Geothermal energy is energy obtained by tapping the heat of the earth itself, usually from kilometers deep into the Earth's crust. It is expensive to build a power station but operating costs are low resulting in low energy costs for suitable sites. Ultimately, this energy derives from heat in the Earth's core. Iceland's geothermal energy could provide 1700 MW for over 100 years, compared to the current production of 140 MW.

The geothermal energy from the core of the Earth is closer to the surface in some areas than in others. Where hot underground steam or water can be tapped and brought to the surface it may be used to generate electricity. Such geothermal power sources exist in certain geologically unstable parts of the world such as Iceland, New Zealand, United States, the Philippines and Italy. The two most prominent areas for this in the United States are in the Yellowstone basin and in northern California. Iceland produced 170 MW geothermal power and heated 86% of all houses in the year 2000 through geothermal energy.  

There is also the potential to generate geothermal energy from hot dry rocks. Holes at least 3 km deep are drilled into the earth. Some of these holes pump water into the earth, while other holes pump hot water out. The heat resource consists of hot underground radiogenic granite rocks, which heat up when there is enough sediment between the rock and the earths surface. Several companies in Australia are exploring this technology.