Geothermal energy provides only 0.3 percent of global electricity today. That could rise to 5 or 10 percent by 2050 if enhanced geothermal systems (EGS) commercialise. The technology is base load renewable, has among the highest capacity factors in the fleet, and does not depend on weather. This guide covers how it works, where it operates, and why the next decade is critical.
Geothermal has been generating electricity since 1904, when the first plant opened at Larderello in Italy. The technology is mature, but growth has been slow because natural geothermal resources are geographically concentrated. Enhanced geothermal systems now aim to unlock the resource nearly anywhere on Earth. If the technology scales, geothermal becomes one of the most important base load renewable options.
How geothermal power works
Below the Earth surface, temperature rises with depth: roughly 25 degrees Celsius per kilometre in ordinary geology, much faster near tectonic boundaries. Geothermal power plants tap this heat via wells drilled into hot reservoirs, converting the thermal energy into electricity through steam turbines. The heat source is the ongoing radioactive decay of elements in the Earth crust plus residual formation heat.
| Plant type | Resource temperature | How it works |
|---|---|---|
| Dry steam | Above 235 degrees C | Steam directly drives turbine |
| Flash steam | 180 to 260 degrees C | Hot water flashes to steam at lower pressure |
| Binary cycle | 110 to 180 degrees C | Heat exchanged to a secondary working fluid |
| Enhanced (EGS) | Any hot rock | Water injected and circulated through created fractures |
Global capacity
Total installed geothermal power capacity reached roughly 16 GW in 2025, generating about 100 TWh of electricity. Geographic distribution is concentrated in a handful of countries with favourable geology.
| Country | Installed capacity (MW) | Notes |
|---|---|---|
| United States | ~3,700 | Concentrated in California, Nevada |
| Indonesia | ~2,400 | Ring of Fire volcanic geology |
| Philippines | ~1,900 | Long standing geothermal programme |
| Turkey | ~1,700 | Rapid growth in past decade |
| Kenya | ~950 | East African Rift resources |
| New Zealand | ~1,000 | North Island volcanic zone |
| Mexico | ~1,000 | Cerro Prieto and other fields |
| Iceland | ~750 | Nearly 100 percent domestic renewable |
| Italy | ~800 | Larderello historical field |
| Japan | ~600 | Slow growth despite strong resource |
Why geothermal punches above its weight
Geothermal capacity factor is 75 to 90 percent, versus 15 to 25 percent for solar and 30 to 45 percent for wind. This means 1 GW of geothermal generates as much electricity as 3 to 4 GW of solar or 2 GW of wind. The 16 GW of global geothermal capacity thus generates about the same electricity as 60 GW of solar.
Geothermal is also dispatchable base load: it runs continuously without weather variability. This makes it complementary to solar and wind on the grid. In markets like Kenya and the Philippines, geothermal provides 20 to 40 percent of electricity, functioning as the reliable backbone alongside hydro.
Enhanced geothermal systems
Enhanced geothermal systems (EGS) inject water into hot but dry rock, create or enhance fractures, and circulate water through the fractures to extract heat. This uncouples geothermal from natural reservoirs, potentially enabling deployment across most geographies. The US Department of Energy EGS programme targets commercial EGS by 2035.
Recent EGS pilot projects (Fervo Energy in Nevada and Utah, Eavor in Alberta) have demonstrated commercially relevant well productivity. Costs remain higher than natural geothermal but are falling. If EGS reaches full commercial scale, global geothermal capacity could grow 10x to 20x by 2050.
Drilling: the cost driver
Roughly half the cost of a geothermal project is drilling. Wells reach 2 to 4 kilometres deep and cost USD 5 to 20 million each. Drilling risk is significant: dry wells (missing the resource) or poor productivity wells all count against the project economics. Drilling technology transferred from the oil and gas industry has reduced cost and risk substantially over the past decade.
Direct use: heating beyond electricity
Geothermal provides much more heating than electricity globally. Direct use applications include district heating (Iceland, Paris, Munich), industrial process heat, greenhouse warming, and fish farming. Ground source heat pumps use shallow geothermal for building heating and cooling. Global direct use capacity is roughly 100 GWt, several times the electricity generation capacity.
Environmental impacts
| Impact | Notes |
|---|---|
| Land footprint | Very small, roughly 1 to 5 acres per MW |
| Water use | Modest; some plants recycle reservoir fluids |
| Emissions | Small CO2 releases from reservoir gases; minor H2S risk |
| Induced seismicity | Small events from EGS operations; managed carefully |
| Wildlife impact | Minor at project scale |
Costs
Natural geothermal LCOE ranges from USD 60 to 100 per MWh. EGS is currently USD 100 to 200 per MWh but falling. Compared to solar plus battery for firm supply, geothermal is competitive in favourable resource areas and increasingly so with EGS commercialisation.
Policy support
The US Inflation Reduction Act provides production tax credits for geothermal that mirror wind and solar. Kenya, Indonesia, and Turkey have national geothermal development programmes. New Zealand has co developed geothermal with iwi (Maori) partnership arrangements. Iceland maintains a state role in geothermal development.
Future outlook
The IEA net zero scenario projects 150 to 300 GW of geothermal by 2050, roughly 10 to 20x current capacity. Most of that growth is expected to come from EGS in markets like the US, China, and Europe. The IEA Renewables 2024 report tracks the pipeline.
Frequently asked questions
Is geothermal really renewable?
Yes at typical extraction rates. Reservoirs can be depleted if drawn down too fast, so sustainable operation is important.
Can geothermal work in cold climates?
Yes. The resource is subsurface heat, unrelated to surface climate. Iceland, Alaska, and northern Canada all have geothermal potential.
How reliable are geothermal plants?
Very. Capacity factors of 75 to 90 percent are typical, higher than any thermal generation source.
Does geothermal cause earthquakes?
Small induced seismicity is possible from EGS operations. Managed carefully with modern injection protocols the risk is very low.
How much can EGS unlock?
Theoretically enormous. Practically, 100 to 500 GW by 2050 in the US alone if the technology scales as planned.
Is geothermal expensive?
Natural geothermal is competitive with solar plus battery in favourable regions. EGS is currently more expensive but falling.
Do we need to drill deep for geothermal?
Depth depends on the thermal gradient. In active volcanic areas, useful temperature is 1 to 2 km deep. In ordinary geology, EGS reaches 4 to 8 km deep.
What about geothermal heating?
Ground source heat pumps (shallow geothermal) are widely deployed for building heating and cooling and are a large complementary market.
Who leads geothermal technology?
Iceland, Indonesia, the US, Japan, and Germany lead technology development. Fervo, Eavor, and Ormat are notable current developers.
Where can I see specific plants?
The UtilityRadar directory lists geothermal plants globally by capacity and country.
Summary
Geothermal is a base load, dispatchable renewable that has been overshadowed by solar and wind because of its geographic concentration. Enhanced geothermal systems now aim to unlock the resource nearly anywhere. If EGS scales, geothermal becomes one of the most important base load low carbon options for 2050 decarbonisation. The technology is real, the pilot projects are working, and the next decade is when the industry finds out whether EGS becomes a mainstream renewable source.
Next reading
- Geothermal electricity: which countries lead
- Renewable energy complete guide
- How geothermal power plants work
- Browse the UtilityRadar directory
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