How does geothermal energy work, and why don’t we use it more?

Despite having huge amounts of heat beneath our feet, geothermal provides just 0.3% of the world's electricity.

Geothermal energy sounds like a no-brainer, but it has failed to make a dent in the world’s energy supply.

There are vast amounts of heat beneath our feet. This energy is available all the time. It’s low-carbon. And sure, we need to dig it out from underground, but that’s a skill we’re very good at; so good, in fact, that it’s the reason why we’re facing the problem of climate change in the first place.

Despite this, geothermal provides a pretty small amount of the world’s heat and less than 1% of the world’s electricity.

When trying to investigate why this potential versus reality gap exists, I realised that geothermal is the energy source that I’ve never written about. It’s also the source that I think many people know very little about. So here, I thought I’d do a short deep dive into how it works, which countries are using it, and some of the reasons why its potential is largely untapped.

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Using geothermal as a heat source versus an electricity source

We often talk about “geothermal” or “heat” energy as a monolith, but there are different types that can be used for different purposes. The potential and constraints for each are not the same.

Shallow heat: Ground-source heat pumps

This is the simplest use of heat underground. Ground-source heat pumps are an alternative to biomass, gas boilers or oil for heating (or cooling) homes.

It’s worth clarifying that ground-source heat pumps are often not classified as “geothermal energy” because they use shallow heat. But I’m including them here because they fall within the general category of using heat underground.

I’ve covered heat pumps before, but mainly with a focus on air-source heat pumps. These electric heat pumps take advantage of the temperature differences between the air outside and inside the home. Of course, you can do the same by using the temperature differential in the ground.

The ground maintains a much more stable and consistent temperature than the air above it. Ground-source heat pumps take advantage of this by extracting heat from the ground in the winter (when the ground is warmer than the air) and transferring heat into the ground in the summer (when the ground is cooler). Below is a schematic of how this works.

These tend to be more expensive to install than air-source heat pumps, but are typically more efficient. They can be used to heat the air, or to provide hot water.

What’s crucial — and different to other types of geothermal — is that ground-source heat pumps mostly tap into heat that’s shallow underground. It’s usually within the top few metres. As we’ll see, other types of geothermal go much deeper.

Ground-source heat pumps are quite popular in China, the United States, and Northern Europe. They often need quite a bit of space to install, hence they’re more popular in locations where detached housing is common and people have fairly large gardens. The geology of a particular area also matters and affects how easy (and costly) it is to drill underground.

Source: Montana Renewables

Deep heat

Drill a bit deeper — below around 500 metres — and we can tap into more energy resources at higher temperatures. Extracting this heat can be used for district heating systems, or used in industrial processes that need large amounts of heat.

The temperatures at these depths tend to be somewhere in the range of 40°C to 60°C. Drilling this deep is obviously more expensive than shallow sources used for ground-source heat pumps.

To make this most worthwhile, geologists will look for areas where the temperature gradient is highest: in other words, where you can find pretty hot deposits close to the surface.

Geothermal for electricity production

The two options above use heat directly. But when temperatures are high enough we can also make electricity from geothermal energy.

In this process, we generate electricity by turning a turbine using steam. Of course, to get steam we need extremely high temperatures. That’s why geothermal resources for electricity tend to come from extremely hot (well over 100°C) reservoirs, deeper in the ground (often several kilometres deep). In some cases, this steam can come directly from these reservoirs. In other cases, very hot water is depressurised at the surface to then make steam.

Since we need high temperatures, the suitable locations for geothermal power are much more limited than for direct heat. The ideal locations tend to cluster around the edges of tectonic plates; as we’ll see later, countries along the “Ring of Fire” — a series of volcanoes that stretch from South-East Asia, up and around the West Americas, down to South America — have the most potential.

I think this is an important misconception: we imagine that we can use the heat beneath our feet to generate electricity anywhere. In reality, large parts of the world can’t do this with current technologies.

Source: BBC Science Focus

Summary of the different types of geothermal

This schematic is pretty nice at capturing the different types. You can get heat for ground-source heat pumps at shallow depths (and lower temperatures). You can get more heat for district heating schemes or industry if you dig deeper. And finally, you can generate electricity if you can tap into even deeper — and hotter — sources, typically well over 100°C.

Source: UK Government Office for Science

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How much of the world’s electricity comes from geothermal?

The bit that I think people find most interesting is geothermal for electricity. We’re going to need a lot of low-carbon electricity if we’re to not only decarbonise our existing grids, but also electrify transport, heating, industry, and meet growing demand for data centres and air conditioning.

In principle, geothermal energy could be an essential part of the mix, especially as it doesn’t suffer from the variability of solar and wind. It could provide a nice, stable grounding that reduces our need for storage or other options to balance out “intermittency.”

But so far, it has had very little impact. The chart below shows how the installed capacity of geothermal has changed since 2000. Now, if we assume the capacity factor — basically the amount of time that the plants are running — for geothermal is around 75% (which seems reasonable given the literature and estimates for the US) then I estimate that it globally we got around 97 terawatt-hours (TWh) of power from geothermal in 2023.¹

For context, the world produced around 30,000 TWh of electricity in 2023, so geothermal was just 0.3% of the total.² Not that impressive, and not really changing much over time.

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Which countries can generate electricity from geothermal, and which of them do?

One common misunderstanding — which I also failed to appreciate in the past — is that geothermal can’t be used for electricity production everywhere. There’s maybe the naive message that every country has all of this heat beneath its feet and that can be easily used to run their electricity grids.

But as we saw earlier, to produce electricity, you need higher temperatures, which aren’t available everywhere at a depth that is currently reachable. Dig deep enough and you’ll hit rocks that are hot enough, but in most locations, this is just too far.

This is reflected in where geothermal power has already been tapped into, and limits the potential for every country to use it.

The maps below show, first, the countries that already have installed geothermal power capacity. The second shows where the highest geothermal potential is: mostly along active tectonic zones.

The highest potential is along the West coast of the Americas, East Coast of Africa, and South-East Asia. That’s why we see countries like the US, Indonesia, the Philippines, Mexico and Turkey leading the way.

Kenya is another interesting example: I estimate that it gets around 45% to 50% of its electricity from geothermal.³ The caveat is that levels of energy poverty are high, so the conclusion that countries can easily run most of their grids on geothermal — while maintaining high standards of living — would be a stretch based on this example alone.

Source: IRENA via Our World in Data

Source: Elders and Moore (2016). Geology of geothermal resources.

You can even see this clustering within the United States. The map below shows temperatures across the country at a depth of 10 kilometres (that is deep!). The highest temperatures — reaching over 300°C — are along the West coast.

That’s where nearly all of the US’s geothermal power plants have been built. In 2021, California and Nevada alone were home to 95% of the installed capacity. “The Geysers” in California is the largest, and probably the most well-known, geothermal project in the world.

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Enhanced Geothermal Systems i.e. fracking to get the heat out

A lot of the heat beneath us is currently untapped, and inaccessible using conventional drilling technologies.

Perhaps the most promising innovation is “enhanced geothermal systems”, which is basically fracking but for heat rather than oil and gas.

To reason why EGS could be such an “unlock” is because we need three things to generate geothermal power:

1. An abundant heat source in rocks underground

2. Fluid that can carry the heat from the rocks to the surface

3. Pathways through the rocks that the fluid can get through

We have lots of (1): hot rocks. What’s often missing is a fluid or a permeable network that can bring the hot fluid to the surface.

EGS (or fracking) solves this by cracking the rock to create permeability and injecting a fluid into the subsurface. In fracking for oil and gas, the high-pressure fluid is used to push out remaining fossil fuels. In geothermal, it’s used to carry heat.

Source: US Department of Energy

Some US analysts are quite bullish on the potential of EGS for geothermal. Optimistic estimates suggest that it could increase the US’s geothermal power capacity 20 to 30-fold. Today, its installed capacity is around 3 gigawatts. With large leaps forward in EGS, this could reach 60 to 90 gigawatts. For context, 90 GW of geothermal power would generate about 10% to 15% of the US’s current electricity generation. Fervo Energy is one of the most prominent examples of companies trying to drive EGS techniques forward.

Of course, these techniques are not without their risks. The most prominent one is the risk of inducing earthquakes. When you inject fluid into deep rocks under pressure, you can cause existing faults to slip, generating earthquakes. This risk is a real one: an EGS project in South Korea triggered a significant earthquake in 2017, and the site was immediately closed.

Geothermal is one of the most land-efficient power sources, so total land use is not a major environmental concern. Of course, that doesn’t mean there isn’t a lot of disruption at a highly localised level, but this is still less than in the current system we have, which is fossil fuels.

Groundwater contamination and pollution are risks that I’m not particularly concerned about as long as EGS projects are well-managed. Drilling typically happens much deeper than groundwater aquifers, and the fluids used for geothermal have much fewer additives than those used for oil and gas fracking. It’s a risk, but one that can be handled.

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The marginal costs of geothermal are pretty low, but the upfront costs are high

The average cost of generating a unit of geothermal electricity is pretty low. This is based on what we call the “levelised cost” which estimates the cost of one unit of power from a source across the lifetime of a power plant. Take a look at the chart below: geothermal is well within the “fossil fuel range” although a bit more expensive than solar and onshore wind. People might argue that the economics of geothermal are even more favourable than the standard LCOE comparison suggests because geothermal reduces the need for storage.

A key point is that geothermal has had no “learning curve” so far. Unlike other renewables, where the cost has dropped as we increase global production, the LCOE of geothermal energy has barely changed in decades.

That’s not really surprising: it’s not a “mass-manufactured” technology like solar panels, wind turbines or batteries. History would suggest that it’s hard to generate a learning curve for digging things out of the ground (which is what geothermal basically is).

Source: IRENA via Our World in Data

While the LCOE of geothermal is relatively low, capital costs are high. Almost all of the costs come from the initial project development and drilling. Once the source has been tapped, the “fuel” is basically free, and the running costs are low. These high upfront costs are a key barrier for geothermal. You’ll often need to dig multiple wells to test if a particular site is even viable. So the combination of high costs and the risk of an unsuccessful project, even after drilling, and the technology can be seen as a potentially expensive, high-risk investment.

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Why don’t we have more geothermal energy?

This is really the key question: why is there such a mismatch between geothermal’s potential and reality?

I think the capital cost and risky investment element is a big one. Deep geothermal can be technically complex.

Oil and gas companies are arguably in a very good position to enter this space. The reason I think more aren’t is profitability. The payback times for geothermal projects can be pretty long, compared to the much shorter-term returns on fossil fuels. You can argue that if they’re serious about being around for the long term, these companies should be moving into alternatives such as geothermal, but that’s not what they’re doing.

Getting regulatory approval and a permit to develop a deep geothermal project can take a long time. Obviously, speeding up this process (while maintaining high standards) would help a lot.

Geothermal resources are not the same everywhere, especially for power generation. Many countries would struggle to produce much geothermal electricity at all with current technologies.

Finally, government support and incentives for geothermal energy have been much weaker than for other low-carbon technologies. This has a bit of a chicken-and-egg problem with public perception. People are not really familiar with geothermal energy, so it’s not a clear win for politicians to back it. This, in turn, hinders the development of geothermal energy, so the public is even less engaged with the technology.

I hope, then, that this quick primer on geothermal energy does even a little to get it slightly higher on the public radar.

If you’re interested in geothermal energy, you might want to check out the latest episode of Solving for Climate, where we interviewed Dr Marit Brommer, Head of the International Geothermal Association.

1. We get this by multiplying the installed capacity by the number of hours in a year and then the capacity factor. So:

14,800 MW * 24 * 365 * 75% = 97,236,000 MWh.

That's 97.2 TWh.

2. 97 / 30,000 * 100 = 0.32%.

3. If we assume that the capacity factor is 75% then I estimate that its 984MW installed capacity generates around 6.5TWh per year.

That's 50% of the total electricity generation: 12.85 TWh.