering drilling technology. A project in Germany, Italy or Spain may require completely different types and amounts of guarantees, with timelines and release conditions that vary significantly.
The horizon: a structural opportunity for those who can read it
Enhanced geothermal energy is not a technology of the distant future. It is a present-day technology that is scaling up. The next five to ten years will be decisive in consolidating the ecosystem of players, regulations, financing and technical capacity that it needs to take off at scale.
For the oil sector, it represents the most direct opportunity to reinvent itself without abandoning its core competencies. For public authorities, a firm and distributed energy source that reduces dependence on external supply. For investors, an infrastructure asset with long-term supply contracts and low volatility once built.
And for those working in the field of bonds and surety within the energy sector, a clear signal: the complexity and volume of geothermal projects will grow. Guarantee structures will have to evolve at the same pace. When risk is well ordered, investment flows. And when investment flows, the energy transition advances.
Does your company operate in the energy sector? Sammy Free can help you
If your company participates or plans to participate in geothermal, renewable energy or energy infrastructure projects, you know first-hand what is at stake: demanding deadlines, complex guarantee requirements and public authorities that leave no room for improvisation. At Sammy Free we have been supporting energy sector companies for years in managing their guarantees and surety bonds, in Spain and across Europe.
We know that every project is different, that deadlines move fast and that the financial structure must be in place from day one. That is why our approach is not to issue guarantees: it is to understand your project, anticipate what you need and give you a clear, agile response.
If you are exploring an opportunity, preparing a tender or already have a project under way and want to make sure that the guarantee structure does not become a stumbling block, contact Sammy Free. Tell us what you are working on and we will tell you, straight to the point, how we can help.
