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Geothermal energy uses the earth's natural internal heat to generate electricity and heating. Geothermal energy may be stored in granite rocks (often called ‘hot rocks’) or trapped in liquids such as water and brine (hydrothermal process).

Many countries generate significant amounts of electricity from geothermal energy. Iceland sources 25 per cent of its total electricity generation from geothermal sources, while geothermal energy represents around 17 per cent of energy generation in the Philippines and Kenya.

Types of geothermal energy

The most common source of geothermal energy around the world is hot springs associated with volcanic activity.

Other types of geothermal energy are:

  • Hot sedimentary aquifers – exploit naturally occurring reservoirs that have been heated by proximate hot rocks or crustal heat flow.
  • Enhanced geothermal systems – commonly referred to as 'hot rocks', these systems exploit the heat stored in rocks deep beneath the earth by fracturing the rock to create permeable reservoirs.
  • Direct use systems – utilise shallow underground reservoirs where there is a slight temperature difference between the surface and groundwater.

Although Australia has no volcanic structures, there is significant potential for geothermal energy to be extracted using hydrothermal and hot fractured rock processes.

How an enhanced geothermal system works

Getting energy from 'hot rocks' relies on techniques established by the oil and gas industries.

Wells are drilled to a depth of 3–5 km below the surface to find heat-producing granites. Water is pumped into the wells and through cracks in the rocks, where it becomes heated to a temperature of up to 300°C.

This extremely hot water is then pushed back to the surface, where the heat is used to drive a turbine and produce electricity. The water is recycled and the process can begin again.

Geothermal energy in Australia

While Australia has excellent geothermal resources, they are mostly located a long way from either the power grid or from large industrial customers that could buy the power they produce.

The geothermal sector in Australia is still in the early stages of development, accounting for around 0.001 per cent of the country's total clean energy generation.

The successful Habanero Pilot Plant run by Geodynamics in South Australia's Cooper Basin in 2013 provided some cause for optimism, but the remote nature of the site made it challenging to find customers for the resources. In 2016, Geodynamics plugged all its remaining geothermal wells in the Cooper Basin and completed remediation activities.

The Australian Renewable Energy Agency (ARENA) has been involved with seven projects, most of which ended in the early investigation phase. Five of these are now closed and two were completed.

Only one small commercial power plant is currently operating - a 0.12 MW facility run by Ergon Energy at Birdsville in Queensland.


ARENA’s international geothermal expert group found that utility-scale generation from geothermal projects was not expected to be commercially viable by 2020. The technology was only expected to become competitive with traditional fossil fuel power generation by 2030 with the help of a high carbon price and in the most favourable scenario for cost reductions.