Geothermal energy is the heat energy contained in the rocks, fluids and natural steam found beneath the surface of the Earth due to either heat from magma or the constant temperature of the earth.  This energy can be captured to provide heating and cooling or electricity for residential, commercial and industrial applications.

There are three ways to harness and apply geothermal energy: electricity generation, direct use and heat pumps.

Power Plants to Generate Electricity

Deep wells (a mile or more) are drilled into underground reservoirs to tap steam and hot water that drive turbines, and subsequently generate electricity. Geothermal power plants have average availability factors - or the percentage of time that the plant is ready to generate power - exceeding those of coal plants, making them reliable sources of baseload power generation.

Direct Use for Heating and Cooling

Hot water found near Earth's surface is piped directly into buildings to provide heat.  Applications include both residential and industrial energy (including district heating), ranging from agriculture and aquaculture to resorts.  Most geothermal direct-use systems use a heat exchanger.

Heat Pumps for Heating and Cooling

The stability of underground temperatures in the upper 10 feet (3 meters) of Earth’s surface is used to provide heat in the winter (by taking heat from the ground) and cooling in the summer (by acting as a heat sink).

Geothermal Energy Potential

While Japan is the world's largest user of direct geothermal heat, the first geothermal power plant was built in Italy in the early 20^th century.  The Philippines, Mexico and New Zealand are also leading geothermal energy producers, using it directly in agricultural and industrial applications and to produce electricity.  Iceland uses geothermal energy as its main source for heating.  In fact, residents of the capital city Reykjavik pay less for hot water than cold.

A 2007 Massachusetts Institute of Technology study concluded that geothermal energy is a largely untapped resource for electricity in the United States, and that with a reasonable investment (estimated at $1 billion over 15 years, a price tag roughly equal to the cost of one large coal-fired power plant) geothermal could provide 10% of US baseload electricity by 2050.

About 10,000 megawatts (MW) of geothermal electricity are currently produced globally, representing only a tiny fraction of geothermal energy potential.  One largely untapped use for geothermal energy is to recover heat directly from magma and the hot dry rock sitting on top of it, located several miles below Earth’s crust.

Development, Deployment and Economics

Currently, geothermal energy ranks ahead of solar and wind and behind hydroelectric and biomass in terms of renewable energy generation. Geothermal energy is consistently available, unlike wind and solar which are only available intermittently, and heat pumps and direct-use applications can be employed almost anywhere.

Geothermal power plants pose the most significant opportunity for large-scale energy production.  The largest cost and risk is incurred during the exploration and drilling phases.  Municipalities and governments around the world are working to solve these impediments to maximize geothermal potential.  For example, the U.S. Department of Energy is working with the geothermal industry to achieve $0.03 to $0.05 cost per kilowatt-hour, expected to result in about 15,000 megawatts of new capacity within the next decade.