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Geothermal Electricity Production

Inside the Earth's crust there are several reservoirs with hot water which can be used for heating buildings and/or production of electricity. The process causes relatively little CO2 emissions (from the steam), which could potentially be reinjected in the earth's crust through carbon capture and storage. Contrary to conventional geothermal power plants, present generation plants re-inject the condensated steam or hot water into the underground acquifer so that the reservoir capacity could remain intact. Around half of the geothermal power capacity is located in developing countries, especially in regions with hydrothermal manifestations (e.g., hot springs, volcanos).

Introduction top

Geothermal energy originates from the high-temperature aquifers inside the Earth’s crust at depths of between one and four kilometres. These aquifers are surrounded by porous, soft rocks and/or sand and are heated by the Earth's heat. Hot water or steam within the acquifers could reach temperatures of over 300oC. This heat can be used for heating of buildings and/or production of electricity ( This page focuses on geothermal electricity production; geothermal heat generation is described on the page for heat pumps. There are three kinds of geothermal power plants (GEO, 2005):

  • Dry steam plants - Some reservoirs have such high temperatures that they mainly contain steam ('dry steam'), which can be piped directly into a steam power plant to spin the turbine generator.
  • Flash power plants - Some geothermal reservoirs produce mostly hot water ('hot water-dominated reservoirs') with a temperature ranging between 150 and 370 oC. This water can be brought up to the surface and ‘flashed’ into steam (see Figure above) for use in a generator to produce electricity.
  • Binary power plants - when the reservoir temperature is not high enough to produce sufficient steam for a flash power plant (i.e. between 120 – 180 oC), the water from the reservoirs can be pumped through a heat exchanger. Here, the heat from the water is transferred into a secondary (binary) working liquid such as isopentane which boils at a low temperature and has a higher vapour pressure at low temperatures. The vapour is subsequently used to spin the turbine generator to produce electricity.

See video

Video 1

Geothermal electricity can be delivered to large grids and mini-grids. Large-scale plants are grid-connected and deliver power for baseload purpose. According to the World Bank (2005), a large-scale geothermal flash plant (50 MW capacity) could have a load factor of 90%. Small-scale geothermal plants, with 200 kW and 20 MW capacity, mainly deliver power to mini-grids and their capacity utilisation depends strongly on the local demand for electricity and is relatively low (between 30 and 70% of their capacity) (World Bank, 2005).

Geothermal electricity production has been successfully developed in regions with hydrothermal manifestations (e.g., geysers and hot springs) (World Bank, 2005). The largest geothermal electricity generation capacities are in Indonesia, Italy, Japan, Mexico, New Zealand, USA, the Philippines and the Central Americas (Dickson and Fanelli, 2004). Worldwide, based on 2007 data, geothermal power plants have the capacity to generate about 10 gigawatts of electricity (ENTTRANS, 2008). In terms of actual production, geothermal electricity's share in global power production amounts to approximately 0.3%. Almost half of the globally installed geothermal power capacity is located in developing countries.

Feasibility of technology and operational necessities top

The potential for geothermal power production is limited to a few countries/regions in the world which are in volcanic areas, particularly in the ‘ring of fire’ around the Pacific Ocean and the rift valley in Eastern Africa (Michaelowa, 2001). Basically, a geothermal energy system requires a heat source (the Earth's core), an underground reservoir (an aqcuifer holding, e.g., meteoric water), and a fluid (water) to carry the heat from the reservoir to the energy production point. In some cases, the fluid and reservoir can be artificial. For example, water can be pumped through pipes drilled through hot underground rocks which heat the water so that it can be used for energy production.

In the Figure below, the potential geothermal resources in the United States are illustrated, including the potential for Enhanced Geothermal Systems (EGS). Enhanced or engineered geothermal systems aim at using the heat of the Earth where no or insufficientsteam or hot water exists and where permeability is low. EGS technology is centred on engineering andcreating large heat exchange areas in hot rock. The process involves enhancing permeability by openingpre-existing fractures and/or creating new fractures. Heat is extracted by pumping a transfer medium,typically water, down a borehole into the hot fractured rock and then pumping the heated fluid upanother borehole to a power plant, from where it is pumped back down (recirculated) to repeat the cycle.

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Figure 1: Geothermal resources in the United States, including favourability of EGS. Source: NREL, no date

The exploration of the geothermal energy systems could be complex. In particular, the process of confirmation of the location of the acquifer, its size and temperature is rather cost intensive. According to a World Bank study (World Bank, 2005), these aspects of project development could take about 25% of the total investment costs. Although the drilling technologies are similar to the ones used in the oil industry, difficult rock permeability could complicate the drilling of wells. Some adjustments need to be made to deal with the higher temperatures and to make sure that the drilling fluid does not contaminate with the ground water. Finally, lack of reliable data on geothermal resources implies uncertainty about the availability and characteristics of the possible aquifers. This increases the financial risk and reduces the interest of financial institutions to provide funding to projects.

The technologies needed for geothermal power and heat production have been proven and have been used by around 60 countries in the world. In the countries with a large geothermal power potential, geothermal exploration technologies are already available. However, especially in Asia and Central and South America, geothermal power generation has grown recently because improved technologies, exploration techniques, as well as resource assessment, field development, reservoir development and power generation techniques have become available (LaGeo, S. A. de C. V., 2004; IEA, 2003), so that risks can be reduced and the financial acceptability of geothermal power production increased. The transfers of newer geothermal exploration and generation technologies/techniques to developing countries would come with: long-term monitoring of geothermal fields under exploitation, project management and financing, improved environmental safety, and addressing health issues in geothermal development.

Originally, the steam used for the electricity production was exhausted into the atmosphere, but as this leads to a lower capacity of the geothermal fields, water can be reinjecting into the acquifer. Modern geothermal facilities therefore have at least two wells drilled at a distance of approximately 1.5 km from each other. One well is used to generate the steam or water, whereas the other well is used to pump the condensed steam and/or cooled water back into the aquifer.

Another important benefit of pumping the water back into the ground is that the water generally has a high salinity level and can thus not be discharged into surface water. Moreover, pumping the cooled water back into the aquifer reduces the risk of subsidence.

Status of the technology and its future market potential top

Most geothermal energy (heat and power) is produced in Asia. In terms of heat production alone, the largest producers are Asia and Europe, whereas the Americas have the largest operational geothermal power production capacity (International Geothermal Association, 2001). Three of the four geothermal fields that have been in operation longest for electricity production are located in industrialised countries: Larderello plant, Italy (547 MW capacity); Wairakei plant, New Zealand (216 MW capacity); and the Geysers plants in the USA (1700 MW capacity). The fourth of these plants is the Cerro Pietro plant in Mexico (620 MW capacity).

During the 1980s and 1990s, the worldwide growth of geothermal power production was about 3.5% per year. Global growth rates for geothermal heat production have been approximately 6% per year. About 60 countries in the world produced heat and power from geothermal energy sources. The potential of geothermal power generation in industrialised countries is limited to those countries that are located in volcanic areas. Within the EU, Italy has the potential to produce geothermal electricity at significant levels followed by Iceland, Austria, Portugal, Iceland and France:

  • Italy has the two main high-temperature deposits with 790 MW of the EU’s 822 MW of geothermal power capacity (2004 levels). Its Larderello plant (see above) had its first unit installed in 1913. Moreover, Italy will install another 100 MW as a result of its green certificate system.
  • Portugal is developing geothermal capacity o­n the volcanic archipelago of the Azores, where the Sao Miguel Island has five geothermal power plants for a total capacity of 16 MW, which generate 25% of the Island’s power.
  • In 2005, France commissioned its second geothermal power plant o­n the Bouillante site, where an additional 10 MW could generate 72 GWh of green power per year.

In El Salvador, the La Geo project produces electricity from geothermal energy (LaGeo, S. A. de C. V., 2004). This project, which has been registered under the Clean Development Mechanism of the Kyoto Protocol (CDM, see, increases the power generation capacity at the existing Berlin Geothermal Power Plant through the drilling of additional geothermal wells and the installation of a new condensation power unit. 

Within Europe research has focused on an advanced geothermal technology with the European Hot Dry Rock project at Soultz-sous-Forets in France (Dickson and Fanelli, 2004). This project aims to demonstrate the feasibility of pumping water through deep hot rocks, which do not have in-situ fluid, and heat the water for energy purposes. In 2001 the European Economic Interest Grouping (EEIG) began a five-year programme to drill additional wells and to build a power plant in Soultz-sous-Forêts. The site is situated in the upper Rhine Graben, and has been selected by the EU Hot Dry Rock geothermal project as a pilot zone for exploiting low enthalpy energy (Baumgärter, no date).

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Figure 2: Global development installed capacity geothermal power (MWe) (Source: Bertani, 2010)

Another technology that is becoming increasingly popular is combined cycle geothermal power generation. This technology combines conventional steam turbine and binary cycle technologies, which would increase overall utilisation efficiencies as power is produced from the high temperature steam and the lower temperature separated water resulting from the binary cycle. In addition, the heat available from condensing the used steam after it has left the steam turbine can be utilised to produce more power.

An international form of co-operation on geothemal electrity production is the IEA Geothermal Implementing Agreement, initiated in 1997. This agreement provides a framework for international co-operation on geothermal research and development. Its main goal is to encourage the worldwide use of geothermal energy. An important aspect of this programme is to help countries with geothermal power potential explore the sources and removal of barriers to exploration and exploitation.

In developing countries, geothermal power production could, among others, be supported by technology support programmes and loans from multilateral organisation. A recent example is the contract signed between the European Investment Bank and the Government of Kenya for a € 32.5 million loan for a geothermal power plant project in Kenya, the Olkaria II geothermal power plant. The project’s design has been supported by the World Bank.

example olkaria II geothermal plant Kenya

Figure 3: Olkaria II geothermal plant Kenya (Source:

How the technology could contribute to socio-economic development and environmental protection top

Geothermal power is a stable source of energy as it is independent of weather circumstances and the climate in the countries. It is therefore a reliable source of energy and commonly has a high capacity factor of between 70 and 90% of installed capacity, which makes it applicable for both base and peak load, especially because geothermal power facilities have an inherent storage capacity. Geothermal energy is an indigenous source of energy and reduces the need to import fossil fuels.

Small mobile geothermal plants can help in meeting the energy requirements of isolated areas. 

Geothermal power production would have the following social benefits:

  • It could contribute to a better income distribution towards local municipalities as the operation and management of geothermal facilities bring employment and increased economic activity in the regions where they are located. The employment will involve skilled, specialised jobs, which may not yet be available in these regions. This would require training of local people and/or hiring experts from other places.
  • In the case of the LaGeo geothermal power project in El Salvador, the building up of the facility is accompanied by a research project on biodiversity and a forest conservation and reforestation programme in the areas surrounding the project. Moreover, the project has a community engagement programme with participation of the neighbouring municipalities of Berlin. The programme aims at generating local employment opportunities, social investment activities, development of sustainable small business, and protection of the local environment.

Geothermal power production has the environmental benefit of being a relatively clean fuel. Potentially negative environmental impacts of geothermal power production are:

  • The impact of the drilling on the nearby environment. This requires the installation of a drilling rig and equipment, as well as construction roads. Depending on the distance that needs to be drilled, the area needed for the drilling rig could vary from 300 m2 to 1500 m2. Drilling could also lead to surface water pollution (e.g., through blow-outs) and emission of polluting gases into the atmosphere.
  • The pipelines to transport the geothermal fluids will have an impact on the surrounding area.
  • The reduction in the pressure in the aquifers. This could lead to subsidence of the ground in the geothermal facility regions. Re-injection of the condensed and/or cooled water back into the reservoirs could neutralise the subsidence. Re-injection also reduces the risk that the steam is exhausted into the atmosphere or that used water is discharged into surface water.
Climate top

The contribution to greenhouse gas emission reduction from geothermal electricity production would lie in the possibility that it could replace fossil fuel based electricity production capacity. For calculation of these GHG emission reductions, it is recommended to apply the Approved Consolidated Methodology ACM0002, which has been developed for renewable energy projects under the Clean Development Mechanism of the UNFCCC Kyoto Protocol (CDM). This methodology helps to determine a baseline for GHG emissions in the absence of the project (i.e. business-as-usual circumstances), how emission reductions below this baseline can be calculated, and how these reductions can be monitored. General information about how to apply CDM methodologies for GHG accounting can be found at:

As per 3 June 2010, the following CDM geothermal electricity projects were registered by the CDM Executive Board:

Name CDM project country
LaGeo, S. A. de C. V., Berlin Geothermal Project, Phase Two El Salvador
Berlin Binary Cycle power plant El Salvador
Amatitlan Geothermal Project Guatemala
Darajat Unit III Geothermal Project Indonesia
Lahendong II-20 MW Geothermal  Indonesia
Olkaria III Phase 2 Geothermal Expansion Project Kenya
San Jacinto Tizate geothermal project Nicaragua
Lihir geothermal power  project  Papua New Guinea
20 MW Nasulo Geothermal Project  Philippines

A CO2 emission source for this technology is the geothermal steam - these emissions could vary depending on the location but on average amount to 122 g CO2/kWh (Bertani and Thain, 2002). Geothermal plants could theoretically inject these gases back into the earth, as a form of carbon capture and storage.

Financial requirements and costs top

The International Energy Agency (IEA) has drafted a Technology Roadmap on Geothermal energy, with a detailed assessment of the financial requirements and costs associated with the Technology (IEA, 2011). The IEA (2011) notes that where high-temperature hydrothermal resources are available, geothermal electricity is in many cases competitive with newly built conventional power plants. However, while geothermal electricity can be competitive under certain conditions, it will be necessary to reduce the levelised cost of energy of less conventional geothermal technology (IEA, 2011). 

The costs related to geothermal electricity production are mainly determined by the:

  • field costs, including surface exploration, drilling, field development and reservoir management. This is also higly dependent on the field specifics (resource temperature and pressure, reservoir depth and permeability, etc.); and
  • plant costs, including machinery, equipment, design, engineering and civil works.

The specific break down of field and plant investment costs depends on site-specific conditions and the type of technology. Well productivity also affects the cost of geothermal energy. Wells typically range from being able to support less than 2 to more than 30 MW of electricity generating capacity, with 5-6 MW as the world average (International Geothermal Association, 2001). Installation costs of a geothermal power plants are in the range of USD 1000 – 3000 per kWh, with production costs ranging from USD 0.022 to 0.054/kWh (International Geothermal Association, 2001).

World Bank (2005a) explores investment costs for three types of geothermal power plants (Figure 2). The table shows that about one quarter of the total investment costs need to be spent on exploration and confirmation of the aquifers. Although the report argues that research and development costs may decrease in the future, the authors have assumed a flat cost trajectory given the uncertainties related to geothermal technology improvement.

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Figure 4: Investment costs for three types of geothermal power plants (Source: World Bank, 2005c)

In addition, technical and financial support could be provided through the Clean Development Mechanism (CDM). The International Geothermal Association (2001) made calculations of the effects on the geothermal power plant economics if the GHG emission reductions were sold as CDM credits at a unit price of USD 8 and 15. It was concluded that at USD 8 per tonne emission reduction achieved by geothermal power production when replacing a combined cycle natural gas plant (55% efficiency), would increase the financial acceptibility of geothermal energy by 8%. When, again at USD 8 per credit, a coal plant (35% efficiency) were replaced by geothermal power capacity, a 24% cost reduction could be achieved by geothermal plants (which is because a coal-based power plant has higher GHG emissions than a gas-fired plant, so that the emission reductions when replacing a coal-based plant are also larger). At a credit price of USD 15, these savings would amount to 15% and 45%, respectively.

The Figure below illustrates estimated financial requirements regarding production costs per technology type for geothermal electricity production. The average production costs for hydrothermal high temperature flashplants have been calculated to range from USD 50/MWe to USD 80/MWe (IEA, 2011). On average, production costs of hydrothermal binary plants vary from USD 60/MWe to USD 110/MWe (IEA, 2011). Recently, a 30 MW binary development in the U.S. showed estimated levelised generation costs of USD 72.MWhe with a 15-year debt and 6.5 % interest rate (IEA, 2011). 

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Figure 5: Production costs of geothermal electricity (USD/MWhe). Source: IEA, 2011

Clean Development Mechanism market status top

[this information is kindly provided by the UNEP Risoe Centre Carbon Markets Group]

Project developers of geothermal projects in the CDM pipeline mainly apply the following methdologies:

ACM2 “Consolidated baseline methodology for grid-connected electricity generation from renewable sources”
AMS-I.D. “Grid connected renewable electricity generation”
AMS I.C. “Thermal energy production with or without electricity”
Further information on these metholodogies can be found here.

There are 14 geothermal projects in the CDM pipeline. Projects based on geothermal energy, therefore, represent a very small part of all CDM projects in the pipeline. It is worth noting that more than 1/3 of all geothermal CDM projects are located in Indonesia.

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Figure 6: Overview of geothermal projects in the CDM (Source: UNEP Risoe CDM/JI Pipeline Analysis and Database, February 1st 2010)

Example CDM project:Amatitlan Geothermal Project by Ortitlan Limitada (CDM Ref. No. 2022)
The Amatitlan Geothermal Project is a geothermal power plant in the Department of Escuintla, in Guatemala. Total installed capacity of the project will be 25.2 MW, with an actual net capacity of 20.5 MW. The plant will utilise three turbines (two with installed capacities of 12 MW each, and one at 1.2 MW) and has a predicted power generation of 162,000 MWh per annum. The purpose of the project is to utilise the geological resources of the Amatitlan Geothermal Field in a state-of-the-art geothermal power plant to generate renewable energy that will be dispatched to the grid.
Project investment: N.A.
Project CO2 reduction over a crediting period of 7 years: 580,849 tCO2e
Expected CER revenue (USD 10/CER): 5,808,490
References top

Baumgärter, no date, The European Hot Dry Rock Project at Soultz. Available at:

Bertani, R. and Thain, I., 2002. "Geothermal Power Generating Plant CO2 Emission Survey", IGA News (International Geothermal Association).

Bertani, R. (2010), Geothermal Power Generation in the World 2005–2010 Update Report, proceedings at
World Geothermal Congress 2010, Bali, Indonesia, 25-29 April 2010.

Dickson, M.H. and Fanelli, M., 2004. What is Geothermal Energy? Instituto di Geoscienze e Georisorse, CNR, Pisa, Italy. Available at:

ENTTRANS, 2008. Sustainable, Low-Carbon Technologies for Potential Use under the CDM – A description of their environmental, economic, and energy aspects, Groningen, the Netherlands. 

GEO, 2005. Geothermal Energy Facts. Geothermal Education Office. Available at:

IEA, 2003. Renewables for Power Generation – Status and ProspectsOECD and IEA.

IEA, 2011. Technology Roadmap - Geothermal heat and power. OECD/IEA 2011, Paris, France. Document can be found at:

International Geothermal Association, 2001. Report of the IGA to the UN Commission on Sustainable Development, Session 9 (CSD-9), New York.

LaGeo, S. A. de C. V., 2004. Berlin Geothermal Project, Phase Two, Clean Development Mechanism Project Design Document Form (CDM-PDD) Version 02. Available at:

Lund, J.W., 2007. "Characteristics, Development and utilization of geothermal resourceGeo-Heat Centre Quarterly Bulletin (Klamath Falls, Oregon: Oregon Institute of Technology) 28(2), pp. 1–9.

Michaelowa, A., 2001. Potential and obstacles for using the CDM to promote geothermal energyin: Sudarmoyo; Bintarto, Bambang; Hadi, Eko; Saryana; Kurniawan, Fanora (eds.): Dedicating geothermal energy to community prosperity, Proceedings of 5th Indonesian Geothermal Association Annual Scientific Conference, Yogyakarta, pp. 211-214.

NREL, no date. National Renewable Energy Laboratory (NREL) technology resource maps. Map can be retrieved from:

World Bank, 2005. Geothermal energy: The technology and the development process. Available at:

World Bank, 2005a. Technical and Economic Assessment: off-grid, mini-grid and grid electrification technologies, Discussion Paper, Energy Unit, Energy and Water Department, The World Bank.