What is Geothermal Energy?

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WHAT IS GEOTHERMAL ENERGY? A GUIDE TO HARNESSING EARTH’S RENEWABLE POWER

Key Insights:

• Geothermal energy is a reliable, renewable, and low-carbon power source that harnesses heat from the Earth's core for heating, cooling, and electricity generation.
• There are three main types of geothermal systems - conventional hydrothermal, enhanced geothermal systems (EGS), and closed-loop systems - each suited to different applications and locations.
• Geothermal energy is ideal for powering industries with high energy demands, such as data centres, providing a stable, 24/7 power supply while reducing carbon footprints to near zero.
• Advancements in drilling technology and energy storage are making geothermal power more scalable and cost-effective, positioning it as a key player in the transition to a net-zero carbon infrastructure.

Renewable energy sources - they’re certainly a hot topic in the fight against climate change. Among these renewables, geothermal energy stands out as a reliable and sustainable option. But what is geothermal energy, and how can it contribute to a cleaner, more efficient energy setup on a mass scale?

We’ll explore how geothermal energy works, its role in reducing carbon emissions, and its potential to power everything from residential heating systems to large-scale industrial applications. As industries and data centres seek alternative energy solutions, geothermal power presents an opportunity to reduce dependence on fossil fuels while ensuring long-term energy security, so now feels like a good time to explore this…

What is geothermal energy?

Geothermal energy is thermal energy extracted from the Earth’s subsurface. Depending on the depth and the geothermal gradient, the heat stored underground varies in temperature, making it useful for different applications, from heating and cooling to electricity generation.

The Earth’s core generates heat through the decay of radioactive elements and the residual energy from planetary formation. This heat continuously moves towards the surface through convection and conduction, creating temperature gradients within the Earth's crust.

In certain regions, such as Iceland, the Pacific Ring of Fire, and volcanic hotspots, the geothermal gradient is particularly high, meaning heat can be accessed at shallower depths. These regions often feature hot springs and geysers, and even active volcanoes, showcasing geothermal energy’s natural power.

Is geothermal energy renewable?

An important question for business leaders and engineers alike is, is geothermal energy renewable? And the answer is yes. Since the Earth’s core produces heat at a near-constant rate, geothermal energy is effectively limitless on a human timescale, making it a highly sustainable and low-carbon alternative to fossil fuels.

Geothermal energy is also gaining traction as a key solution for sustainable infrastructure, especially in areas like data centres, where energy efficiency and environmental impact are critical concerns. Companies are exploring multiple pathways to enhance sustainability, such as integrating geothermal energy into district heating systems, similar to how waste heat from data centres is repurposed in 5th generation heat networks, (which you can read more about in our article: 5th generation heat networks).

Is geothermal energy capable of meeting the world’s electricity demands?

With ongoing advancements in technology and lower project costs, according to the IEA, geothermal energy could supply up to 15% of the world's growing electricity needs by 2050. This would involve installing up to 800 gigawatts (GW) of geothermal capacity, generating nearly 6,000 terawatt-hours of electricity each year - about the same amount of power that the United States and India currently use together.

How does geothermal energy work?

The extraction and utilisation of geothermal energy depend on the temperature and depth of heat sources. Geothermal systems fall into three main categories:

1. Conventional Hydrothermal Systems

These systems rely on naturally occurring hot water reservoirs found underground. Wells are drilled to extract hot water, which can be used directly for heating. The cooled water is then re-injected into the reservoir to maintain sustainability.

2. Enhanced Geothermal Systems (EGS)

In locations where natural permeability is insufficient, EGS technology enhances geothermal reservoirs by creating artificial fractures in the rock. This allows water to circulate and absorb heat before being extracted to generate higher temperature hot water at the surface.

3. Closed-Loop Geothermal Systems

Unlike conventional systems, closed-loop systems circulate water a working fluid (such as water or refrigerants) through sealed pipes underground. Heat is absorbed and transferred back to the surface without direct interaction with underground formations, minimising environmental impact.

These approaches align with other emerging clean energy technologies that RED Engineering Design is actively exploring, such as advanced nuclear solutions for data centres.

Harnessing geothermal energy for power and heating

Geothermal energy is versatile and can be used for various applications, depending on the temperature available:

Low-temperature geothermal energy (<50°C)

• Used for direct heating in homes, greenhouses, and swimming pools
• Supports district heating networks in residential and commercial buildings
• Typically accessed from depths of 500–1,000 metres

Medium-temperature geothermal energy (100–200°C)

• Suitable for district heating schemes and industrial process heating
• Can be used in absorption chillers to provide cooling (ideal for data centres)
• Requires wells drilled several kilometres deep for effective extraction

High-Temperature Geothermal Energy (>250°C)

• Used for electricity generation via steam turbines
• Typically found in volcanic regions or deep rock formations
• Extracted through closed-loop geothermal systems to protect underground structures

As more industries focus on reducing emissions, data centre sustainability strategies are evolving to include renewable energy solutions like geothermal power, which is critical in transforming data centres into eco-friendly hubs. You can read more about this in our article: Powering Data Centres With Advanced Nuclear Technologies.

Geothermal Power for AI and data centres

Data centres require constant power and cooling, and AI-driven workloads demand even higher energy densities. Collocated geothermal power plants could provide both electricity and cooling, significantly reducing operational carbon footprints.

Unlike intermittent renewables such as wind and solar, geothermal energy delivers consistent output, reducing dependency on fossil fuel backup systems. This is particularly important as companies develop strategies to achieve zero-carbon, water-negative data centres. This is a topic we at RED Engineering Design are incredibly invested in. Delver further into this by reading our thought leadership article: The Roadmap to Zero.

The future of geothermal energy

With advances in drilling technology, thermal modelling, and energy storage, geothermal power is becoming more economically viable and scalable. Countries such as China, the US, Indonesia, Turkey, Sweden, Iceland, and Japan are making huge headway in large-scale geothermal deployment.

In addition to this, the oil and gas industry’s existing expertise in well drilling and underground resource management can be repurposed for geothermal energy extraction, accelerating deployment timelines.

Many geothermal projects will likely be developed under Power Purchase Agreements (PPAs), where private investors fund, build, and operate energy plants while selling power to consumers over 15–20-year contracts.

To achieve net-zero carbon targets, early-stage investments in exploration, test drilling, and feasibility studies will be crucial. Key considerations include:

• Total Cost of Ownership (TCO) for geothermal projects
• Levelised Cost of Energy (LCOE) over the project’s lifespan
• Regulatory frameworks for renewable energy integration

Let’s see how far we can take geothermal energy…

Geothermal energy is a reliable, low-carbon, and virtually limitless energy source that can play a key role in reducing emissions and enhancing energy security.

For businesses, cities, and industries looking to decarbonise their operations, geothermal solutions offer an economically viable and environmentally responsible alternative.

At RED Engineering Design, we are committed to leveraging cutting-edge geothermal technology to develop smart, resilient, and sustainable energy infrastructure.

By integrating geothermal energy into future projects, we can create more efficient, low-carbon solutions that benefit both businesses and communities.

For more insights on geothermal energy solutions, get in touch with RED Engineering Design today.