Morgan Stanley Sees Geothermal Power Going Mainstream

A new report says advances in drilling could make enhanced geothermal systems viable for widespread U.S. electricity generation.

Updated on Nov. 5, 2026 in Geology

Isometric editorial illustration of a drilling derrick and wellhead pad on flat terrain, with a thin steam plume rising, suggesting geothermal drilling. — Morgan Stanley says drilling advances borrowed from the shale oil industry could make enhanced geothermal power viable across much of the United States. AI Illustration. Upload story photo >

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Morgan Stanley has published a report saying new drilling technologies make geothermal energy viable for widespread power generation. Enhanced geothermal systems (EGS) use horizontal drilling and reservoir engineering techniques adapted from the shale oil industry.

Why it matters

Previously, geothermal energy could only be extracted economically in a few locations with unusually high subsurface heat and water. Engineered reservoirs could expand that potential to many more places across the country.

Morgan Stanley estimates hot subsurface rock at 150 C to 250 C exists across 85% of the United States at depths of 4 to 7 kilometers, with nearly 9 gigawatts of planned data center development overlapping those areas. The estimates are drawn from the bank's own analysis, and site-level feasibility has not been independently verified.

The players

Morgan Stanley

A major global investment bank whose research division published the report assessing enhanced geothermal systems.

Alaska's Division of Geological and Geophysical Services

A state agency that conducts geological research and is currently studying enhanced geothermal systems.

The details

Enhanced geothermal systems involve developing engineered reservoirs using horizontal drilling, reservoir engineering, and hydraulic stimulation. Alaska's Division of Geological and Geophysical Services is among the bodies researching the approach.

Morgan Stanley projects EGS will reach economic viability by 2030, when it could unlock more than $300 billion in investment.

Big Picture

Enhanced geothermal systems borrow horizontal drilling and hydraulic stimulation methods from the shale oil industry and apply them to heat extraction. That transfer is what Morgan Stanley argues could move geothermal power beyond the handful of naturally favorable sites where it has been limited until now.

If enhanced geothermal systems become viable as projected, households and businesses in regions with suitable subsurface rock could see new sources of electricity. Data center operators may also gain a steadier power option than intermittent alternatives.

The takeaway

Watch whether drilling-based geothermal projects move from reports to operating plants before the 2030 horizon, since that will show whether the projected economics hold.