This technology, over 100 years old, was first pioneered in Europe by Prince Piero Ginori Conti of Trevignano in 1904. The first geothermal power plant was commissioned in 1913 in Larderello, Italy, marking the beginning of geothermal use for electricity production. This laid the groundwork for geothermal power as a reliable and sustainable source of electricity, leveraging the Earth’s heat, which is naturally replenished and virtually inexhaustible.
Geothermal energy comes from the underground heat stored beneath the Earth’s surface, which can be accessed via shallow ground, hot water reservoirs or deep rock formations. This heat was created as a result of the Earth’s formation billions of years ago and is further fuelled by the ongoing radioactive decay of minerals deep underground. The Earth’s core, mantle and crust’s high temperatures contain vast amounts of fluid thermal heat, which can be tapped for various applications, including electricity generation, heating and even cooling.
What’s the history of geothermal?
Although its modern incarnation was developed in the early 20th century, the use of geothermal power dates back to ancient times, when hot springs were utilised for bathing and heating. For example, the Romans used hot springs to heat buildings and public baths. However, the technological development of geothermal electricity began with the successful operation of the Larderello plant. Since then, the geothermal technology has evolved significantly, leading to more efficient and sustainable extraction methods.
Other significant milestones in the history of geothermal include the building of geothermal heating systems in Reykjavik, Iceland, in the 1930s and the establishment of the first commercial geothermal power plant in the United States in 1960, called “The Geysers”.
Today, geothermal power is a critical component of the renewable energy mix in countries such as the United States, Iceland, the Philippines and Kenya. Within the EU, the Member States with the highest uptake include Italy, Hungary, France and the Netherlands.
Globally, only a few countries master this technology, with the United States being the first per number of gigawatt (GW) installed, as shown in the graph below.
How does geothermal work?
Geothermal power production involves tapping into underground reservoirs of hot water and steam. Wells are drilled into geothermal reservoirs to bring the steam or hot water to the surface, where it is used to drive turbines connected to electricity generators. The cooled water is then re-injected into the Earth to sustain the reservoir pressure and temperature, creating a sustainable loop.
Which types of geothermal power exist today?
There are three main types of geothermal power plant technologies:
1. Dry Steam Plants: These use steam directly from geothermal reservoirs to turn power generator turbines. Dry steam plants are the oldest type of geothermal power plants and are primarily found in areas with abundant steam resources, such as the aforementioned Geysers complex in the United States.
2. Flash Steam Plants: These extract high-pressure hot water from underground and convert it into steam by raising it to the surface to drive the power generator turbines. The remaining water is re-injected into the reservoir. Flash steam plants are the most common type of geothermal power plant today.
3. Binary Cycle Plants: These transfer heat from geothermal hot water to another liquid with a lower boiling point than water. This secondary liquid is then vapourised and used to turn powgenerator turbines. Binary cycle plants can operate with lower temperatures and geothermal resources and are more versatile in their application.
What are the main uses of geothermal energy?
Geothermal power offers diverse and significant applications across various sectors. Here are the primary uses:
Power Generation
Geothermal provides a stable and reliable source of energy, capable of delivering baseload power to energy systems around the clock. This is particularly valuable in balancing the variable nature of renewable energy sources, particularly wind and solar. By leveraging the consistent heat from the Earth, geothermal power plants can produce electricity continuously, helping to ensure a steady supply, providing flexibility and enhancing grid stability.
Direct Use Applications
Geothermal energy’s direct use involves utilising heat without converting it to electricity. This method is highly efficient and has several practical implementations:
- District Heating
Geothermal can provide centralised heating for residential, commercial and public buildings through district heating systems. - Agriculture
This energy source can also support agricultural activities such as greenhouse heating, aquaculture and soil warming. This helps in extending growing seasons, improving crop yields, and reducing energy costs. - Industrial Processes
Many industrial processes require significant heat inputs, which can be efficiently supplied by geothermal. Applications include food processing, pasteurisation, drying and various manufacturing processes. - Recreational Uses
Just as the Romans did before, geothermal is still used for heating in spas, swimming pools, hot springsand wellness centres, providing therapeutic benefits and enhancing recreational facilities.
Beyond district heating systems, geothermal is also used for individual heat pumps, let’s see how they work.
Geothermal Heat Pumps
Geothermal heat pumps (GHPs) are a highly efficient way to heat and cool buildings. GHPs can significantly reduce energy consumption and costs compared to conventional fossil fuel-based systems, contributing to increased energy efficiency.
However, their currently high upfront costs hamper these pumps’ full potential vis-à-vis their fossil-based alternatives.
What are the benefits of geothermal power?
Beyond the many use cases we just explored, geothermal boasts several benefits.
Low-carbon power generation
To begin with, geothermal power emits very little carbon dioxide and is a renewable energy source as heat is continuously produced inside the earth. This technology therefore contributes, albeit to a lesser extent than other renewables, to the EU climate and energy targets.
Renewable energy integration
Geothermal also plays a pivotal role in enhancing the integration of variable renewables into the electricity system by complementing the weather-dependent patterns of wind and solar production. This quality proves particularly useful in carbon-free hourly matching.
Geothermal energy plays an important role for 24/7 carbon-free energy matching, which involves aligning energy consumption with the generation of carbon-free energy by the hour. By integrating reliable and stable geothermal into the energy mix, it is possible to complement variable renewables production, by supplying power when the sun doesn’t shine and the wind doesn’t blow. This enhances the overall stability of the power grid and ensures a steady supply of clean electricity.
Security of supply
Geothermal energy already contributes to Europe’s energy security by diversifying the energy mix and reducing dependence on imported fossil fuels such as oil and gas.
What are the downsides of geothermal?
Any power technology comes with its pros and cons.
High upfront costs
One of the main challenges is the high upfront capital expenditure (CAPEX) required for geothermal projects. The costs associated with drilling, exploration and building often account for 80% to 90% of the total project cost over its 40+ year lifetime. This makes geothermal projects somewhat financially risky and limits their attractiveness compared to other energy sources.
Permitting and regulatory challenges
Geothermal energy also faces permitting and regulatory challenges. The process of obtaining permits for geothermal projects can be lengthy and complex, often involving multiple stakeholders. Environmental concerns, such as the risk of induced seismicity – earthquakes caused by geothermal drilling – and the management of the geothermal fluid, further complicate the process. Additionally, geothermal projects must navigate land use issues and compete with other land applications, such as agriculture and conservation.
Geographical limitations
Geography also pose a significant limitation. High-temperature geothermal resources suitable for electricity generation are primarily found in regions with volcanic activity or tectonic plate boundaries. In Europe, this limits large-scale geothermal electricity production to specific areas, namely Iceland, Italy and Turkey, making it less competitive in other regions. While enhanced geothermal systems offer possible solutions by allowing the exploitation of lower-temperature resources, they are still in the experimental stage and not yet widely deployed.
Why is geothermal important for Europe?
Geothermal energy will play a crucial role in Europe’s green energy strategy. Despite the challenges, it will remain a vital source due to its ability to provide steady, low-carbon power.
As Europe faces geopolitical tensions and energy supply disruptions, geothermal offers a domestically sourced, stable and renewable energy solution.
In addition, it also supports the decarbonisation of the heating and cooling sector, which accounts for a significant portion of Europe’s energy consumption and greenhouse gas emissions.
Indeed, geothermal energy aligns with the European Union’s climate goals and commitments under the Paris Agreement.
Geothermal energy projects also create local jobs and stimulate economic growth, particularly in rural and remote areas with geothermal potential.
What is the EU doing on geothermal?
The EU is a staunch supporter of geothermal energy, incorporating it into several key legislations and initiatives:
- Renewable Energy Directive (RED): Geothermal is explicitly listed as a renewable energy source in the EU’s RED (Article 2 (1) & (3) of the 2018 review) and therefore benefits from support schemes and Heat Purchasing Agreements. The directive sets binding targets for renewable energy share in the EU’s energy mix and provides a framework for member states to enhance their geothermal energy resources.
- Market Design: Geothermal energy is also eligible for the EU’s Contracts for Difference (CfDs), to support new investments. The EU Commission has proposed tendering procedures for renewable energy sources, including geothermal and increasing the use of technology-specific and non-price criteria in auctions. This approach aims to create a stable investment environment and encourage the building of projects.
- Permitting: Geothermal also benefits from a streamlined permitting process, shorter deadlines, and is considered in spatial planning to reduce costs and provide demand security. The inclusion of geothermal in renewable energy acceleration areas facilitates faster project implementation and reduces administrative burdens. The EU also emphasises incorporating geothermal district heating and heat pumps early in the planning process to optimise resource use and infrastructure development.
- European ambitions: The REPowerEU initiative calls for installing millions of geothermal and ambient heat pumps and modernising district heating systems to replace fossil fuels. The EU’s Solar Strategy also highlights the role of geothermal energy in meeting 2030 renewable energy targets, calling for a three-fold increase in energy demand covered by geothermal and solar heat.
The EU’s support for geothermal also extends beyond these legislative frameworks. Various funding mechanisms, such as the Horizon Europe program and the European Regional Development Fund provide financial support for research, innovation and the deployment of geothermal technologies.
Collaborative projects and partnerships with industry stakeholders and research institutions have further advanced geothermal development in Europe.
Solutions to address geothermal’s challenges
To overcome permitting issues, the EU is aiming to streamline processes for geothermal projects, ensuring quicker approvals and integrating geothermal planning into local authorities’ spatial strategies. Revised permitting rules include shorter deadlines for project approvals, prioritisation of renewable energy projects and the establishment of areas for clean energy development. These measures aim to reduce administrative delays and provide greater certainty for project developers.
To mitigate high CAPEX, the new electricity market design promotes long-term power contracts, such as Power Purchasing Agreements (PPAs), which provide price stability and investment security. This approach de-risks projects and attracts necessary investments to expand geothermal capacity.
Eurelectric’sstudy on market design emphasises the importance of long-term instruments for capital-intensive investments in low-carbon technologies such as geothermal. By de-risking such contracts, the study highlights how the EU can bolster investment rates to the level needed to achieve 2030 targets.
Eurelectric’s Secretary General Kristian Ruby further details the benefits of such hedging instruments in this video:
In addition to financial instruments, the study suggests enhancing liquidity in forward markets and easing collateral regulations to make hedging more manageable for project developers, including geothermal projects. Public authorities can play a complementary role by offering state-backed CfDs for large-scale projects and removing legislative barriers hindering private PPAs. A balanced approach ensures that both public and private sectors contribute to geothermal energy development without stifling innovation or competition.
To know more about our market design study click here.
Technological advancements also offer solutions to some of the challenges. Research and development efforts focus on improving drilling techniques, reducing costs and increasing the efficiency of geothermal power plants. Innovations in materials, sensors and monitoring systems can also enhance geothermal capacity.
What are Eurelectric’s members doing on geothermal?
Eurelectric’s members are actively engaged in advancing geothermal energy as a key component of the renewable energy mix. To give you a taste of our work, we selected two particularly interesting instances:
EDA Renováveis – Portugal
EDA Renováveis, a subsidiary of Portuguese energy provider Electricidade dos Açores, is at the forefront of geothermal energy in the Azores archipelago. This area due to its volcanic nature, has a significant natural geothermal potential. EDA Renováveis harnesses this potential primarily on the islands of São Miguel and Terceira, where geothermal is most abundant.
São Miguel: The geothermal project in the Ribeira Grande geothermal field on São Miguel Island has been a major success. With four decades of use and 23 deep drills, the geothermal plants here have significantly contributed to the island’s overall energy mix. In 2022, geothermal energy supplied approximately 42% of the electricity needs on São Miguel, underscoring its critical role to the energy system.
Terceira: The Pico Alto geothermal plant on Terceira Island represents another significant achievement. The plant became operation in 2017.Despite Terceira’s initial reliance on fossil fuels, this geothermal plant has enabled a substantial increase in the share of renewables. Within a couple years, geothermal energy was already providing 11% of the island’s electricity, demonstrating a significant reduction in fossil fuel reliance.
EDA’s commitment to expanding geothermal capacity aligns with the broader goals of the Azorean Strategy for Energy 2030 and the Roadmap to Carbon Neutrality in the Azores 2050. These strategies outline ambitious targets for increasing renewable energy penetration, with geothermal energy playing a pivotal role.
Wiener Stadtwerke – Austria
Austrian utility Wiener Stadtwerke, meanwhile, is spearheading initiatives that integrate geothermal into Vienna’s district heating system through its subsidiary Wien Energie,. This is part of a broader strategy to decarbonise the city’s energy supply by 2040.
One of the landmark projects is the Seestadt Aspern geothermal plant, which is set to become operational by 2026. This plant, with a thermal capacity of up to 20 megawatt (MW) and a temperature output of approximately 100°C, is expected to provide heat for around 20,000 households. The project is a significant step towards reducing emissions, with an estimated annual reduction of up to 54,000 tons of CO2.
Climate-Neutral District Heating
Wien Energie’s district heating strategy also encompasses the use of low-temperature power networks, which integrate geothermal probes and other green technologies to manage thermal loads efficiently. The Village im Dritten project exemplifies well this approach, creating an integrated energy supply system for a new city quarter. This system combines geothermal energy with heat pumps and photovoltaics, ensuring a balanced and sustainable energy supply.
In addition to geothermal energy, Wien Energie utilises waste heat from various sources such as wastewater treatment plants, power plant cooling water and data centres. These measures significantly enhance the overall efficiency of the district heating system, making it a cornerstone of Vienna’s path to climate neutrality.
Both EDA Renováveis and Wiener Stadtwerke are actively engaged in advancing geothermal energy through their projects. These efforts are not only helping energy transition goals but also the broader agenda of 24/7 carbon-free energy. Through continued investment and innovation, geothermal will play an increasingly important role in the sustainable energy future envisioned by Eurelectric and its members.
A Promising Future
Geothermal power represents a significant component in the global shift towards renewable energy resources. As Europe strives to meet its ambitious renewable energy targets, developing new geothermal projects will be crucial. By leveraging geothermal energy’s benefits and addressing its challenges with continued support from the EU, technological advancements and innovative financing mechanisms, Europe can harness its full potential, contributing to a cleaner, greener future, setting an example for the rest of the world.
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Disclaimer: This article is for informative purposes only and may not entirely reflect Eurelectric official positions. For formal positions, please consult our position papers here.