Geothermal Energy Explained: Power Plants, Heat and Enhanced Systems

The Earth’s core is hot, around 5,000 °C or more, and that heat flows steadily outward, topped up by radioactive decay. Below our feet the temperature usually climbs by 25–30 °C per kilometre. In volcanic regions such as Iceland, Kenya, Indonesia and New Zealand, the heat comes close to the surface, and people have been making electricity from it for over a century. Shallow ground heat, by contrast, can be used almost anywhere through heat pumps. A new generation of drilling technology may also open up deep heat well beyond volcanic zones. This guide covers all three.

Geothermal resources: a spectrum of temperatures

In continental crust the geothermal gradient averages 25–30 °C/km, but in volcanic and rift zones it can top 50–100 °C/km. You might reach 150 °C at 2 km in Iceland and need 5 km in much of Europe.

Geothermal power plants

The first electricity from geothermal steam was generated at Larderello, Italy, in 1904. Three main plant types are in use today:

• Dry steam: steam from the reservoir drives the turbines directly. Such resources are rare. Larderello is one; The Geysers in California, the world’s largest geothermal complex, is another.
• Flash steam: high-pressure hot water (above ~180 °C) “flashes” into steam as the pressure drops. This is the most common type.
• Binary cycle (ORC): moderate-temperature water (100–180 °C) heats a second fluid with a lower boiling point, and that fluid drives the turbine. It is a closed loop with very low emissions, and the fastest-growing type.

Thermodynamics keeps conversion efficiency low (at these temperatures the Carnot limit is only 20–30%), but the fuel costs nothing. Geothermal plants run at capacity factors of 70–95%, among the highest of any source, and deliver firm baseload renewable power.

Global capacity

According to IRENA and IEA data, installed geothermal power capacity is about 16–17 GW. It generates roughly 95–100 TWh a year, under 0.5% of world electricity.

Capacities are approximate (IRENA / ThinkGeoEnergy, 2024–2025). Individual plants are shown on the power plants map.

Direct use: geothermal heat

Using geothermal heat directly is far more efficient than turning it into electricity. Lund & Toth’s worldwide review put direct use at about 1,020 PJ (around 280 TWh) per year in 2019, more than twice geothermal electricity, with over half coming from ground-source heat pumps. The main uses:

• District heating. Reykjavik heats about 90% of its buildings with geothermal water. Paris has drawn on the Dogger aquifer since the 1970s and now heats over 250,000 homes that way, and Munich wants its district heating network to run largely on geothermal by 2040.
• Greenhouses and agriculture (Netherlands, Kenya, Iceland).
• Industrial heat for drying, food processing and pulp.
• Bathing and spas, historically the largest use.

Ground-source heat pumps: geothermal for everyone

Strictly speaking, shallow ground heat is mostly stored solar energy, but ground-source heat pumps (GSHPs) are usually counted as geothermal. A few metres down, the ground stays close to the annual mean air temperature all year, about 8–12 °C in central Europe. A heat pump connected to a borehole or horizontal loop draws heat from it in winter (and can dump heat into it for cooling in summer) at a seasonal COP of 3.5–4.8.

A typical 10 kW house needs roughly 150–200 m of borehole. Size yours with the ground source heat pump calculator and compare it with air-source options in the heat pump calculator. Sweden, Switzerland and Germany have the densest residential GSHP markets.

Costs

Exploration risk is the biggest hurdle. A developer may spend $10–30 million on exploration wells before finding out whether the reservoir will produce. Risk-sharing schemes such as the Geothermal Risk Mitigation Facility in East Africa help. Compare costs in the LCOE calculator.

Enhanced geothermal systems: a possible breakthrough

Conventional geothermal needs three things in the same place: heat, natural fractures and water. EGS engineers the last two. Wells are drilled into hot rock, water is pumped in under pressure to open fractures, and fluid then circulates between injection and production wells. Recent progress:

• Horizontal drilling and multi-stage stimulation, both borrowed from the shale industry, have cut drilling time and cost sharply. Fervo Energy’s Project Red in Nevada started delivering power in 2023, and its 500 MW Cape Station project in Utah is aiming for first power around 2026.
• The US DOE’s FORGE field laboratory in Utah has connected wells in granite at ~230 °C.
• Closed-loop “advanced geothermal systems” circulate fluid through sealed wells and need no stimulation.

The US DOE’s GeoVision study estimated that, with better technology, geothermal could supply 60 GW in the US by 2050 (about 8.5% of generation). The IEA’s 2024 report suggests next-generation geothermal could cover up to 15% of global electricity demand growth to 2050 if costs fall as projected. That is a large “if”.

Is your region suitable?

Geothermal potential depends on how deep you have to go for useful temperatures, how permeable the rock is and whether water is present. A rough guide:

National geological surveys publish maps of heat flow and temperature at depth, and many countries offer online tools for borehole permits and ground-source suitability. Before anyone commits to an exploration well for a deep project, a feasibility study usually pulls together existing oil and gas well data, seismic surveys and geochemistry. Hungary, for instance, has some of the highest heat flow in continental Europe and heats several towns with thermal water. In Romania, Oradea has used geothermal water for district heating since the 1990s.

For a household the decision is simpler. Almost any garden with room for a borehole or horizontal collector can take a ground-source heat pump, subject to local permits and groundwater protection rules.

Environmental impacts

Emissions. Binary plants emit almost nothing while running. Flash and dry-steam plants release non-condensable gases from the reservoir, mostly CO₂ and hydrogen sulfide. Operational emissions are typically 5–100 g CO₂/kWh, but some fields with carbonate-rich reservoirs, such as parts of western Türkiye, go above 400 g/kWh. Life-cycle medians are around 30–40 g CO₂e/kWh (IPCC). Iceland’s CarbFix project pumps CO₂ and H₂S back underground, where they mineralise into rock.

Induced seismicity. Most tremors are too small to feel, but EGS projects have caused felt events: Basel (2006, M3.4, project cancelled) and Pohang, South Korea (2017, M5.5, linked to the project by a government investigation). Modern projects use real-time monitoring and “traffic light” protocols that cut injection when seismic activity picks up.

Land and water. Geothermal takes up little land, about the same as nuclear per unit of energy or less. Binary plants with air cooling use little water. Some fields have seen subsidence and damage to hot springs and geysers (Wairakei, New Zealand).

Bottom line

Geothermal is the only renewable that delivers steady output around the clock from almost anywhere on Earth, but it pays only where the heat is within reach. For power it is still a niche, concentrated in volcanic countries. For heat it is already a major source in places like Iceland and Paris, and ground-source heat pumps apply the same principle to any house. If enhanced geothermal hits its cost targets, it could become a significant source of firm clean power. See which countries lead on the world energy map, and model shallow geothermal for your home with the ground source heat pump calculator.

Figures in this guide are typical ranges drawn from the sources above; your own numbers depend on location, prices and equipment. Use the linked calculators for site-specific estimates.