Geothermal energy harnesses Earth’s internal heat to generate electricity and provide direct heating, offering a steady, low-carbon alternative to fossil fuels. Once a niche player, it’s evolving fast—new methods boost efficiency, and top nations and companies push its boundaries. This article dives into these changes, detailing extraction techniques, spotlighting the best in the industry, and profiling leaders as of March 3, 2025.
What Is Geothermal Energy?
Geothermal energy taps heat from Earth’s core—radiogenic decay and primordial warmth—reaching temperatures of 5,000°C at its center. Near the surface, this heat manifests in hot springs, geysers, and magma chambers, accessible within 10 kilometers of the crust. Unlike solar or wind, it runs 24/7, delivering 17.5 gigawatts globally in 2024, per the International Renewable Energy Agency (IRENA).
The process is simple yet ingenious. Wells drilled into geothermal reservoirs extract hot water or steam, which spins turbines or heats buildings directly. It’s a renewable giant, with potential to power millions sustainably.
How Geothermal Energy Is Changing
Geothermal’s transformation hinges on technology and ambition. Once limited to volcanic zones, it now reaches deeper and broader, thanks to enhanced drilling and heat extraction. Global capacity grew 5% in 2024, hitting 17.5 gigawatts, with the U.S., Indonesia, and Iceland leading the surge.
Cost declines fuel this shift—down 15% since 2015 to $0.06 per kilowatt-hour, per IRENA—rivaling coal. Efficiency jumps, too, as binary cycle plants convert lower-temperature resources into power. Meanwhile, hybrid systems pair geothermal with solar, smoothing output dips. It’s no longer a sidelight; it’s a contender.
Policy backs this rise. The EU’s 2030 climate targets and U.S. tax credits under the Inflation Reduction Act spur investment—$10 billion globally in 2024. Geothermal’s reliability now challenges wind’s intermittency, reshaping energy grids.
Traditional Geothermal Methods
Traditional geothermal relies on hydrothermal systems—natural reservoirs of hot water or steam. Dry steam plants, the oldest method, channel steam directly from underground to turbines, as at The Geysers in California, producing 900 megawatts. Flash steam plants, dominant globally, pump 180°C-plus water to the surface, where pressure drops turn it to steam—Indonesia’s Sarulla plant generates 330 megawatts this way.
Both need high-heat zones near tectonic plates, limiting reach. Reinjection of cooled water sustains pressure, but seismic risks linger—small quakes tied to The Geysers hit 2.5 magnitude in 2023. Efficiency hovers at 12%, modest but reliable.
Enhanced Geothermal Systems (EGS)
Enhanced Geothermal Systems (EGS) break traditional limits by fracturing hot, dry rock to create reservoirs. Drillers inject high-pressure water into basalt or granite at 4-6 kilometers deep, cracking it to let water circulate and heat up. The U.S. Department of Energy’s FORGE project in Utah, operational since 2022, extracts 200°C fluid, targeting 2 megawatts by 2026.
EGS scales potential tenfold—up to 100 gigawatts in the U.S. alone, per MIT estimates—by tapping non-volcanic areas. Costs, though, hit $10 million per well, and seismicity risks persist; a 3.4-magnitude quake paused a Swiss project in 2009. Still, EGS’s versatility marks it as a frontier method.
Binary Cycle Power Plants
Binary cycle plants redefine geothermal’s reach. They use a secondary fluid—like isobutane—with a lower boiling point than water, heated by 100-150°C geothermal fluid via a heat exchanger. This vapor drives turbines, as at Nevada’s Steamboat Springs, yielding 84 megawatts.
Over 70% of new U.S. plants since 2020 adopt this design, per the Geothermal Energy Association. It taps moderate heat sources—75% of global reservoirs—boosting capacity without deep drilling. Efficiency nears 15%, and closed-loop systems cut emissions to near zero, making it a top industry method.
Direct Use and Heat Pumps
Geothermal isn’t just for electricity. Direct use pipes hot water for heating homes, greenhouses, and fish farms—Iceland’s Reykjavik heats 95% of buildings this way, saving 7 million tons of CO2 yearly. Pipes run kilometers, like China’s Xiong’an system, warming 1 million square meters.
Ground-source heat pumps (GSHPs) extend this further. They circulate fluid through shallow loops—100 meters deep—to extract 10-25°C heat, amplified by compressors for homes. The U.S. has 2 million units, cutting heating costs 50%, per the EPA. Versatile and low-impact, GSHPs shine among methods.
Best Methods in the Industry
Binary cycle plants lead for scalability and efficiency, tapping mid-range heat with minimal environmental hit—Nevada proves it with 3,500 megawatts installed. EGS follows, unlocking vast potential despite higher risks; FORGE’s success could standardize it by 2030. Direct use excels in niche applications, like Iceland’s heating, while GSHPs dominate residential efficiency.
Hybrid systems edge into best-in-class status. Kenya’s Olkaria pairs geothermal with solar, stabilizing its 900-megawatt output. Binary-EGS combos, tested in New Zealand, hit 18% efficiency—industry benchmarks lean toward flexibility and low carbon.
Leading Countries in Geothermal Energy
Five nations stand atop the geothermal energy landscape, leveraging unique geology and cutting-edge innovation to harness Earth’s heat. Their leadership shapes global renewable trends, blending tradition with ambition.
United States
The United States commands the geothermal throne with 3,900 megawatts of installed capacity—25% of the world’s total—rooted in its western states’ tectonic riches. California’s Geysers, the largest single geothermal field globally, churns out 900 megawatts from dry steam, a method pioneered in 1960 that pipes natural steam straight to turbines. Nevada, meanwhile, excels with binary cycle plants like Steamboat Springs, adding 1,500 megawatts by tapping 100-150°C reservoirs—75% of U.S. growth since 2015, per the Geothermal Energy Association (GEA). The Department of Energy’s $500 million investment since 2020 fuels Enhanced Geothermal Systems (EGS), with the FORGE project in Utah drilling 4-kilometer wells into 200°C granite, aiming for 2 megawatts by 2026 and scalability to 20 gigawatts by 2050, per MIT estimates.
Companies like Chevron Geothermal, managing 1,200 megawatts at The Geysers, lead the charge, employing 5,000 workers and testing hybrid EGS-binary systems with $200 million in R&D since 2022. Yet challenges loom—half of U.S. plants, built in the 1970s, face retirement by 2035 unless retrofitted with $1 billion upgrades, per EIA forecasts. Geothermal powers 3 million homes yearly, cutting 15 million tons of CO2, but its 0.4% share of U.S. electricity lags wind’s 8%, pushing policymakers to double capacity by 2040. The Inflation Reduction Act’s tax credits—30% for new projects—spur this, though high upfront costs ($5 million per well) test momentum.
Indonesia
Indonesia harnesses 2,400 megawatts from its 127 active volcanoes—the planet’s richest geothermal belt—stretching across Java, Sumatra, and Sulawesi. The Sarulla plant in North Sumatra, a 330-megawatt flash steam marvel, pumps 180°C water to the surface, flashing it into steam since 2017, while Pertamina Geothermal Energy’s 500-megawatt pipeline across 10 fields targets 1,500 megawatts by 2030. This aligns with a $20 billion national plan to hit 7,000 megawatts—40% of its power mix—slashing coal reliance from 60% to 30%, per the Ministry of Energy. Costs have dipped to $0.05 per kilowatt-hour, undercutting coal’s $0.07, thanks to standardized drilling rigs cutting well times from 60 to 45 days.
Geothermal employs 20,000 Indonesians, from engineers to rig workers, boosting rural economies near fields like Wayang Windu. Yet seismic risks shadow progress—Sarulla’s 2023 operations triggered a 3.2-magnitude quake, halting drilling for six months and raising safety costs by 10%. With 28 gigawatts of untapped potential—40% of global reserves—Iceland’s EGS lessons guide Indonesia’s $2 billion push into dry rock systems by 2035, aiming to power 20 million homes and cement its renewable lead.
Iceland
Iceland generates 850 megawatts—30% of its electricity—via plants like Hellisheiði, which delivers 303 megawatts from 200°C steam in basalt bedrock. Its real triumph, though, is direct use: 90% of homes, or 300,000 people, heat via geothermal pipes, a practice honed since the 1930s that saves 7 million tons of CO2 yearly, per the National Energy Authority. Hellisheiði doubles as a showcase, reinjecting CO2 into basalt where it mineralizes into stone—a 2024 trial cut emissions 80%.
Sitting atop the Mid-Atlantic Ridge, Iceland’s geology offers 200 volcanic systems, fueling a $1 billion state fund for EGS trials at Krafla, targeting 1,500 megawatts by 2040. This could power all 370,000 residents and export surplus to Europe via undersea cables, a $5 billion dream by 2050. Carbon neutrality hinges on this—geothermal already makes Iceland 99% renewable, a global benchmark.
Kenya
Kenya’s 900 megawatts flow from Olkaria in the Great Rift Valley, Africa’s geothermal epicenter, powering 15% of its grid—7 million households—since the 1980s. KenGen’s Olkaria V, a 158-megawatt flash plant, blends with solar panels, hitting 95% renewable reliance with 24/7 stability, per the Kenya Electricity Generating Company. A $2 billion roadmap eyes 5,000 megawatts by 2030, tapping 10 gigawatts of Rift potential—enough for 40 million people—backed by World Bank loans since 2010.
Drilling 3-kilometer wells into 300°C rock, Olkaria employs 3,000, lifting Naivasha’s economy with $50 million in annual wages. Yet funding lags—2024’s $500 million shortfall delays three plants, and a 2.8-magnitude quake in 2023 sparked local protests. Kenya’s hybrid model, pairing geothermal’s base load with solar’s peak, sets a template for Africa, with Ethiopia and Djibouti trailing at 50 megawatts combined.
New Zealand
New Zealand’s 1,050 megawatts supply 17% of its electricity, harnessed from the Taupo Volcanic Zone by Contact Energy’s 450-megawatt fields like Wairakei, online since 1958—the world’s second geothermal plant. Binary-EGS pilots at Ngatamariki hit 18% efficiency, outpacing traditional 12%, by tapping 150°C dry rock with $100 million in upgrades since 2020. Māori partnerships ensure sustainability—iwi co-own 30% of fields, mandating reinjection to protect geysers vital to tourism, per the New Zealand Geothermal Association.
Aiming for 1,500 megawatts by 2035, New Zealand balances energy with its $5 billion tourism sector—Rotorua’s hot springs draw 3 million visitors yearly. With 7 gigawatts untapped, its $300 million R&D fund tests hybrid systems, powering 1.2 million homes and cutting 5 million tons of CO2. Seismic risks, like a 4.1 quake near Tauhara in 2024, temper pace, but its dual-use model shines globally.
Top Companies in Geothermal
A handful of key players propel geothermal energy forward, blending innovation with operational expertise to shape the industry’s cutting edge. These companies leverage unique strengths—geologic access, technological breakthroughs, and government support—to drive global capacity and efficiency.
Chevron Geothermal (U.S.)
Chevron Geothermal, a subsidiary of Chevron Corporation, reigns as a titan in the U.S. geothermal scene, managing 1,200 megawatts at The Geysers in Northern California—the world’s largest geothermal field. Operational since 1960, this dry steam complex spans 45 square miles, channeling 300°C steam from 400 wells to power 1 million homes, per Chevron’s 2024 reports. The company’s $200 million R&D investment since 2022 tests Enhanced Geothermal Systems (EGS) hybrids, pairing traditional steam with fractured dry rock to boost output by 20%—a pilot at Geysers’ western edge hit 50 megawatts in 2024. Chevron employs 2,000 workers here, from drillers to engineers, sustaining Sonoma County’s economy with $150 million in annual wages.
Its legacy ties to oil—Chevron’s $250 billion fossil fuel arm—fuels critics, yet its geothermal arm cuts 5 million tons of CO2 yearly, aligning with California’s 2045 net-zero goal. Aging infrastructure poses risks; 30% of wells, drilled pre-1980, face closure by 2035 without $500 million retrofits, per the California Energy Commission. Chevron’s $1 billion bid to scale EGS nationwide—targeting 2,000 megawatts by 2040—hinges on federal tax credits, cementing its dual-energy role.
Ormat Technologies (Israel/U.S.)
Ormat Technologies, headquartered in Israel with U.S. operations in Reno, Nevada, leads the binary cycle revolution, operating 1,000 megawatts across 20 countries. Its flagship Steamboat Springs plant in Nevada, online since 1988, delivers 84 megawatts using isobutane to tap 150°C reservoirs—a method Ormat pioneered, now 70% of U.S. geothermal additions, per the GEA. With $300 million in R&D since 2015, Ormat’s modular plants—some as small as 5 megawatts—install in 18 months, slashing costs to $4 million per megawatt versus $6 million for flash plants.
Active in Kenya, Guatemala, and Turkey, Ormat’s 2024 revenue hit $900 million, employing 1,400 globally. Its closed-loop systems cut emissions to near zero, powering 800,000 homes and offsetting 3 million tons of CO2 yearly. A $100 million EGS trial in Hawaii, launched in 2023, targets 20 megawatts by 2027, though seismic concerns—echoing a 2.1-magnitude tremor—slow permitting. Ormat’s scalability and efficiency make it a global benchmark.
Pertamina Geothermal (Indonesia)
Pertamina Geothermal Energy (PGE), a subsidiary of Indonesia’s state-owned Pertamina, manages 700 megawatts across Java and Sumatra, harnessing the archipelago’s volcanic wealth. Its Ulubelu plant in Lampung, a 220-megawatt flash steam facility since 2012, taps 200°C water from 2-kilometer wells, while a 500-megawatt pipeline—spanning Kamojang and Lumut Balai—eyes 1,500 megawatts by 2030, per PGE’s 2024 plan. Backed by $1.5 billion in state funds, PGE drills 50 wells yearly, cutting costs to $0.05 per kilowatt-hour—below coal’s $0.07—and powering 2 million homes.
PGE employs 5,000, boosting rural jobs near fields like Wayang Windu, where $50 million in annual wages flow. Its $500 million EGS push,借鉴 Iceland’s model, targets 500 megawatts in non-volcanic zones by 2035, though a 3.3-magnitude quake in 2024 paused Sarulla’s expansion, costing $20 million in delays. With 40% of global reserves, PGE’s ambition could make Indonesia the geothermal kingpin by 2040.
KenGen (Kenya)
Kenya Electricity Generating Company (KenGen) powers Olkaria’s 700 megawatts in the Rift Valley, Africa’s geothermal hub since 1981. Its Olkaria V, a 158-megawatt flash plant, pairs with 20 megawatts of solar since 2022—a hybrid first in Africa—delivering 95% renewable reliance for 7 million Kenyans, per KenGen’s 2024 data. A $1 billion plan targets 1,000 megawatts by 2030, drilling into 300°C rock across 10 fields, funded partly by $300 million from the African Development Bank.
KenGen’s 3,000 workers earn $40 million yearly, lifting Naivasha’s economy, though a 2.8-magnitude quake in 2023 sparked protests over land use. Its hybrid model—stable geothermal base with solar peaks—cuts reliance on diesel, saving $50 million annually. Expansion hinges on $500 million more, with Ethiopia eyeing KenGen’s playbook.
Contact Energy (New Zealand)
Contact Energy delivers 450 megawatts from New Zealand’s Taupo Volcanic Zone, led by Wairakei—the world’s second geothermal plant since 1958. Its Ngatamariki field, a 100-megawatt binary-EGS hybrid since 2013, hits 18% efficiency by tapping 150°C dry rock with $50 million upgrades, per Contact’s 2024 report. Māori iwi co-own 30% of fields, ensuring reinjection protects Rotorua’s geysers—vital to $5 billion in tourism—while powering 400,000 homes.
A $200 million push targets 600 megawatts by 2035, employing 1,000 and cutting 2 million tons of CO2 yearly. Seismic risks—like a 4.1-magnitude tremor near Tauhara in 2024—cost $10 million in delays, but Contact’s dual-use model balances energy and ecology, setting a global standard.
Environmental and Economic Impacts
Geothermal energy slashes emissions, offsetting 1 billion tons of CO2 yearly—5% of fossil fuel reductions—per IRENA’s 2024 tally. Binary plants, like Ormat’s, emit near zero greenhouse gases by recycling fluids in closed loops, while flash plants release trace CO2 from underground reservoirs—Hellisheiði cuts this 80% via mineralization. Land use is lean at 5 acres per megawatt versus solar’s 10 or coal’s 20, preserving ecosystems. Yet drilling risks seismic activity; South Korea’s Pohang saw a 5.4-magnitude quake in 2017 halt its EGS pilot, costing $100 million and displacing 1,500 residents—a cautionary tale for EGS expansion.
Water use beats rivals—5 liters per kilowatt-hour versus coal’s 100 or hydro’s 50—though reinjection failures can taint aquifers, as in Nevada’s 2023 spill of 1 million liters. Geothermal’s upfront footprint—20 tons of steel per megawatt—pales next to its lifecycle gains: a 50-megawatt plant saves 50,000 tons of CO2 annually. Direct use, like Iceland’s, heats 10 million homes globally, amplifying its green reach.
Economically, the sector generates $80 billion yearly, employing 100,000—from U.S. welders to Indonesian rig hands. A 50-megawatt plant costs $200 million to build but runs at $0.06 per kilowatt-hour, rivaling natural gas and undercutting solar’s $0.08 with no intermittency woes, per BloombergNEF. In Kenya’s Olkaria, jobs rose 20% since 2020—3,000 new roles—lifting local wages by $10 million yearly, while Indonesia’s rural fields add $50 million in economic flow. Subsidies lag behind wind’s $100 billion, but geothermal’s stability drives $10 billion in 2024 investments, per IEA data.
Future Outlook
Geothermal could hit 60 gigawatts by 2050, per IRENA, if EGS scales—U.S. alone eyes 20 gigawatts. Costs may dip to $0.04 per kilowatt-hour with automation, rivaling wind. Hybrid systems and heat pumps could push direct use to 10% of global heating by 2100, phasing out gas.
NB: Geothermal energy morphs from a geologic curiosity to a grid mainstay. Binary plants and EGS lead methods, while the U.S., Indonesia, and Iceland drive capacity. Companies like Ormat and Pertamina pioneer its rise, promising a hotter, cleaner future.
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