Geothermal Electricity

Quick Facts

  • Geothermal electricity generation is a commercially proven technology that harnesses the nearly inexhaustible heat of the earth’s core to continuously generate nearly zero-emission renewable electricity at a cost that is competitive with, and in many cases lower than, traditional fossil fuel power generation.
  • Geothermal energy is available twenty-four hours a day, seven days a week, which avoids problems of variability associated with other renewable technologies like wind and solar.
  • While it constitutes 8 percent of U.S. non-hydroelectric renewable electricity generation, geothermal energy currently provides less than 1 percent of total U.S. electricity.[1],[2]
  • Currently, nine states produce electricity from geothermal plants, with more than 80 percent of total geothermal generation capacity in California.[3]
  • While the United States currently has about 3,000 megawatts (MW) of geothermal electric generating capacity, the U.S. Geological Survey estimates the United States possesses 39,000 megawatts MW of geothermal potential, including identified resources and resources that are hidden or undetectable at the surface.[4],[5],[6]


Geothermal energy can be used for electricity generation, heat pumps, or direct applications. This document focuses only on the traditional, commercially available technologies that produce electricity by exploiting the naturally occurring heat of the earth. Enhanced geothermal systems, which utilize advanced, and often experimental, drilling and fluid injection techniques to augment and expand the availability of geothermal resources, are the subject of a separate factsheet (see Climate TechBook: Enhanced Geothermal Systems).

Unlike other sources of renewable energy, such as wind and solar, geothermal power generation can operate steadily nearly twenty-four hours a day, seven days a week. Continual production makes geothermal an ideal candidate for providing nearly zero-emission renewable baseload power.

In 2011, the 15.3 billion kilowatt-hours (kWh)  of geothermal electricity generated in the United States constituted 8 percent of the non-hydroelectric, renewable electricity generation, but only 0.4 percent of total electricity generation.[7],[8] The same year, five states generated electricity from geothermal energy (CA, HI, ID,  NV, and UT), but California alone accounted for 82 percent of U.S. geothermal electric generation.[9] Geothermal plays an important role in some of the states where it is installed. Geothermal facilities satisfy 6 percent of California’s electricity consumption and 2 percent of Hawaii’s. [10],[11]

Despite its current limited application, geothermal energy has a very large potential for expansion. As Figure 1 illustrates, most of the U.S. geothermal potential is in the western states. The U.S. Geological Survey estimates that current technologies could harness nearly 40,000 MW of geothermal resources in America’s West, compared to a current U.S. electric generating capacity of roughly 1 million MW.[12]

Figure 1: Distribution of U.S. Geothermal Resources

Source: Roberts, Billy J. National Renewable Energy Laboratory. October 2009.


Geothermal energy taps into the natural heat of the earth to produce electricity. More specifically, conventional geothermal energy draws on the earth’s hydrothermal resources (underground heated water and steam). After drilling into these reservoirs, geothermal plants extract hot water and steam from the earth’s crust to drive electricity-generating turbines, a process called “heat mining.”[13]

The various techniques currently used to produce geothermal energy include the following (see Figure 2 for illustrations of these techniques):

Dry Steam

Dry steam plants draw steam directly from under the earth’s surface to a turbine that drives a generator. The steam then condenses into water and is reinjected into the geothermal reservoir.

Flash Steam

Flash steam plants extract geothermal water exceeding 350°F under extremely high pressure. Upon surfacing, a sudden reduction in pressure causes a portion of the heated water to vaporize, or “flash,” into steam. That steam turns a turbine, which drives a generator, after which the water is reinjected into the geothermal reservoir.

Binary Cycle

Binary cycle plants operate in areas with substantially lower-temperature geothermal water (225°F). Rather than using hydrothermal resources to drive a turbine, binary cycle plants use the earth’s heated water to vaporize a “working fluid,” any fluid with a lower boiling point than water (e.g., iso-butane). The vaporized working fluid drives a turbine that powers a generator, while the extracted geothermal water is promptly reinjected into the reservoir without ever leaving its closed loop system.

Figure 2: The Three Most Common Techniques Used for Geothermal Electricity Generation

Illustration of a Dry Steam Power Plant - Geothermal steam comes up from the reservoir through a production well.  The steam spins a turbine, which in turn spins a generator that creates electricity.  Excess steam condenses to water, which is put back into the reservoir via an injection well.

Source: U.S. Department of Energy. Geothermal Technology Program. Hydrothermal Power Systems. November, 2010.

Geothermal energy also depends on advanced hard-rock drilling technology. While oil and gas drilling techniques apply to geothermal drilling, temperatures above 250°F found in geothermal reservoirs complicate the process. The high heat increases the probability of well failure due to collapse, mechanical malfunction, and casing failure.[14],[15] Extensive research has gone into understanding the geological characteristics of geothermal reservoirs and how to adapt drilling technologies to these conditions.[16]

Environmental Benefit and Emission Reduction Potential

Environmental benefits from geothermal energy include near-zero greenhouse gas emissions from plant operations and low freshwater use and contamination. Traces of carbon dioxide (CO2) and other greenhouse gases are found dissolved in some hydrothermal reservoirs. Using those hydrothermal resources with dry steam and flash steam geothermal plants does allow these dissolved greenhouse gases to escape into the atmosphere.[17] [18]A geothermal plant will emit only zero to four percent as much CO2 as a traditional coal-fueled power plant per unit of electricity generated.[19] Geothermal plants also emit significantly less conventional air pollutants (nitrogen oxides, sulfur dioxide, and particulate matter) than coal power plants, as these emissions are virtually nonexistent.[20]

A market-based policy to reduce greenhouse gas emissions and spur the deployment of clean energy technology could lead to much more rapid growth in geothermal electricity generation. For example, in its analysis of a 2010 greenhouse gas cap-and-trade proposal, U.S. Energy Information Administration projected that, geothermal electricity generation could grow more than twice as fast with such a policy in place.[21]

Globally, the International Energy Agency (IEA) estimates that geothermal electricity generation provided about 0.3 percent of total electricity in 2010. With current policies, IEA projects that geothermal sources will provide only about 0.5 percent of global electricity by 2035. However, with coordinated international action to keep greenhouse gases emissions in the atmosphere below 450 parts per million, IEA projects that geothermal electricity generation could provide about 1.4 percent of global electricity generation by 2035.[22]


There are at least two categories of costs associated all types of electricity generation: capital costs and operating and maintenance costs. The capital cost for a geothermal plant can vary significantly depending upon the conversion technology, the depth of the wells, and the temperature of the hydrothermal resource. The capital cost of a geothermal plant can range from $1,000 to more than $6,000 per kilowatt (kW) of capacity.[23]

While the capital cost of a geothermal plant can be either comparable to or much higher than that of a traditional fossil fuel power plant, the full cost of generating electricity includes operating and maintenance costs. Unlike a coal or natural gas plant, geothermal facilities do not need to purchase fuel to generate electricity. Accounting for this fact through a levelized cost analysis reveals that geothermal plants can produce electricity for 6 to 9 cents per kilowatt-hour (kWh), a rate competitive with traditional fossil fuel generation.[24] Depending on tax incentives, the EIA expects that the levelized cost of geothermal energy will remain competitive with fossil fuels.[25]

Geothermal plants harnessing high-temperature resources tend to be less expensive than those relying on low-temperature resources. This is because in high-temperature areas, more electricity can be generated from each unit of geothermal water, reducing the number of wells required. Therefore, flash steam geothermal plants, which generate electricity using hotter geothermal fluids and fewer wells, are likely to have lower capital costs than binary geothermal plants, which use cooler geothermal fluids and more wells. This correlation is pictured in Figure 3. The capital costs of flash steam plants range from $1,000 to $2,000 per kilowatt installed, while the capital costs of binary plants range from $2,000 to $6,500 per kilowatt.[26],[27]

With time, experts expect the cost of geothermal energy to drop as firms gain experience installing geothermal plants. Costs will also fall as new drilling technologies improve the exploration and well drilling phase, which constitutes, on average, 37.5 percent of a geothermal plant’s total capital cost.[28]

Figure 3: Relationship between Capital Cost of Geothermal Plants and Resource Temperature

Source: National Renewable Energy Laboratory, 2012. Renewable Electricity Futures Study.

Current Status of Geothermal Energy

From the early 1970s to the early 1990s, geothermal electricity generation saw rapid growth, with an average annual growth rate of more than 16 percent.[29] From the early 1990s until the present, however, geothermal generation has been relatively flat. As of February 2013, the United States possessed about 3,386 MW of installed geothermal capacity.[30] An additional 175 geothermal projects across fifteen states are currently under development.[31] According to the EIA, under current policies geothermal generation is projected to increase much more quickly than total electricity demand, with an annual growth rate of 4.3 percent between 2011 and 2035.[32]

Legislation and government incentives may help jumpstart the expansion of the geothermal industry. In 2012, the U.S. Department of Energy (DOE) provided $62 million for research in geothermal technologies.[33] Geothermal energy also received a production tax credit (PTC) through 2013.[34]

Geothermal energy plays an important role in some countries. Iceland, for example, generates over 80 percent of its electricity from geothermal sources.[35] The United States leads the world in terms of total installed geothermal capacity.[36] Global electric generation from geothermal sources is projected at an annual growth rate of 4.8 to 6.3%, depending on climate and energy policies.[37]

Obstacles to Further Development or Deployment of Geothermal Energy

High-Risk Exploration Phase

The exploratory phases of a geothermal project are marked by not only high capital costs but also a 75-80 percent chance of failure for exploratory well drilling, due to uncertainties regarding reservoir geology.[38] The combination of high risk and high capital costs can make financing geothermal projects difficult.[39]

Investment Uncertainty

Changes in government funding for geothermal generation and uncertainty over future climate-related regulations create uncertainty for potential project developers. Certainty is especially important in geothermal projects, which take an average of ten years to move from exploration to generation.[40] In the past, Congress has allowed the federal Production Tax Credit (PTC) to expire before renewing it. In addition, after years of moderate funding, the 2007 budget contained no provision to continue funding geothermal research. More recent federal budgets have, however, provided some funding to promote geothermal research and development, including $62 million from the DOE’s Energy Efficiency and Renewable Energy (EERE) fiscal year 2012 budget appropriated by the U.S. Congress.[41]

Geographic Distribution and Transmission

Some of the most promising geothermal resources lie great distances from regions of large electricity consumption, or load centers. The need to install adequate transmission capacity can deter investment in geothermal projects. For example, in 2002, MidAmerica Energy abandoned its geothermal project near California’s Salton Sea primarily due to lack of available transmission resources.[42]

Permitting Delays

Delays in permitting can increase the amount of time it takes to bring new geothermal facilities on-line, and increase project costs and developer risk.

Policy Options to Help Promote Geothermal Energy

Price on Carbon

A price on carbon, such as that which would exist under a greenhouse gas cap-and-trade program, would raise the cost of electricity produced from fossil fuels relative to the cost of electricity from renewable sources, such as geothermal energy, and other lower-carbon technologies.

Electricity Portfolio Standard

Electricity portfolio standards generally require that electric utilities obtain specified minimum percentages of their electricity from certain energy sources. Thirty-one states and the District of Columbia have renewable portfolio standards or alternative energy portfolio standards.[43] Congress has also considered federal renewable electricity standards and clean energy standards. Electricity portfolio standards encourage investment in new geothermal power and can guarantee a market for its generation.

Tax Credits and Other Subsidies

The federal Production Tax Credit (PTC) for geothermal electricity generation expires at the end of 2013. The PTC can lower the after-tax, levelized cost of electricity from geothermal by as much as 30 percent.[44] Geothermal developers can also choose to substitute their PTC benefits with the Investment Tax Credit (ITC). The ITC would provide tax credits equivalent to 10 percent of their investment costs in geothermal technologies. The ITC credits will expire at the end of 2016 unless the legislation is renewed.[45]

Development of New Transmission Infrastructure

Improving transmission corridors to areas with geothermal reservoirs would facilitate investment in geothermal energy. Policies to build new transmission to areas with significant renewable energy resources are already proposed for accessing the wind-rich regions of the central plains and the extensive solar resources of the desert in the Southwest United States. Such policies could also promote expanded transmission to reach the geothermal fields of the West.

Related Business Environmental Leadership Council (BELC) Companies


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Related Pew Center Resources

Climate Change 101: Technology Solutions, 2011

The Case for Action: Creating a Clean Energy Future. 2010

Deploying Our Clean Energy Future. 2009

Further Reading / Additional Resources

Blodgett, Leslie, and Kara Slack. 2009. Geothermal 101: Basics of Geothermal Energy Production and Use. Geothermal Energy Association.

Geothermal Energy Association. Deloitte. 2008. Geothermal Risk Mitigation Strategies Report. Department of Energy, Office of Energy Efficiency and Renewable Energy Geothermal Program.

Energy Information Administration. Geothermal Explained. 2011.

Fridleifsson, I.B., R. Bertani, E. Huenges, J. W. Lund, A. Ragnarsson, and L. Rybach. 2008. “The Possible Role and Contribution of Geothermal Energy to the Mitigation of Climate Change.” In: O. Hohmeyer and T. Trittin (Eds.) IPCC Scoping Meeting on Renewable Energy Sources, Proceedings, Luebeck, Germany, 20-25 January 2008, 59-80.

Geothermal Technologies Program. 2008. Geothermal Tomorrow 2008. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

Geothermal Technologies Program. 2008. Multi-year Research, Development and Demonstration Plan: 2009-2015 with program activities to 2025. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

Idaho National Laboratory. 2007. The Future of Geothermal Energy. The U.S. Department of Energy National Laboratory operated by the Battelle Energy Alliance.

International Geothermal Energy Association.

Union of Concerned Scientists. 2009. How Geothermal Energy Works.

Salmon, J. Pater, J. Meurice, N. Wobus, F. Stern, and M. Duaime. 2011. Guidebook to Geothermal Power Finance. National Renewable Energy Laboratory.

Williams, Colin, Marshall Reed, Robert Mariner, Jacob DeAngelo and S. Peter Galanis. 2008. Assessment of Moderate-and High-Temperature Geothermal Resources of the United States. United States Geological Survey.

Williams, Eric, Rich Lotstein, Chrisopher Galik and Hallie Knuffman. July 2007. A Convenient Guide to Climate Change Policy and Technology. Duke University.



[1] Energy Information Administration (EIA), Electric Power Annual Report. 2013. Table 3.1.B.

[2] EIA, Electric Power Annual. 2013. Table 3.1.A.

[3] Matek, Benjamin. Geothermal Energy Association. 2013. 2013 Annual US Geothermal Power Production and Development Report.

[4] Ibid.

[5] Williams, Colin, Marshall Reed, Robert Mariner, Jacob DeAngelo and S. Peter Galanis. 2008. Assessment of Moderate-and High-Temperature Geothermal Resources of the United States. United States Geological Survey.

[6] Represents a 50 percent chance of at least this amount.

[7] EIA, Electric Power Annual. 2013. Table 3.1.B.

[8] EIA, Electric Power Annual. 2013. Table 3.1.A.

[9] EIA, Electric Power Annual. 2013. Table 3.19.

[10] Ibid.

[11] EIA, Electric Power Annual. 2013. Table 3.6.

[12] EIA, Electric Power Annual. 2013. Table 4.3.

[13] Tester, Jefferson, et. al. 2006. The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) on the United States in the 21st Century. Massachusetts Institute of Technology.

[14] Casing is the pipe that connects the geothermal well to the generation facility, and prevents the mixing of hot geothermal fluids with groundwater at other depths. High temperatures can cause the steel piping to expand or buckle if not properly enforced with cement, a process referred to as “casing failure”.

[15] Geothermal Technologies Program. 2011. Multi-year Research, Development and Demonstration Plan: 2009-2015 with program activities to 2025. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

[16]For an example of this work, see Blankenship, Douglas, David Chavira, Joseph Henfling, Chris Hetmaniak, David Huey, Ron Jacobson, Dennis King, Steve Knudsen, A.J. Mansure, and Yarom Polsky. 2009. Development of a High-Temperature Diagnostics-While-Drilling Tool. Sandia Report 2009-0248.

[17] Kagel, Alysa, Diana Bates, and Karl Gawell. 2007. A Guide to Geothermal Energy and the Environment. Geothermal Energy Association. []. See Williams, Eric, Rich Lotstein, Chrisopher Galik and Hallie Knuffman. July 2007. A Convenient Guide to Climate Change Policy and Technology.

[18] The gases released through geothermal energy production would have eventually entered the atmosphere, regardless of production in the area; however, the timing of their release is material to near-term climate forcing.

[19] Binary plants emit 0 lbs. of CO2 per MWh, flash plants emit 60 lbs. of CO2 per MWh, and dry steam plants emit 88.8 lbs. of CO2 per MWh.

[20] Williams, Eric, Rich Lotstein, Chrisopher Galik and Hallie Knuffman. July 2007. A Convenient Guide to Climate Change Policy and Technology. Duke University.

[21] Energy Information Administration. July 2010. Energy Market and Economic Impacts of the American Power Act of 2010. The text compares EIA’s “Reference” and “APA Basic” cases.

[22] International Energy Agency (IEA). 2011. World Energy Outlook 2012.

[23] Augustine, C.; Denholm, P.; Heath, G.; Mai, T.; Tegen, S.; Young. K. (2012). "Geothermal Energy Technologies," Chapter 7. National Renewable Energy Laboratory. Renewable Electricity Futures Study, Vol. 2, Golden, CO: National Renewable Energy Laboratory; pp. 7-1 – 7-32.

[24] Ibid.

[25] EIA. 2013. Annual Energy Outlook 2013. Available at:

[26] Costs are given in 2009 dollars.

[27] Augustine, et al. 2012

[28]Augustine et al, 2012.

[29] EIA. 2012. Annual Energy Review. See Table 8.2b.

[30] Matek, Benjamin. Geothermal Energy Association. 2013. 2013 Annual US Geothermal Power Production and Development Report.

[31] Ibid.

[32] Energy Information Administration. 2013. Annual Energy Outlook 2013. See Table 16.

[33] U.S. Department of Energy. 2012. Fiscal Year 2012 Agency Financial Report.

[34] HR1: The American Recovery and Reinvestment Act. THOMAS.

[35] Williams, 2008.

[36] Matek, 2013.

[37] IEA. 2012. World Energy Outlook 2012.

[38]Geothermal Technologies Program. 2008. Geothermal Tomorrow 2008. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

[39] Deloitte, 2008.        

[40] Williams, 2007.

[41] U.S. Department of Energy. 2012. Fiscal Year 2012 Agency Financial Report.

[42] See footnote 9 in Tester et. al, 2006.

[43] For more information on state RPSs, see

[44] Owens, Brandon. 2002. An Economic Valuation of a Geothermal Production tax Credit. National Renewable Energy Laboratory.

[45] DSIRE. 2013. Business Investment Tax Credit (ITC).