A geothermal power plant generates electricity by tapping heat stored deep underground, using steam or hot water to spin a turbine connected to a generator. It works on the same basic principle as a coal or natural gas plant, with one key difference: no fuel is burned. The heat comes from the Earth itself, making geothermal one of the few renewable energy sources that can produce power around the clock regardless of weather.
How Geothermal Plants Convert Heat to Electricity
Miles beneath the Earth’s surface, pockets of extremely hot water and steam sit trapped in rock formations called hydrothermal reservoirs. These reservoirs hold fluid at temperatures between 300°F and 700°F. When a well is drilled into one, the hot water or steam rises toward the surface. As it climbs, dropping pressure causes it to flash into steam or arrive as steam directly. That steam flows through a turbine, spinning it at high speed. The turbine is connected to a generator, which converts that mechanical spinning into electrical current.
After passing through the turbine, the cooled water is typically injected back into the reservoir, where the Earth reheats it. This closed loop means the resource replenishes itself over time, and the plant produces almost no emissions during operation.
Three Types of Geothermal Power Plants
Not all underground reservoirs are the same. Some produce pure steam, others produce pressurized hot water, and some aren’t hot enough for direct steam production. Each scenario calls for a different plant design.
Dry Steam Plants
These are the simplest design. Wells tap directly into underground reservoirs that produce steam rather than liquid water. The steam travels straight from the well to the turbine with no intermediate processing. Dry steam reservoirs are relatively rare, but they power some of the oldest and largest geothermal facilities in the world, including The Geysers complex in Northern California.
Flash Steam Plants
Flash steam is the most common type globally. These plants pull up water that’s hotter than 360°F but still liquid because of the immense underground pressure keeping it from boiling. At the surface, the water enters a flash separator, a tank held at much lower pressure. The sudden pressure drop causes a portion of the water to instantly vaporize into steam (the “flash”). That steam drives the turbine. The remaining hot liquid, still carrying significant energy, can be sent through a second lower-pressure flash separator to extract even more steam. This double-flash approach squeezes more electricity from the same fluid. Whatever liquid remains gets pumped back underground.
Binary Cycle Plants
When the underground water is hot but not hot enough for flashing, typically around 300°F (150°C), binary cycle plants offer a solution. Instead of using the geothermal water directly, it passes through a heat exchanger where it heats a secondary working fluid that has a much lower boiling point. That fluid vaporizes easily, expands, and spins the turbine. The geothermal water never contacts the turbine at all and is sent back underground in a completely closed loop. Binary plants are the fastest-growing type because they can operate on lower-temperature resources that are far more common worldwide.
Reliability Compared to Solar and Wind
Geothermal’s biggest advantage over other renewables is consistency. A geothermal plant runs day and night, in any season, regardless of cloud cover or wind speed. This shows up clearly in capacity factor, a measure of how much electricity a plant actually produces compared to its theoretical maximum. In 2024, U.S. geothermal plants ran at a 64.6% capacity factor. Solar photovoltaic hit 25.0%, and wind reached 55.8%. That high capacity factor makes geothermal especially useful as baseload power, the steady foundation of an electrical grid that other sources layer on top of.
What Geothermal Power Costs
Geothermal electricity is expensive to start but cheap to run. Drilling wells several miles deep and confirming a viable reservoir before generating a single watt makes upfront costs high and carries exploration risk. Once operating, though, fuel costs are essentially zero.
Recent power purchase agreements in the U.S. give a sense of the price utilities actually pay. Projects in Nevada, California, Hawaii, and Alaska have signed contracts in the range of $67 to $75 per megawatt-hour for terms of 20 to 30 years. One exception is a contract at The Geysers in California at $99 per megawatt-hour, though that was for a shorter 10-year term. These prices are competitive with new natural gas in many markets and continue to drop as drilling technology improves.
Land and Environmental Footprint
Geothermal plants occupy a surprisingly small area. A typical facility needs 1 to 8 acres per megawatt of capacity. For comparison, a coal plant requires over 10 acres per megawatt, and a solar farm needs 50 or more. Because the wells are drilled vertically and the surface equipment is compact, geothermal plants can coexist with agriculture, forests, or other land uses. Emissions during operation are minimal, limited to small amounts of naturally occurring gases released from underground fluid, and far below what any fossil fuel plant produces.
Global Capacity and Leading Countries
Total worldwide geothermal capacity reached 15.4 gigawatts by the end of 2024, up from about 13 gigawatts in 2020. That’s a modest figure compared to solar or wind, but geothermal punches above its weight in certain countries. Iceland meets over 90% of its heating demand with geothermal energy and relies on it for a significant share of its electricity. The Philippines, Kenya, El Salvador, and New Zealand all depend on geothermal for a substantial portion of their power grids. The United States has the largest installed capacity of any country, concentrated mostly in California and Nevada.
Enhanced Geothermal: Expanding the Map
Traditional geothermal plants depend on naturally occurring reservoirs of hot water or steam, which limits them to volcanically active regions. Enhanced geothermal systems (EGS) aim to change that. The concept is straightforward: drill into hot, dry rock that lacks natural water flow, then inject fluid under controlled pressure to open up fractures and create an artificial reservoir. Once the rock is permeable enough, water can be circulated through it, heated, and brought back to the surface to generate power.
EGS could theoretically unlock geothermal energy almost anywhere, since temperatures increase with depth everywhere on Earth. The challenge is engineering: creating reliable fracture networks miles underground without triggering seismic concerns, and doing it at a cost that competes with other energy sources. Several pilot projects are currently operating, and the technology is advancing quickly enough that many energy analysts view EGS as one of the most promising paths to scaling geothermal beyond its current niche.