Geothermal energy utilizes the natural heat of the Earth, deep below the Earth's crust. On average, the temperature of the Earth increases with depth, about 25–30˚C per kilometer. However, most geothermal energy production occurs in locations where the temperature  gradient is higher. A well known example is Iceland, which has a long history of using geothermal heat both for heating purposes and to produce electricity.

Existing knowledge of the subsurface and the subsurface temperatures provides guidance to select highly prospective locations. In Europe and elsewhere in the world, much is known of the Earth’s subsurface through decades of drilling.    

To leverage the geothermal energy deep inside the Earth, wells need to be drilled into the an aquifer. An aquifer is  a layer of porous rock or sediment saturated with water.  In the most typical setup one well will be used to pump up the hot water, whilst another well will be used to pump the water back into the aquifer after the heat has been extracted.   Please see the video at the top of this page..

This means that always the same amount of water that will be going up one well, will also be going down the other well. No water will be extracted from the system, which is resulting to a material balance within the aquifer.     

At the Earth’s surface, depending on the temperature of the water, the produced heat can be used to generate electricity using a binary or Organic Rankine Cycle (ORC) plant, or by directly heating houses, offices and other locations. Sometimes a combination of these two is used, where the produced hot water is first processed in an electricity plant and then the residual heat is extracted for heating purposes in a cascading set-up. To distribute this heat to the customers, a heat network is required.