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How Exactly Does Geothermal Energy Work?

It’s time to dig into a less talked about-but-powerful source of renewable energy.


While it’s hard to miss a massive solar array or a field full of wind turbines, so much of the action with geothermal energy happens out-of-sight that it tends to not generate as much love as its buzzier brothers in the renewable energy landscape.

And that’s too bad, because geothermal energy is pretty awesome. It takes the natural functions of the Earth and puts them to great use heating homes, creating electricity, and helping to propel the global shift from the dirty fossil fuels driving climate change to renewables.

But how? It’s time to dig into a less talked about-but-powerful source of renewable energy. Read on as we tackle some of the most common questions about geothermal.

What is geothermal energy?

“If you were to dig a big hole straight down into the Earth, you would notice the temperature getting warmer the deeper you go. That's because the inside of the Earth is full of heat. This heat is called geothermal energy,” the EPA explains in its Student’s Guide to Global Climate Change.

That’s the gist: When we talk about “geothermal,” we’re talking about tapping into the heat energy contained in the rock and waters of the Earth's crust.

What is geothermal energy used for?

Geothermal energy is largely used in two distinct ways – to heat homes and other buildings or to create electricity.

The first is the best-known and easiest to understand. Geothermal heat pumps transfer the moderate heat found not far below the Earth’s surface into homes and buildings through a looping pipe system.

When it’s cold outside, the fluid in the pipes warms as it travels through the stretch of pipe buried underground, where temperatures in the upper 10 feet of the Earth remain at a constant 50 to 60 degrees Fahrenheit. The system then carries the now-warmed fluid into a home or building, where the geothermal unit uses it to heat air circulated through your home via a standard duct system.

Some geothermal systems also circulate the fluid directly as sub-floor radiant heat, aka a series of pipes that have been laid beneath your flooring.

(An inversion of this process can be used to cool your home in the summertime, too.)

There are a few more moving parts to a geothermal power plant. These plants tap into the much higher temperatures deeper inside the planet to generate electricity.

This is typically done by pumping very hot water under high pressure from as deep as one or two miles underground. Once the water reaches the surface, the pressure drops, causing the water to turn to steam. That steam then turns a turbine that is connected to a generator, producing electricity.

If this sounds confusing, just imagine a geyser like Old Faithful spouting steam and hot water out of the earth, only here all that steam generates electricity. It’s more than just an analogy – according to the US EPA : “Deep geothermal technologies harness the same kind of energy that produces geysers.”

One key difference between natural geysers and geothermal power plants, though, is that these plants usually recycle the fluid pumped to the surface to use again.

It works like this. Plants often gather the steam that passes through turbines in a cooling tower or some other capturing unit, where it cools off and condenses back into liquid water. Then, they pump this water back into the Earth, so it can warm back up and begin the whole process again.

Is geothermal energy available everywhere?

Geothermal energy can be found almost anywhere, but it’s certainly more readily accessible in some places than others. Regions rich in hot springs and other natural hot water reservoirs (i.e., places where the Earth’s heat is closer to the surface) are going to have an easier time finding and using geothermal, particularly on a larger scale.

In the US, most geothermal power plants are located in the geologically active West.

“The areas with the highest underground temperatures are in regions with active or geologically young volcanoes. These ‘hot spots’ occur at tectonic plate boundaries or at places where the crust is thin enough to let the heat through,” the Union of Concerned Scientists explains.

“The Pacific Rim, often called the Ring of Fire for its many volcanoes, has many hot spots, including some in Alaska, California, and Oregon. Nevada has hundreds of hot spots, covering much of the northern part of the state.”

It’s unsurprising then that California, already a national leader in renewable energy, has far-and-away the most installed geothermal capacity in the US. The state’s 40-plus geothermal plants provided nearly 6 percent of its electricity in 2017.

But the US is far from the only country using geothermal. Half a world away in chilly Iceland, “virtually every building in the country is heated with hot spring water. In fact, Iceland gets more than 50 percent of its primary energy from geothermal sources.”

How much do home geothermal systems cost?

Just like with home solar energy systems, that depends. The price of a home geothermal heating/cooling system varies, largely depending on the size and type of loop system needed.

By and large, a home or small-scale commercial geothermal system can run anywhere from $10,000 to $25,000. The reason for that broad cost spectrum: “soil conditions, plot size, system configuration, site accessibility, and the amount of digging and drilling required” all play a role in determining how much your system will set you back. Many of those conditions can vary wildly from one place to another.

While these price tags might look scary, many folks don’t have to pay the sticker price for geothermal heat pumps. A number of federal, state, and local incentives can help to offset the initial up-front costs of going geothermal, bringing you all the benefits of clean energy with a much shorter payback period.

Additionally, in the US and in much of the wider world, it’s worth noting that at the larger power plant level, electricity generated from geothermal sources is already cost-competitive with electricity generated by fossil fuels.   

Will I really save money with a geothermal system?

You will.

“Homeowners save 30-70 percent on heating and 20-50 percent on cooling costs by using geothermal heat pumps compared to other conventional systems,” according to Energy Informative. “This translates to roughly $400 to $1,500 annual savings.”

If you follow those numbers, you could recoup the cost of your geothermal system installation through energy savings in as little as five years (or as many as 15 or 16), depending on a number of factors, from the cost of your installation and local utility rates to your climate and home heating and cooling needs.

Most folks likely fall somewhere in between: “Although installation costs can be up to several times more expensive, [geothermal heat pumps] are up to 65 percent more efficient than traditional HVAC units and pay themselves back over time in energy savings — typically within 10 years,” according to the US Department of Energy.

How long do geothermal systems last?

This is where you’ll really start to see the value of a home geothermal system pay off. Geothermal systems are built to last a very long time.

“The indoor components typically last about 25 years (compared with 15 years or less for a furnace or conventional AC unit) and more than 50 years for the ground loop,” The Family Handyman magazine reports. “The system has fewer moving parts and is protected from outdoor elements, so it requires minimal maintenance.”

The US Department of Energy backs up those numbers, adding that geothermal systems also benefit the overall electrical grid by lightening demand for power during peak seasons like summer.

The point is, not only will your system eventually pay for itself, it will last long enough for you to enjoy years and years (perhaps decades!) of straight energy savings after it has.

What’s next?

With seas rising, global heat records falling, and storms becoming more and more devastating, the reality of climate change has never been clearer. But with clean energy solutions like wind and solar energy getting more affordable, batteries getting better, and buildings and other technologies becoming more efficient every year, neither has the way forward.

Interested in taking the next step? Ready to make a difference for the future of our planet? Sign up to receive updates from The Climate Reality Project.

Stopping the climate crisis is the challenge of our time. But the sustainable future we want is finally within our grasp. And at Climate Reality, we won’t let it slip away. Will you join us?