Resources for the Future Inc.
10/01/2026 | Press release | Distributed by Public on 10/01/2026 07:36
Introduction to Geothermal Energy
Introduction to Geothermal Energy
Using the heat of the Earth for electric power, heating, and cooling could help decarbonize the US energy mix. While investments in geothermal are on the rise, major challenges remain on the way to realizing geothermal's potential.
Date
Oct. 1, 2026
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6 minutesWhat Is Geothermal Energy?
Geothermal energy refers to heat contained below the Earth's surface that can be used to produce electricity as well as heat and cool homes. Today, geothermal energy contributes a tiny share of total US power generation, and heats and cools relatively few buildings. The US Energy Information Administration estimates that geothermal energy accounted for 16,000 gigawatt-hours, or 0.4 percent, of US utility-scale electricity generation in 2023, concentrated in Western states and drawn from sites near tectonic activity. However, estimates show that geothermal could produce anywhere from 90 gigawatts to over 250 gigawatts by 2050. As the total capacity of the grid today is roughly 1,200 gigawatts, geothermal could be a substantial source of power in the United States in the coming years and potentially more dominant in the longer term.
There are many advantages to geothermal energy. It produces virtually no direct carbon dioxide or conventional air pollutants. It also, in theory, can produce constant energy, or firm power, unlike solar and wind resources where generation must be supplemented by energy storage. (Geothermal energy can supplement other forms of energy storage as well.) These two characteristics are why geothermal energy is referred to as a clean, firm source of power.
Geothermal energy has political advantages as well, enjoying bipartisan support in Congress amidst a dismantling of much of the Biden administration's decarbonization policy agenda (including an end to tax breaks for solar and wind). Although Congress retained some tax credit incentives for geothermal energy, policies that reduce risks and obstacles to geothermal development, address market failures, and create well-designed incentives for development and deployment are needed to ensure geothermal can reach its full potential.
Types of Geothermal Technologies
Geothermal energy systems generally fall into two distinct categories depending on whether the technology produces electricity or thermal services like heating and cooling.
Geothermal heating and cooling systems take advantage of the fact that temperatures just below the surface of the Earth are less variable than temperatures at the surface. These systems exploit stable subsurface temperatures either through individual heat pumps or through thermal energy networks (TENs), which connect multiple buildings to a single geothermal system that pulls heat from the subsurface. Figure 1 shows this process in detail. TENs also can heat homes by using thermal energy generated as waste from data centers, industrial processes, or sewage, and also are capable of storing energy for later use. Such networked systems could reduce electricity demand, particularly during peak summer cooling and winter heating periods, when strain on the grid is highest.
Figure 1. Thermal Energy Networks
Source: US Department of Energy, Pathways to Commercial Liftoff: Geothermal Heating and Cooling (2025). Image adapted by the Department of Energy from the National Laboratory of the Rockies.
Geothermal power technologies use geothermal energy to generate electricity. These technologies can be broadly grouped into four main categories, as illustrated in Figure 2.
Figure 2. Geothermal Power Technologies
Figure originally published in the Spring/Summer 2026 issue of Resources magazine.
- Conventional geothermal systems tap into subsurface hot water reservoirs and aquifers near tectonic activity and generate electricity in areas with easily accessible geothermal resources. While geographically constrained to places like Iceland, some innovators are still exploring and finding usable subsurface pools.
- Enhanced geothermal systems use fracking technology to create porous networks through which a working fluid (usually brackish water) can be cycled and converted into steam for electricity generation. Drilling operators for enhanced geothermal systems typically create reservoirs for the fluid at least two miles underground. Unlike conventional systems, enhanced geothermal systems do not rely on existing underground sources of water, so they can be deployed in many places without naturally occurring hydrothermal resources. Figure 3 visualizes where subsurface thermal conditions and relatively low lifetime costs may make enhanced geothermal systems favorable. Different companies have different approaches to implementing and designing enhanced geothermal systems.
Figure 3. Siting Favorability for Enhanced Geothermal Systems (EGS)
Source: National Laboratory of the Rockies, US Enhanced Geothermal System (2018) and US Operating Geothermal Power Plants (2014). N/A regions have temperatures less than 150ºC at 10 kilometers of depth, so the national laboratory did not assess the levelized costs of electricity in these areas. The blue dots represent operating conventional hydrothermal plants, which were commercialized following energy crises in the 1970s.
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Closed-loop systems circulate water through sealed pipes under similar thermal conditions as enhanced geothermal systems, but instead of passing fluid through fractures, drilling operators create a radiator-like loop deep underground through which water is heated to generate electricity when the water turns to steam.
- Superhot systems could involve any of the above approaches but include drilling down to conditions where water is under high pressure at or above 374ºC (also called a supercritical phase). Water in a supercritical phase can carry five to eight times more heat than cooler water, dramatically increasing power output and efficiency. Superhot conditions are geographically ubiquitous at great depth, but significant technical challenges remain because of the impacts of these conditions on drilling equipment and well integrity. This is the "frontier" case of geothermal technology and is the furthest from commercialization.
New technologies are also being developed to use geothermal energy like a battery for intermittent-generation technologies like wind and solar. Just as pumped hydroelectric systems pump water to mountain lakes in the evening when electricity is cheap and release the water to spin a turbine during times of peak electricity demand, geothermal operators can pump water underground and wait to release the hot water until the power is needed. This works as the hot water is forced upward by the high-pressure, high-temperature subsurface environment to spin a turbine, with the heat drawn off to run a steam generator.
Another new technology is millimeter wave drilling, which uses high-powered microwaves instead of conventional drills to bore through deep granite or basalt basement rock.
Challenges for Today's Geothermal Industry
Next-generation geothermal technologies face significant hurdles to wider adoption. Though Fervo's Cape Station in Utah, the United States' first commercial enhanced geothermal generation plant, is expected to start delivering power to the grid in late 2026, geothermal will not be competitive with other energy sources until producers have benefited from a period of learning-by-doing to reduce risks and costs. High initial investments and fixed costs currently require geothermal plants to sell electricity at a higher price than plants that use solar, wind, and natural gas.
Permitting and leasing challenges abound, and both are on Congress' radar. Geothermal's palatability and perceived risks to host communities (including risks from seismicity and water use) are likely substantially smaller than other energy production processes that rely on drilling. There are lessons to be learned from existing research on the analogous impacts of the rapid spread of fracking in the oil and gas industry on local communities.
The interconnection queue poses a major concern for geothermal plants (and, for that matter, all electric power plants). This queue refers to the lengthy time it can take to get permission to hook up a power source to the grid. Major sources of power demand, such as data centers, are also lengthening the queue as they connect to the grid. Notably, tech companies are starting to back geothermal systems as new power sources for these data centers, either as behind-the-meter generators or by securing generation with power purchase agreements. Additional transmission infrastructure also is required to connect relatively isolated plants to customers.
The power sector faces economic challenges in the acquisition of firm power sources such as geothermal. If electricity prices are high now, building a geothermal plant makes financial sense. But because it can take years to build a large geothermal plant, there is no guarantee that electricity prices will still be high enough for the plant to be profitable when it is ready to start selling electricity.
There are technology-specific challenges, too. Technological challenges to access superhot rocks are serious, and solutions may need focused and sustained government support. The challenges to scaling geothermal heating and cooling are more pedestrian, but still knotty, involving in part the development of ownership models and rate designs to incentivize developers and users alike to bring down costs and make geothermal more competitive.
The Future of Geothermal
The conventional geothermal industry benefited from government support in the 1970s, when the energy crisis caused long lines at gas stations and increased policymaker support for alternative energy supplies. Today, the industry-due to fracking technologies and growth in electricity demand-is poised for a major expansion. Ever-growing demand from data centers has incentivized tech companies to invest heavily in geothermal energy. Several energy startups have raised hundreds of millions of dollars in early-stage funding, supporting them as they commercialize these nascent technologies, and DOE's Office of Geothermal has established a series of grants and competitions to help grow the nascent industry.
Successes in scaling solar and wind, as well as oil and gas production, lend credibility to the idea that geothermal could provide a substantial portion of US electricity in the coming decades. Nevertheless, overcoming this sector's challenges will require more rigorous technological research efforts supported by diverse innovation policies that reward clean, firm power and reduce interconnection queues; reform the economics of delivering and paying for heating and cooling; ensure that community concerns are addressed; minimize permitting and leasing obstacles; and improve exploration incentives.
Resources for the Future Inc. published this content on October 01, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on October 01, 2026 at 13:37 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]