A downhole tool includes a compact heat source including an inner housing having thermal insulation. The compact heat source includes an electrically activated heat source disposed in the inner housing and configured to receive electrical energy to generate first thermal energy. Additionally, the compact heat source includes active metal exothermic materials disposed in the inner housing and configured to receive the first thermal energy from the electrically activated heat source to initiate a first exothermic reaction in the active metal exothermic materials that generates second thermal energy. Further, the compact heat source includes a thermite material disposed in the inner housing. The thermite material is configured to receive the second thermal energy from the first exothermic reaction and ignite a second exothermic reaction of the thermite material to generate third thermal energy. Additionally, the compact heat source is configured to output the third thermal energy out of the inner housing.